All posts by Dr. jur. Dirk Oldenburg

About Dr. jur. Dirk Oldenburg

Email: [email protected]
Tel: +49 (0) 178 41 41 935
Dr. Dirk Oldenburg (born 1957 Kiel, Germany; qualified German lawyer/Rechtsanwalt) has gathered more than 30 years experience as partner of an international law firm in Frankfurt (Puender pp; today part of Clifford Chance) on the one hand and thereafter in the corporate world as General Counsel, Management Board Member and Chief Compliance Officer of the global pharmaceutical company Aventis/Sanofi. Utilizing his expertise and experience both from the attorney´s point of view as well as from the perspective of a corporate lawyer and corporate executive Dirk Oldenburg has moved into the field of mediation of complex dispute situations - be it due to legal or factual issues, due to interpersonal or intercultural difficulties within a relationship or because of high sensitivity or urgency of a matter.

Mediation – Practical Guidelines, Part 2: The mediator – role and limits as the moderator of the process of reaching an agreement

While part 1 of these guidelines addressed the basic principles of the mediation procedure in general and, above all, the logistical issues of “who, where, how,” part 2 deals mainly with preparing for the conflict before the mediation hearing and the specifics of conducting the hearing as such.

I. Moderating the process of reaching an agreement

Every mediator will have his or her own style and basic concept regarding the sequence and structure of a mediation hearing, which he or she is then required to adjust to the respective individual case.

  1. Written narrative summary by the parties to the conflict

The mediator cannot reasonably be expected to work his or her way through what may be mountains of files on a lengthy conflict, nor is it certain that he or she would in fact discern the true core of the conflict even so. Both parties must therefore be asked to summarize the facts of the matter and the status of the dispute from their standpoints, in a manner appropriate to the complexity of the case. To this end, the mediator should, after consulting with the parties to the conflict, set out clear rules for the maximum scope and submission deadline and potentially establish an organizational structure that applies to all sides with regard to the subjects to be addressed. Within a further time limit after that, each party will then have the opportunity, after taking note of the opposing side’s submissions, to submit supplementary written remarks on the statements made therein within a certain time window and maximum scope.

These clear and easily understood summaries – which are termed “narratives” hereinafter – form the basis for the mediator to familiarize himself or herself with the substance of the conflict and plan the mediation process.

  1. Opening phase of the mediation hearing

At the start of the mediation hearing, the mediator should provide an introduction to mediation in general, the planned process of the talks, and the procedural rules that must be observed.

After that, one option is to allow the parties to the conflict to present their respective standpoints orally within a certain speaking time. Instead of that, and often preferably, the mediator, who is now quite familiar with the matter from reading the written remarks, can outline his or her understanding of the status of the dispute and the issues that are especially relevant to the conflict and ask the parties to the conflict to add to or correct these remarks. This method has one major advantage in that it precludes potentially heated debate between the parties right at the start of the talks, instead offering an avenue of introduction to the subject matter of the conflict through the mediator’s presentation and with the mediator’s distance from the case.

  1. Looping and paraphrasing

One factor that is absolutely crucial to the success of the mediator’s work is ensuring that all parties to the conflict have a firm sense at all times that the mediator is paying attention to and considering their submissions and actually understanding them as intended by the presenting party. The technique of “looping” or paraphrasing is an excellent way to do this. What this means is that the mediator repeats or paraphrases the parties’ submissions on an ongoing basis to ensure that he or she does in fact understand both parties’ submissions and arguments accurately. Having the mediator summarize the written narratives is another side of this same technique, which is why it is an excellent way to start the discussions and negotiations. In this way, the parties’ representatives can build the necessary fundamental trust in the mediator’s impartiality and understanding of the facts of the matter.

