Like ‘change’, disputes are inevitable in any human setting and since humanity is yet to come up with ways to completely eradicate disputes, it is only advisable that effective dispute resolution mechanisms are fashioned out to resolve disputes in all spheres of human endeavour.
Alternative Dispute Resolution (ADR) is one of the ways of tackling disputes and can be simply explained as the resort to other means of resolving disputes other than litigation. These means include Negotiation, Mediation and Arbitration as the most common forms of ADR. These forms have also been acclaimed to be generally confidential, less formal and time saving compared to the known court room processes.
This piece is narrowed to why Mediation as a dispute resolution tool is the path to channel by Small and Medium Scale Enterprises (SMEs) when they are confronted with disputes without unduly spending or destroying their business relationships as may be the case in the adversarial litigation process.
As the name connotes, SMEs are business entities of small and medium capacities with respect to their human resource and production size. They comprise industries such as agriculture, manufacturing, commerce and services. SMEs have significant impact on economic growth and development as well as employment and income in economies across the globe. In Ghana, SMEs represent a greater part of businesses and are projected as the backbone of the Ghanaian economy. According to the report by the Strategic and Research Department of the GCB Bank limited, titled the SME Sector in Ghana Report, 2023, about 92% of companies registered are small and medium ones and that SMEs also provide about 85% of manufacturing employment and contribute about 70% to Ghana’s Gross domestic product (GDP).
Notwithstanding their great contribution to economies, SMEs are mostly faced with the challenge of limited access to legal and financial services amongst others. Thus, given the financial constraints that characterize the operation of SMEs, it would not be in the best interest of any SME to opt for litigation processes in the event of disputes. This is because litigation is acrimonious, costly, time consuming, involves cumbersome processes, characterized by undue delays and takes forever to end and as such should not be an option for any given SME.
Accordingly, SMEs must consciously initiate processes to ensure proper management of their scarce resources to protect their businesses and sustain business relationships for steady growth. SMEs must as a matter of priority be proactive in the manner disputes are resolved when they arise. It is against this background that Mediation as an ADR tool becomes an obvious choice for an SME in dispute resolution.
The appealing nature of Mediation as a dispute resolution mechanism for SMEs stems from the fact that Mediation gives the parties full control over the procedure and the outcome of that procedure unlike Arbitration which is relatively more formal and takes the decision making away from the parties.
Preserving confidentiality and established relationship is another feature of Mediation. Thus, mediation is the best option if SMEs are concerned about enhancing and preserving well established business relationships especially when they are guided by their business interests.
Mediation promotes cooperation and improves communication which enables the parties to carry out a dispassionate appraisal of the real issues in controversy and make concessions for amicable resolution within the shortest possible time. An impartial mediator is available to help the parties to communicate in effective ways that prevents emotions from getting in the way. This makes the Mediation process less acrimonious since parties communicate and mutually agree on the procedure to follow.
Mediation has proven to be an effective method of achieving mutually beneficial outcomes to both sides of a dispute, however, an unwillingness of one or both of the parties to cooperate can make the entire process a waste of time, effort and money;” Ghanaian businesses are encouraged to embrace Mediation as an effective dispute resolution procedure when confronted with business disputes.
SMEs are the backbone of many economies and key to any country’s recovery from any form of economic recession. A comprehensive approach is therefore required to ensure total economic recovery, and the approach should include directing SME businesses to cost effective and business appropriate method of resolving dispute.
REFERENCES
- GCB’s strategic and research department’s SMEs’ Sector in Ghana Report, 2023.
- https://www.wipo.int/amc/en/mediation/why-mediation.html
- https://www.worldbank.org/en/topic/smefinance
About the Author
Abigail Rama Williams is a Senior Associate at Corporate and Allied Attorneys, a dynamic law firm, providing cutting edge legal services in Ghana. She is very proficient in handling transactions in corporate and commercial business, undertaking legal due diligence in investment transactions, immovable property acquisition estate and succession, family law and litigation/dispute resolution.
