The Importance of Mediation in the Business World

The Importance of Mediation in the Business World

“I had two bad experiences with the law. In the first, I lost a case. In the second, I won. Will we ever learn wisdom from our ancestors?” — VICTOR HUGO

The mediation system, which was integrated into our national legal system through the “Law on Mediation in Legal Disputes” that came into effect in 2008 for Criminal Law and in 2013 for Civil Law, is a method of “Alternative Dispute Resolution” (ADR). This system is widely established in countries with advanced legal systems, unlike our own. Through this system, the traditional approach of “seeking justice in court” is being reconsidered.

The mediation system, which has unfortunately arrived late and with implementation difficulties in our country, is considered the most effective method that parties can use to resolve disputes with the assistance of a neutral third party, either outside the court or through court-directed mediation. Mediation is notably distinct from our existing legal system due to its flexibility, effectiveness, and emphasis on confidentiality, which is why it is increasingly preferred in business, family, school, and even international disputes.

In this method, parties who decide to resolve their dispute through mediation, either voluntarily or at the suggestion of a court, present their case to a mediator. With the assistance of a completely impartial and nonjudgmental mediator, they have the opportunity to discuss their issues and find the best solution for themselves.

Due to courts’ heavy workloads, cases often take a long time to resolve, and delayed justice further erodes trust in the judiciary. Turkey has only recently become acquainted with alternative dispute resolution methods used in Europe for many years. Mediation was introduced into Turkish criminal law in 2008, and since the fall of 2013, it has also been applicable in civil law.

A Brief History of Mediation

The history of mediation dates back 4,000 years, all the way to Mesopotamia and the Sumerian civilization. Further applications of mediation can be seen in Homer’s Iliad in 750 B.C., Sophocles’ Ajax around 500 B.C., and later in Ancient Rome and in China, where Confucian ethics were practiced. Today, it is estimated that there are around six million mediators and 950,000 mediation committees in China alone.

In the United States, where mediation is most widely used, professional mediation began in 1913 to resolve labor disputes, gradually becoming institutionalized. Civil and commercial mediation first emerged in the 20th century in the United States as a way to save time and costs associated with formal court proceedings. The United Kingdom, Australia, and Canada followed suit, and now mediation is an accepted alternative to litigation in many countries worldwide.

In the United Kingdom, the development of mediation has evolved to coexist increasingly with civil law processes rather than compete with them. Notable examples include the groundbreaking Access to Justice reports by Lord Woolf in 1995 and 1996, and the subsequent Civil Procedure Rules in 1998.

In Europe, the 2008 EU Mediation Directive by the European Parliament and Council on cross-border disputes between parties in member states has produced positive results for Alternative Dispute Resolution (ADR). Mediation, which often takes the form of court-supervised ADR, has become an established prerequisite for states aspiring to join the European Union. Existing EU member states have also reconsidered their access to mediation while implementing this directive, which has resulted in important legislative developments in some cases.

In the Middle East and North Africa (MENA) region, recent projects initiated by support organizations such as the World Bank/IFC and the United Kingdom’s Department for International Development (DFID) have helped design similar reforms. These include updating procedural laws and regulations, establishing both independent and court-supervised ADR centers, and training mediator cadres in countries like Lebanon, Egypt, Morocco, Pakistan, Bangladesh, and India.

Mediation, as an effective, affordable, and peaceful form of ADR, is now widely used in many countries, not just in the United States, but from India, Pakistan, Hong Kong, Singapore, and Korea, to Latin America, Kenya, Somalia, Israel, New Zealand, Australia, and many continental European countries, especially those in the European Union.

Mediation in Turkey

“Keep talking until you reach an agreement…”

In fact, negotiation and mediation, as forms of alternative dispute resolution, are not new inventions. The history of negotiation, the most universal, egalitarian, and peaceful method of resolving disputes, is as old as human history itself. The principle of “keep talking until you reach an agreement” is an ancient Eastern African principle. In East Africa, people do not leave the negotiation table until a resolution is reached. When the negotiation method succeeds, meaning the parties resolve their dispute through dialogue, the resulting solution and agreement become the common product of the parties.

Successful applications of these methods can not only reduce the burden on the court system, leading to more efficient operations, but they can also contribute to the establishment of a social atmosphere of peace and reconciliation. Constructive collaboration and mutual influence in reaching a common resolution with the help of a third party can also foster a culture of coexistence. A resolution reached in a mediation session, where the parties work towards a win-win outcome without prejudice, is a significant achievement for social unity.

As mentioned above, mediation was incorporated into Turkey’s legal system in 2008 for Criminal Law and in 2013 for Civil Law. However, mediation is particularly relevant in civil law matters, including commercial life, landlord-tenant disputes, employer-employee conflicts, certain family law issues, intellectual and industrial property rights, and especially debt collection disputes, making it the main subject of this article.

Advantages of Mediation

The flexibility and effectiveness of mediation have made it a preferred method for resolving disputes in business, family, school, and even international contexts. Parties who decide to resolve their dispute through mediation, either by their own will or at the suggestion of a court, can present their dispute to a mediator and have the opportunity to discuss their issues with a specially trained, impartial mediator. They can explore and arrive at the best solution for themselves, away from prejudice and judgment.

In mediation, parties create their own solutions, which sets mediation apart from other alternative resolution methods and from the judicial system. Turkey’s court system is under extraordinary pressure with long trials and rising costs, which increasingly pose a barrier to the “right to seek justice.”