  1. Interests/needs versus positions

The positions and demands or denials expressed by the parties to the conflict are obvious and clearly apparent. They are generally quite easy to ascertain and name. In terms of looking for possible solutions that involve an amicable agreement later on, however, it is highly important to “see through” these positions and discern the actual interest or need on which the party to the conflict bases the position. Although a position is generally expressed in the form of a monetary amount, in the vast majority of cases even a monetary position is backed by an identifiable interest or concern that does not have to do primarily with money. Finding out these underlying interests or needs on the part of all of the parties to the conflict (not just the claimant) is very often the key to identifying the best possible alternative solution in the further course of the negotiations.

  1. Evaluating and weighing the parties’ interests/needs

In many cases, the matter concerns not just one need on the part of one of the parties to the conflict, but rather several, which generally vary in their importance to that party. But the other parties to the conflict also have needs and interests of their own, and they also vary in relevance. For mediation purposes, it is important for the true interests/needs of everyone involved in the conflict to be identified through open discussion and then evaluated or categorized jointly by the interested parties in terms of their importance and significance to the parties to the conflict. In many cases, the interests of those involved in the conflict have more aspects than is initially apparent. This can open up possible avenues of reaching an agreement, as accommodating a need that has been acknowledged as being especially important to one party may generate greater value for that party than conceding the point “costs” the opposing side – so a kind of added value with regard to one aspect or another can be generated through these kinds of elements of mutual agreement, making it easier to reach an overall solution.

The process of designating and attaching values to the interests and needs of other interested parties (and not just one’s own) openly and through shared discussion creates a negotiation atmosphere of consideration toward the other interested parties. It is much more difficult to reach an amicable agreement without this kind of cooperative negotiation atmosphere.

  1. Separating the factual level from the relationship level

It is not uncommon for conflicts (such as those between shareholders or partners in a business) to be based not primarily on factual issues, but rather to have their true roots on the relationship level. If the mediator is not successful in identifying and understanding these root causes – which are often not clear from the exchange of written narratives – it will be very difficult to resolve the conflict. Where the conflict exists on a relationship level, achieving a certain level of satisfaction, or at least airing of concerns, on the part of the affected parties is even generally the primary goal. Since relationship conflicts are very difficult to categorize, it is nigh impossible to generalize about how to handle them, except to say that the most promising path is generally to gently and carefully identify and name the deeper-seated areas of personal dissonance. It may be necessary to hold a large number of individual discussions, or even to call in an appropriate expert. In many cases, even simply allowing the affected parties to voice their concerns with the mediator’s guidance can lead to a greater understanding of the opposing side’s views and feelings. In addition, naming and identifying the deeper-seated root causes of a conflict often points to ways that the parties could consciously avoid or handle the problematic relationship in the future, for example by agreeing to change the processes by which information is shared or matters are coordinated, making changes in responsibilities, involving external persons of trust, and so on.

  1. Determining and evaluating the alternatives in case an amicable resolution is not reached

Before beginning to look for approaches to achieve an amicable resolution, it is advisable to openly discuss all of the conceivable scenarios in which an amicable resolution is not reached as a group and evaluate their effects on the interested parties. It is certainly a good idea – and a matter of course before reaching an amicable settlement – to identify, assess, and weigh the prospects and risks associated with continuing the conflict.

Although this sounds like it goes without saying, there are nonetheless many parties who do not go through a clearly structured process of weighing these factors. Holding open discussions to assess the various alternatives for reaching or not reaching an amicable resolution means that in factual terms, part of the process of weighing the various factors takes place in the presence of the opposing party, and most of all, in the presence of the mediator. That means the mediator can more readily influence the evaluation of the alternatives and the process of weighing the options than if these consultations were to take place among the parties’ representatives themselves, confined to their own delegations, without the mediator taking part. In particular, the mediator can ensure that all interested parties have a clear sense of the scenarios in which an amicable resolution is not reached as they make their decisions.

During the discussion that follows within a negotiation delegation, there are often different assessments and perspectives, and different personalities also affect the process of forming an opinion. Holding an open discussion as a group beforehand may shift the dynamics within the delegation and enhance the members’ willingness to compromise, because the scenarios for what will happen if an agreement is not reached are probably clearer to them at that point than they usually are.

