Russia’s war against Ukraine is not localised, but has global implications for trade, commerce, and businesses. Sanctions, embargoes, and other restrictive measures, but also the high level of international trade and investment links of both States, are making the effects of this armed conflict felt worldwide, for example through the impairment or complete disruption of supply chains. Commercial mediation helps in times of crisis.
Many questions, much uncertainty: Commercial mediation helps with answers and security
Germany is one of the countries that is feeling the full impact of these effects. Many companies in Germany are alarmed. A primary concern is energy supply. What happens if the embargo on Russian gas does come into effect? How will existing gas supply contracts still be fulfilled, at least in part? Can I sue my energy supplier for damages for non-fulfillment of the contract? What is the effect of possible force majeure, sanction, and limitation of liability clauses in energy supply contracts? Do they cover non-performance of the contract? And since many of these energy supply contracts will have an international character, questions will also have to be answered about the applicable law and the subsequent enforcement of arbitrated or judicially determined claims.
The constellation is explosive for companies and energy suppliers. The risks of litigation are high, complex, and difficult to manage. There is much uncertainty, known as “poison” for trade and investment. What is certain, however, is that litigation can certainly damage or even completely destroy long-standing, usually good, and also profitable relationships between the parties. The good reputation of many companies is also at stake.
However, since it can be assumed that the parties are interested in the continuation of their relationship and want to protect their good reputation, it is precisely now that parties should use approaches that aim at long-term, sustainable solutions to overcome the currently existing challenges. These exist – and commercial mediation is one approach that should be seriously considered.
Commercial mediation helps by being flexible, solution-oriented, and confidential.
Mediation is an interest-based conflict resolution process in which a neutral, independent third party (mediator) helps the parties to develop autonomous solutions that resolve the conflict. A strength of mediation is that it aims at further communication between the parties and re-establishes and/or further promotes the already existing relationship with understanding and trust. This feature leads, on the one hand, to the parties being able to creatively share and discuss options and approaches to solving their specific challenge. On the other hand, and further strengthened by the stringent legal and contractual confidentiality of mediation, it also results in the parties being able to freely exchange information in the mediation without fear that information shared or developed as part of the mediation could be used adversely in subsequent arbitration or court proceedings. Confidentiality also covers the existence of mediation, which can protect parties from damage to their reputation.
The mediation process itself is very flexible and can be adapted by the parties, often in collaboration with the mediator, to resolve the challenges they face. Longer-term, multi-stage processes are particularly feasible here, which maintain communication between the parties and allow them to adapt to new developments immediately, efficiently, and sustainably. The use of mediation within the framework of a dispute resolution committee or “dispute board”, which is known for large construction projects, would also be more than suitable here as an accompaniment to the transaction.
Commercial mediation to save valuable trade and investment relations
In the current sensitive situation, which can lead to serious and complex difficulties for companies and their energy suppliers, good, structured, and facilitated communication that allows for pro-active management of the situation is essential. Commercial mediation, as part of a best practice, appropriate and comprehensive Enterprise Risk Management (ERM), is clearly a priority. Parties should prioritise this conflict resolution process, not only for cost reasons but above all to save their valuable commercial relationships. Commercial mediation helps in times of crisis.