Case 3: Catering

Under a contract to supply catering services, Company A (provider) provided Company B (beneficiary) with a number of X meals per day based on weekly orders communicated by the beneficiary during the activities carried out under a project co-financed by the European Commission three days a week for several weeks.

Company B did not fully comply with the obligation to pay the issued bills on time, although according to the contract it was required to pay for the services provided and received no later than 60 days from the issued invoice.

As a consequence, the communication between Company A and Company B degenerated and Company A initiated an action claim, requesting:

  1. Company B to pay the amount representing all services provided according to the contract of the catering services;
  2. Company B to pay a delay penalty according to the contract;
  3. Company B to pay the court costs (taxes and fees).

Company A mentioned in the action claim that Company B was ordered repeatedly to pay the outstanding amount, by various notices attached to the file, but Company B did not intend to comply with the requests, registering a considerable debt.

Company B stated that it had partially repaid the debts and would continue to pay for the missing amount. The company mentioned that the contractual relationship with Company A was good, that the delay of the payments was not intentional and would be done as soon as the Management Authority reimbursed the operating costs.

On recommendation of the court, both parties accepted to try to solve the dispute with Mediation.

In a first phase, the mediator read the documents of the case file submitted by the parties and then met separately with each party. During these meetings the parties were assisted by a lawyer/legal advisor and the status quo, substantive issues, strengths and weaknesses of the position adopted were discussed. Most importantly, the mediator changed the orientation of both sides to negotiation and identified alternatives to resolve the dispute based on points of convergence of their interests.

The first common session took place about two weeks after involving the mediator. Parties present at the meeting assisted. Due to personal animosities generated by breaking the communication, both parties were hostile towards each other, materializing in reticence and negativism. The mediator began the mediation session based on the discussion of the history of the conflict and the problems he identified.

In the beginning the most difficult challenge was getting the parties to interact and openly discuss possible ways of solving the problem, which attenuated the level of animosity and reopened channels of communication. After two hours though, the parties agreed to think about the issues and to meet again in a week.

During this week, the mediator discussed with both parties via the phone and monitored the development of the case.

At the second hearing, the parties had no legal assistance, as a sign that a certain degree of trust was rebuilt. Alternatives were discussed, factual data was presented and a solution was outlined. Company A representatives began to understand that they would receive the difference of money, spread over the next three months if they were to withdraw the request submitted to the court, receiving check guarantee file with monthly maturity. Also, it was agreed on by the parties that only half of the amount owed as penalties needed to be paid back,

At this stage, the mediator proposed drawing up a mediation agreement. Both parties still had a natural reticence and wanted to consult with their lawyers. Naturally, the mediator agreed and proposed a third meeting in order to present the parties with the draft of their mediation agreement, still allowing the parties to make some changes on which both mutually had to agree.

The parties agreed.

The mediator drew up the agreement. The agreement contained a number of definitions, a description of the conflict and the solution and the waivers that the parties had agreed on. To increase the efficiency, the mediator, with the parties' agreement, sent their lawyers the draft of the agreement for discussion in the third meeting.

In the third session, the parties were assisted by their lawyers. Based on the mediation agreement, the lawyers requested some changes. These were discussed and some proposed changes were accepted, the idea being that they would add value to the agreement while at the same time would protect both parties. Finally, the parties signed the mediation agreement. The dispute was off a few weeks later, at the time allowed by the court, the applicant recovered the court fees.

Conclusions

  • In fact, in real terms, none of the parties lost.
  • Mediation offered a concrete plan and simple rules in order to reach a result.
  • Mediation reopened communication channels.
  • Mediation created the necessary context to rebuild mutual trust, which ultimately led to an objective negotiation.
  • Mediation gave the parties the opportunity to reach an agreement which, not coming exclusively from only one party, was not denounced by their lawyers.
  • From investing into the mediator and until signing the mediation agreement, the entire procedure only took about six weeks.

Please note that the identities of the disputing individuals were altered, due to the confidentiality element Mediation carries.

Project Partners

  • Eurochambres, Brussels, Belgium (Project coordinator)
  • Brussels Enterprises, Commerce and Industry Belgium
  • Croatian Chamber of Economy
  • Cyprus Chamber of Commerce and Economy
  • Centre for Mediation and Arbitration of Paris, France
  • Handelskammer Hamburg Service GmbH, Germany
  • The Union of Italian Chambers of Commerce, Industry, Handicraft and Agriculture
  • Open University of Italian Chambers of Commerce
  • Latvian Chamber of Commerce and Industry
  • Iasi Chamber of Commerce and Industry, Romania
  • Barcelona Chamber of Commerce, Industry and Navigation, Spain