  1. Identifying possible solutions

The task in the next stage of the process is to identify as many conceivable approaches that can be taken to achieve an amicable resolution as possible. Aside from the obvious options, there are almost always less obvious ones, which are more likely to be found in joint brainstorming sessions. For all kinds of brainstorming, the main point is to elicit as many thoughts and ideas as possible, refraining for the time being from making any value judgments or ruling anything out. The mediator’s role is to ask the parties to the conflict to think about possible solutions from the other side’s perspective as well, regardless of their own situations. During this process, the interested parties should be urged to be as creative as possible so that no theoretically conceivable solutions are overlooked. In this regard, the mediator should act as a catalyst for the parties’ creativity. The mere fact that they are considering, at least in part, ways of arriving at an amicable agreement while taking the interests and needs of the other side into account fosters greater understanding for the opposing side’s concerns, whether they are purely financial in nature or involve communication challenges, financial problems, or something else. The important thing is to set down all of the possible solutions so that they can be referred to anytime later on.

  1. Assessing the possible solutions

After all of the conceivable approaches to achieving a resolution have been found, designated and set down, the next step is to identify the solution models that are realistic and merit discussion. In this situation, it is beneficial for all interested parties to have been involved in preparing the full overview of all possible approaches, so all sides are aware that resolving the conflict – if it is in fact possible to do so – will require them to select, adapt, and combine the various elements from this list.

The list of possible solutions will very likely include approaches in which the added value discussed above is created by giving something to one party that is more important to that party than conceding it costs the other. Special attention should be paid to seeking out these kinds of elements and including them in an overall concept. If at all possible, a good overall solution should address all of the matters involved in the conflict and, beyond that, all other connecting factors between the parties, since a full package solution makes it much easier to balance out points of contention with concessions or promises made elsewhere, thereby crafting an overall solution that is suitable for consensus and advantageous for all of the parties involved. This means that all levels and topics, whether factual or personal in nature, should be included in the package in order to arrive at a solution that appeals to all sides and establish a relationship that is as free of tension as possible for the future.

As part of this process of identifying a solution, it is occasionally a good idea to refer once again to the alternatives that have been identified in the event that no agreement is reached in order to maintain the parties’ interest in achieving an amicable resolution and ensure that they do not give up their efforts prematurely. Mediation negotiations often seem to have failed conclusively, but can then be started back up again successfully, for example if the parties take a break so they can resume the discussion with renewed energy and after reconsidering the alternatives that will apply if an agreement is not reached. In these kinds of situations, it is crucial for the mediator to retain firm control of the course of the hearing at all times, intervening in situations of escalating conflict or where a breakdown seems imminent and taking procedural measures to affect how the negotiations proceed. This is one reason that mediation involving a strong, experienced mediator has significantly better prospects of success than normal bilateral settlement negotiations.

II. A generator of limitless agreement?

That brings us to the question of what limits the mediator needs to observe. The goal of this section is to shed some light on the borderline issues that typically come up. In general, of course, any mediator who works close to the limits of his or her actual role makes himself or herself more vulnerable to attack, so one side or the other might assert that the mediator’s neutrality has been lost – with the result that the mediator should recuse himself or herself immediately. However, the mediator can guard against this risk to a certain extent by coordinating any activities that could leave him or her open to attack with all of the parties to the conflict in advance and engaging in these activities only if all parties have agreed. For the typical activities in question (such as individual discussions with one of the parties to the conflict), this can already be set out in general terms in the mediation agreement (agreement between the parties to implement mediation) or the mediator agreement (agreement between the parties and the mediator on various points, particularly describing the engagement, compensation, liability and possibly also the nature and limits of implementation).