Moreover, seeking justice often involves a desire for acknowledgment and validation, beyond mere legal entitlements. Clients often express frustration when they are unable to fully convey their grievances, feeling unheard by the court due to procedural constraints and the overwhelming workload. According to a 2013 study by the Turkish Statistical Institute, 6,393,207 cases were filed before judges in that year alone. This environment can leave individuals feeling misunderstood and emotionally unsatisfied.

Creating Your Own Justice

This is where mediation reveals its value. In contrast to the technical and structured method of delivering justice in court, mediation allows parties to shape their path and, with the guidance of a mediator, effectively create their own form of justice. A mediator’s professional skills, drawn from their training and personal attributes, help uncover the real interests and needs of the parties, beyond the visible disputes.

The average duration of a commercial or employment lawsuit can extend over two to three years, and by the time justice is delivered, it has often lost much of its value. Lengthy proceedings are common grounds for complaints to the European Court of Human Rights (ECHR), and, more recently, for individual petitions to Turkey’s Constitutional Court. In contrast, mediation with an expert mediator can lead to a resolution in just a few sessions.

Parties who reach a deeper understanding of each other can position themselves better for future interactions. By clarifying their needs and interests, mediation enables negotiations that lead to effective solutions, often impossible to achieve in court. This aspect of mediation ensures voluntary compliance with the agreements reached, as they are not enforced by law but are mutually agreed upon.

Why Mediation is Preferred in Business and Commercial Life

“Mediation is about thinking and acting in a way that benefits all parties involved,” emphasizing a win-win mentality—“I want to win, and I want you to win as well.” Mediation encourages creative solutions that mutually benefit institutions, individuals, suppliers, business partners, universities, and end-users. Here’s an example to illustrate this theory:

“Imagine two people in a kitchen, both desiring a single orange. The usual solution is to cut the orange in half. But if they had discussed their needs, they would have found that one wanted the juice and the other needed the zest for baking. Each could have had what they needed, demonstrating that there was no actual conflict between them. By clarifying needs, both parties could have reached a win-win solution.”

How to Access Mediation in Turkey

Currently, mediation is not mandatory in Turkey, as it is in some other countries. However, the Ministry of Justice’s Directorate of Mediation has started implementing pilot mandatory mediation programs. In the current system, anyone with a dispute can access an up-to-date list of mediators on the Ministry of Justice’s website. Additionally, after a case is filed, the court may provide information about mediation without making a specific recommendation. Mediators are registered and monitored by the Ministry of Justice.

Where Mediation is Applied

Mediation is practiced in over 20 countries, including the United States, the United Kingdom, Germany, France, Italy, Austria, the Netherlands, and Denmark.

Who Can Act as a Mediator

In Turkey, only mediators registered in the Ministry of Justice’s mediation registry can practice. To become a mediator, one must be a law school graduate with at least five years of professional experience. Those without a law degree are not eligible to become mediators. Mediators operate under the oversight of the Ministry of Justice and can be reported for non-neutral behavior.

Differences Between Mediation and Arbitration

International Commercial Dispute Resolution Through Arbitration

In commercial relations, well-structured contracts are crucial, yet disputes may still arise. To resolve these disputes efficiently and cost-effectively, alternative resolution methods are recommended, which help preserve business relations.

International Arbitration

Arbitration is the most common method for resolving international commercial disputes, defined as the resolution of disputes by an arbitrator or panel outside the national courts. Parties can choose arbitration if they have agreed in writing that disputes will be resolved through this method. Arbitration is voluntary, meaning that parties need to have an agreement to use this method.

Amicable Dispute Resolution – Mediation

Mediation and conciliation are widely recognized methods for amicable dispute resolution. In conciliation, a neutral third party assists in an informal setting, while mediation is more structured and functional, conducted by a neutral third party who organizes meetings to help parties reach an agreeable resolution.

In contrast to arbitration, mediation is less rule-bound and the mediator does not have binding decision-making power. Instead, the mediator assists the parties in discussing the issues and negotiating solutions. Mediation may involve both joint and separate sessions with the parties to explore and understand the dispute comprehensively.

Numerous arbitration organizations, such as the International Chamber of Commerce (ICC) and the American Arbitration Association (AAA), also provide mediation services, setting rules and administrative support for the process. Given that mediation is voluntary, parties must agree in writing to resolve their dispute through mediation. Organizations like the ICC publish model mediation agreements to facilitate this.

The Famous Win-Win Theory

“To achieve the best outcome, each person in the group should act in a way that is best for both themselves and the group.”

According to John Nash, the father of the Win-Win Theory:

For interpersonal relationships and decision-making, it is essential to develop emotion-free, quantifiable formulas. Everything can be formulated and reduced to numbers. Nash initially built on Adam Smith’s idea, “For the best outcome, each person should act in their own self-interest.” However, he revised this, believing that it has led to a world plagued by pollution, warming, and environmental issues. Instead, Nash proposed: “To achieve the best outcome, each person in the group should act in a way that is best for both themselves and the group.” After all, the “group” is none other than our one and only planet Earth.

Conclusion

The greatest loss of energy in a company often comes from internal conflicts, which are usually subtle and go unnoticed but result in significant losses. It is crucial for mid- and upper-level managers to develop mediation skills, as they play a key role in fostering a peaceful workplace environment. Conflict, peaceful resolution methods, and reconciliation are so important that, in their absence, companies struggle to be productive.

Thus, we believe that mediation should be promoted within international corporations to ensure the proper functioning of internal ethical and integrity codes. A culture of reconciliation not only aids in resolving intra-company disputes but also plays a vital role in resolving potential conflicts with other companies. Working with in-house or external legal advisors or mediators is crucial for establishing this system.