Mediation: The Orange Hypothesis

Mediation: The Orange Hypothesis

Mediation: The Orange Hypothesis

Thursday, 29 October 2009 15:34

China and Hong Kong have become a magnet for international business over the past couple of years. At the same time, this "boom" has produced an increase in the complexity and the number of disputes between businesses each year. In the past, it has been a company's first priority to jump straight into litigation or arbitration. However, due to the increase in court costs and lawyer's fees, as well as the possibility of a trial or conflict lasting a number of years, many companies are searching for an alternative to resolve their differences.

Recently, under the newly reformed Hong Kong civil procedure rules, which came into effect on 2 April 2009, an emphasis has been put on the use of alternative dispute resolution methods to settle or resolve disputes before they even consider going to court. One of the most popular methods world-wide, mediation, has been touted as the best way to resolve conflicts. In fact, many consider mediation the first step of resolving conflict.


One should recall the old adage of two little brothers fighting over an orange. The father steps in and gives two options. The first being a form of litigation or arbitration, where upon hearing the children's arguments, the father then cuts the orange in half and gives one half to each of the brothers. Both brothers leave dissatisfied and angry. The second option, the father acts as a neutral 3rd party mediator, who coaxes the brothers to learn that one brother only needs the peel to use in a recipe, while the other brother only wants the core to make juice with. Each brother then leaves satisfied with the end results.

The adage calls into fact the basics of mediation. Both parties in a dispute call in a neutral 3rd party who should bring in applicable expertise in the particular field of the dispute. The mediator is objective and instead of sitting in judgment, he facilitates a reasonable debate between the two parties and uses both parties' resources to help them resolve their dispute.

In the cases of big business, one cannot possibly lose when using mediation. The main reasons for this are the speedy settlements at usually low costs and the only costs for mediation are the costs to hire the mediator and acquiring a venue.

Mediation also offers settlements that cannot be obtained by court rulings. When settling in mediation, it's possible to create a new contract between the businesses and keep doing business together during the mediation process. Perhaps, including new terms and conditions of how the two parties will conduct operations with each other. The idea is that one must enter into mediation freely and voluntarily for it to work properly. They may not be happy campers, but they have to definitely want to settle.

Unlike a judge or arbitrator, a mediator can help the parties restructure or reshape their agreements and help to preserve a profitable ongoing relationship between both parties.

In this economy, if a company wants to cut costs, save time and a relationship with another company, then they should first look to mediation rather than immediately turn to litigation.

Should you wish to know whether mediation is something that can assist you, please contact our Dispute Resolution Department.

This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.