  1. Clarification of facts by the mediator?

Can and should a mediator make himself or herself available to clarify disputed facts (e.g. by examining witnesses), and is the mediator even allowed to do this? This kind of activity clearly does not fall within the scope of the mediator’s role. If the parties wish it, however, it is not prohibited; the parties’ autonomy in determining the course of the mediation allows it. After all, the parties have the option of withdrawing from the mediation process entirely at any time, and events that form part of the mediation process cannot be used in court proceedings concerning the dispute (Article 7 of Directive 2008/52/EC). However, it must be clear to the mediator in such a case that he or she is playing with fire. There are two reasons for this. First, examining witnesses, for example, would pose an elevated risk that one of the parties could allege that the specific nature of the questioning constitutes the mediator’s taking sides; and second, it is questionable whether clarifying factual issues (or supposedly clarifying them, at any rate, as they often remain disputed even afterward) would truly improve the prospects of reaching an amicable agreement or would actually tend to worsen them instead. After all, uncertainty on certain issues – regardless of the nature thereof, and wherever possible, regarding as many open issues as possible – can be viewed as building blocks for an amicable resolution. It is therefore recommended that mediators not be available to clarify the facts of the matter as a basic principle. At most, the mediator should only state that he or she is willing to do this if there is pressure to do so from all of the parties to the conflict, and only if it is extremely unlikely that an agreement would be reached otherwise.

  1. Assessment of factual, legal, evidentiary questions?

In principle, the mediator should refrain from expressing any opinions of his or her own on these kinds of questions that are relevant to the conflict, but instead should view the mediator’s role as lying solely in pointing out which questions should be viewed as open and without a certain final answer. Uncertainty in questions of all kinds, especially those concerning the facts of the matter, witness statements, matters of credibility, expert opinions, legal questions, and issues of solvency is a particular reason why it is possible to achieve solutions through agreement and compromise, and why these solutions should in fact logically be achieved in most cases. The mediator must resist any temptation to assume the role of deciding the matter or permitting others to place him or her in such a role; in principle, this applies even if all parties turn to the mediator with this in mind. Before acceding to such a request, the mediator would have to be firmly convinced that the mediation is unlikely to succeed otherwise.

  1. Individual discussions?

Individual discussions should be an option, and for the sake of clarity, specific rules on this point should be set down in the mediation agreement or the agreement with the mediator. If one party suspects that a mediator would act unfairly during an individual discussion, that party would be best advised to reject the mediator immediately.

Without violating his or her obligations in any way, a mediator can address the risks that arise for one party in a conflict better and with greater emphasis if the mediator is meeting one on one with that party. This kind of treatment could be viewed – possibly even correctly – as a violation of the obligation of neutrality if it occurred in a discussion attended by all parties. If the parties accept their mediator, they will assume that he or she applies the same standards on both sides. Naturally, the mediator must live up to these expectations and cannot allow himself or herself to be made into a tool for one side.

  1. Suggestions for reaching an agreement?

These kinds of suggestions should exist – but only as a last resort. There is no doubt whatsoever that one of a mediator’s main tasks is to be creative in seeking out potential approaches to take in order to reach an agreement and introduce any approaches not identified or designated by the parties themselves into the discussion on a hypothetical basis. However, the mediator should fundamentally interpret his or her role as being merely that of a catalyst for the parties to reach an agreement between them, and not, like an arbitrator, making a suggestion that he or she perceives to be fair as an intermediary. As a precaution, it is a good idea to insert a provision in the mediation agreement and/or the agreement with the mediator stating that the mediator is entitled to make suggestions regarding possible agreement between the parties at his or her own discretion, but the mediator should not exercise this right except if all parties specifically wish it and if the mediator believes that in all likelihood, the parties would not reach an agreement otherwise.

III. Outlook

It appears that there is so far no widespread practice in Europe of using mediation to settle conflicts in economic matters. In the interests of the overloaded justice system and with an eye to settling conflicts faster and at lower cost and conserving resources in general, and in the fundamental interest of dealing with one another in a spirit of cooperation, this should be changed for the good of all.



