Dr. Martin Svatos: Resolution of Business Interests in the 21st Century

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On March 7, the Guarini Institute for Public Affairs invited Dr. Martin Svatos to lecture on the “Resolution of Business Interests in the 21st Century,” alongside Institute adviser John Fanti.

Dr. Svatos discussed conflict-free business and the ways in which this could be achieved. He started off the lecture saying that it is not possible to have conflict-free business interests. There will always be a conflict. But it is important to discuss ways to solve conflicts. Dr. Svatos talked about the differences between unsuccessful and successful approaches to conflict resolution by providing six methods: negotiation, facilitation, mediation, med-arb, arbitration, and litigation.

Before he went on to discuss the pros and shortcomings of each method, Dr. Svatos asked what the audience thought was the most commonly used method of resolving conflicts. Most answered arbitration and litigation. However, Dr. Svatos pointed out that negotiation and mediation are the two strategies that have the best outcomes and least negative effects.

In order to highlight the negative and positives of each strategy, Dr. Svatos presented a chart that was divided into four categories: costs, fairness, influence on relationship, and durability. Under costs, in order to negotiate and mediate to find a solution to a conflict, one needs to invest time and money. Under influence on relationship, most of the time negotiation and mediation make the relationship even stronger, so it has a very strong positive affect. However, negotiation and mediation may take time, hours, days, maybe even weeks in negotiation rooms.

Afterwards, Dr. Svatos showed how arbitration and litigation fit within these four categories. Arbitration may take months or even years, while litigation takes many years to come to a solution. More importantly, through litigation, the relationship is completely destroyed. In order to make the point that litigation is unsuccessful and mediation is the preferred strategy to use for conflict resolution, Dr. Svatos used an example that he called the Dr. Jekyll and Mr. Hyde scenario.

Two CEO’s of two shipbuilding companies (Jekyll Yachts inc. and Hyde Ocean Arrow ltd) were in conflict with Super Navigation ltd. Mr. Hyde and Dr. Jekyll handled the cases in completely different ways. Mr. Hyde initiated litigation, which was extremely problematic because the company he was litigating with was in a different country. Not only did Hyde not understand the language, but the litigation started in 2012 and still to this day, has not come to a resolution. Also, litigation is not confidential so the case was put in the media for the world to see.

Dr. Jekyll used mediation to solve the problem. The mediator basically helped the two parties communicate, so even if the company is international, it would not affect Dr. Jekyll’s company. Slowly, the conflict disappeared and the parties started to communicate. This was a positive outcome because it led to ongoing business interests, the problem was solved, and confidentiality was maintained.

In conclusion, Fanti gave important practical advice on how conflict resolution can easily be accomplished. He said that it should be written into the contract before the two parties start working together in order to make disputes easier to resolve. Conflict resolution in business interests is not something many people think about, but Dr. Svatos’s lecture showed that it is an extremely important subject and the ways in which conflicts are resolved can lead to very positive or negative affects depending on the strategy used to resolve the conflict.