Following a successful mediation in a case administered by SIMC, Ms Mayuri Khatu, Head of Legal at Tata International Ltd, reflects on the importance of mediation clauses in contracts. She suggests that a modern in-house legal team must look beyond managing risks to partner with business units on solutions to avoid litigation to the extent possible.
We are grateful to Ms Khatu for sharing her views.
“In my view, no company would encourage litigation unless it is inevitable.”
Mayuri Khatu, Head of Legal, Tata International Ltd
Catch up on the interview here or read the full transcript below:
Q: As an in-house counsel, tell us the story of how you became involved in mediation.
Mayuri Khatu (MK): I have always been associated with companies as in-house counsel and have seen management perceptions which more or less pro settlement or discouraging litigations. In my view, no company would encourage litigation unless it is inevitable. A company will certainly have a list of cases filed by and against company. But they predominantly will be happy to find solutions and reduce net value at risk. And therefore, out-of-court settlements without much of compromising company’s interests, but considering time and cost are always welcome, in my view.
Q: What does a successful in-house legal team look like in today’s context?
MK: The role of a legal department is no longer limited to managing legal risks associated with the business. But now, they work around them. Now effective legal teams now need to partner with businesses, understand their issues, and really are expected to provide viable or tangible solutions, and also be vigilant to avoid litigation to the extent possible.
Our standard clauses on dispute resolutions are sacrosanct. And subsequently with the amendment to SIAC rules, with the introduction of Arb-Med-Arb clauses, they have now become a part of our standard templates. So that is how mediation is coming into picture now.
Wee Meng (WM): Thank you. So let me just elaborate a little bit on that. When you talk about the Arb-Med-Arb clause, what we are saying is that when the parties have a dispute, they first bring the matter to arbitration. And after the matter is admitted by SIAC and the panel is constituted, the matter automatically comes to SIMC for mediation within a period of eight weeks. If it is settled – excellent; if it is not settled, it goes back to SIAC for arbitration. So it is a very smooth one-stop process, where you basically have the best of both worlds of both arbitration and mediation.
MK: Yes, that’s right.
Q: Tell us about one dispute faced by your corporation and how mediation helped to resolve that.
MK: Earlier we had this fantastic case somewhere in 2016, where arbitration was invoked against us. And it was pertaining to a coal purchase contract. The claimant was an energy and commodity seller based in UAE. And we were respondents in that. The dispute was about the quality of the cargo on parameters that are agreed. So there was a discrepancy between the terms agreed during business confirmation, and those appearing in the signed contract that was drafted by the seller. And then we rejected the cargo. And of course, that is where the seller went into the dispute and invoked arbitration. Let me tell you the speed at which proceedings were handled was really commendable. I mean, we received this arbitration and location notice in December 2016. Then subsequently, the parties agreed to mediate somewhere in April, middle of April 2017. And by 19 June 2017, the mediated settlement agreement was reached, signed, done and dusted.
Q: What would you say to corporates that may still be unsure of mediation for their dispute?
MK: I would rather see mediation as a win-win situation, because what happens is that there is one party who is aggrieved and the other party who has to defend the case. So when a party goes into mediation, and when the matter goes into mediation, time is given to both of them to prove their own sides. And the mediation helps in solving the dispute in a faster way. As you have seen, in our case, we could get the final reward, final award, in two months time. So that saves your time. And of course, the same effect is on cost because the number of hearings or whatever are lesser. So cost- and time-saving really gives peace to the management and everybody’s happy at the end because mediation is something which is not forced.
Both parties have to agree so it is a consensus or conscious decision taken by both the parties to part away with the extent that they agree in the mediation process. And that’s why I really see that there are all plus aspects to agreeing to the mediation process. So yes, low-cost solution and the flexibility, cultural understanding and also proximity. So all these benefits are certainly coming out of mediation.
This interview was first launched at the inaugural UNCITRAL Academy 2021 Industry Capacity-Building Workshop on 7 September 2021 organised by UNCITRAL and the Singapore Ministry of Law, and supported by SIMC.