Mediation – Practical Guidelines, Part 1: Basic principles and preparing for the mediation hearing

Mediation is a subject of much discussion, spurred by the legislative initiative at the EU level (Directive 08/52/EC) and the transposition thereof by national laws. There are now also a number of different ways to obtain training as a mediator.

But has mediation also made significant gains in terms of its importance in practice, outside the fields of law where it is traditionally employed (such as family law)? There is reason for doubt.

Why has mediation evidently not yet achieved the prominence in practice that it should be accorded in the interests of all concerned?

Successful mediation is not based on complex academic theory. Instead, it requires three things above all:

  • logistical preparations for the mediation that are appropriate to the case, including appropriate preparation of the subject matter of the conflict;
  • the specific craft of the mediator in conducting the discussion and leading the procedure; and, most important of all,
  • an experienced figure who has the qualities required of a mediator: integrity, natural authority, engagement, determination, and creativity.

I.  Methodology: strictness versus variety

Article 3 of Directive 08/52/EC places the term “mediation” in quotation marks and defines it as any kind of voluntary attempt to resolve a dispute, “however named or referred to.” It is already apparent from this that there cannot be a strict methodology for mediation, but rather that the manner in which the attempt to reach a resolution is made is subject to the autonomy of the interested parties. Still, certain mediation principles have taken hold in doctrine and practice (especially the “Harvard concept”), so in simplified terms, the mediation process can be broken down into the following rough phases:

  • Preparing for the mediation, including setting down rules of procedure, logistics, etc.
  • “Opening” the mediation hearing, with an introduction to the basic principles and features of the mediation procedure, the facts of the matter, and the status of the dispute; under some circumstances, an informal meeting may be held ahead of time.
  • Jointly working out all subjects in dispute from a factual and legal standpoint and otherwise.
  • Jointly working out and identifying the actual underlying interests and needs of the parties to the conflict and their relative importance and significance to the respective parties.
  • Jointly working out, in creative form, all theoretically conceivable approaches that might be taken to achieve a resolution, initially without evaluating or assessing them at the same time.
  • Jointly working out all theoretically conceivable scenarios in which an amicable resolution is not reached, initially without evaluating or assessing them.
  • Evaluating and comparing all of the identified scenarios in which an amicable resolution is not reached on the one hand and all possible approaches for reaching an amicable resolution on the other.
  • Working toward realistic models of achieving an amicable resolution.

This methodological approach is just one of many, and it affords as much leeway as desired for specific emphases appropriate to the individual case. In principle, mediation can be used to address any kind of difference of opinion; only non-waivable law (i.e. questions of status) sets boundaries for whether a conflict can undergo mediation.

This paper cannot possibly address all of the challenges that can arise during mediation, nor is it intended to do so. Instead, it will focus on a few important aspects.

II. The “who, where, how” of a mediation hearing

Mediation’s eventual success or failure is determined to a large extent early on, during the planning and conceptualization of the mediation procedure.

Who is the most important point for the mediation procedure—that is, determining the size and composition of the parties’ representation. What are the crucial criteria when it comes to the question of who should participate as the parties’ representatives?

  • Under no circumstances should there be too many people involved. The most reasonable number is between one and five per side. The delegations should be at least roughly the same size.
  • There must be sufficient knowledge of the matter represented on all sides in the delegation, or this knowledge must be available to the delegation on short notice.
  • There must be persons with adequate decision-making authority at the table. The level of the hierarchy above the one where the case is being handled and, if at all possible, decision makers from outside the legal department should also be represented. The main decision makers should be able to view each other as equals in terms of the corporate hierarchy, so they can talk to each other as equals as well.

Only if these conditions are met does the mediation have optimum prospects of success. A certain amount of distance from the matter itself and not having had too much prior involvement greatly enhance the parties’ objectivity in assessing their own prospects and risks. On the other hand, it is also necessary to ensure that the representatives are familiar with all matters and aspects that are favorable to their party and can bring them into the proceedings so that they do not agree to a solution that unreasonably disadvantages their party for lack of awareness of these points.

It should be pointed out that decision makers from outside legal departments often display a more pragmatic, more realistic view, basing their assessment on whether a potential approach to achieve a solution seems appropriate and reasonable on the whole rather than following a particular—and chiefly legal—analysis.

Each party should have as many representatives in the mediation procedure as necessary, but as few as possible, as the development of a relationship of mutual trust between those who are conducting the negotiations for the opposing sides (and, of course, between the parties’ representatives and the mediator) is critically important to the success of mediation. Without a certain level of mutual trust, it is much more difficult to talk about ways to bring the parties’ positions together or bring up possible scenarios to resolve the matter. This means that the mediator must keep these circumstances—along with interpersonal compatibility—in mind early on in the process, during the considerations regarding the determination of the parties’ representatives. It is easier to foster and build trust between a modest number of representatives of the parties than if there is a large delegation on each side. And it is not uncommon—in fact, it is quite typical—for final talks between just two or three persons to be necessary in order to overcome the last obstacles to achieving an agreement.

The mediator also needs to take great care with the aspects of where and how early on, reviewing where, in what physical setting, and on what schedule the mediation is to take place. Depending on the nature and subject matter of the dispute, a wide range of different concepts may be appropriate and promising in this regard. These outward circumstances must be appropriate to the complexity of the matter, the economic or other importance of the case, and the persons involved. Only if the critical persons on all sides view these conditions as being appropriate and comfortable is it possible to create a discussion atmosphere that permits and even fosters the building of trust between the relevant decision makers in a relatively short time—and without that, the prospects of successful mediation are poor.

Not every conflict justifies spending several days in negotiations in an exclusive, isolated location—but for complex, highly important conflicts, this kind of setting often gives rise to the best prospects of success. In other cases, the prospects of success may be greatest if it is possible to bring the final decision makers on both sides together in person, even if only for three hours at an airport hotel.

No two cases are alike. And yet, one common thread is that the participants should already perceive even the general framework of the mediation as representing more than just the logistical details of a business meeting. Deciding that one is willing to engage in a cooperative mediation procedure marks the first step toward achieving an amicable agreement; this is exactly where the mediator needs to meet the parties to the conflict and then bring them along by creating the framework for constructive talks in a spirit of mutual trust.

It is definitely possible, especially in large organizations and in the case of large-scale procedures, that not all of the parties’ representatives will feel that pursuing mediation is the right approach. They may interpret a push to achieve an amicable resolution as criticism of their management of the conflict so far, or, in the case of large-scale matters, they may even see an agreement as jeopardizing the main thing they have been working on (possibly for years), their “raison d’être,” or even their economic livelihood. This makes it all the more important for the mediator to strive to keep up the momentum formed by the decision to attempt mediation and try to bring all delegation members fully on board for the procedure.

In principle, therefore, mediation starts with a positive initial situation. Immediately launching directly into the process of working on the issues without allowing the persons involved to get a feel for one another beforehand should be avoided. If at all possible, the parties’ representatives should get to know one another first, without direct reference to the conflict. In this way, initial personal impressions are formed during discussion of general topics, not later on, during the discussion of the conflict, which is naturally contentious. Ideally, even the very first round of discussion of the facts of the matter will be less contentious on both sides if this is done, with a greater sense of partnership. Throughout the mediation hearing, one of the mediator’s key tasks is to remind all of the parties’ representatives to communicate in line with the cooperative principle behind mediation while putting a stop to any emerging signs of aggressive communication behavior in order to avoid jeopardizing the mutual trust that has been built—or to be able to establish that trust in the first place.

Setting down the details of who, where, and how in a mediation agreement may be a good idea, but it is not critically important. Rather it is important that a shared understanding on these points does exist or, even better, for them to be left up to the mediator.

Part 2 of these guidelines will address preparing for the conflict before the mediation hearing and the specifics of conducting the hearing as such.