Before Diving into Arbitration, Conflict Management Needs to Become Part of every Business Strategy

AM Editorial Team

The International Chamber of Commerce (ICC) released a guide on “Effective Conflict Management” in July 2023. The guide emphasizes the need for companies to have internal policies and processes that promote successful and efficient resolution of disputes. The ICC recommends that companies shift their focus from “dispute resolution” to “conflict management” and take a proactive approach to identify and address potential conflicts before they escalate.

To implement this shift, the ICC recommends assessing the whole range of alternative dispute resolution (ADR) mechanisms, such as mediation, disputes boards, and arbitration, and viewing them as commercial tools that support successful business administration. Companies should also create an internal structure that manages conflicts proactively. As part of this structure, the ICC suggests appointing an “ADR Champion” or “conflict manager” as an in-house role focused on the development and deployment of proactive dispute tools and ADR services.

The conflict manager would act as an intermediary between operational teams, company management, in-house legal departments, and external legal advisors. The role includes carrying out an early risk assessment to identify the risks of commencing formal dispute resolution proceedings and how those risks might be mitigated or eliminated. The assessment covers various considerations, including the strengths and weaknesses of both parties’ legal arguments, the impact of the dispute on the wider commercial strategy of the company, the financial impact of the dispute, risks associated with diverting internal resources, potential harm to a continuing or future business relationship, regional or global reputational impact, and interest in setting a precedent.

The emergence and development of the conflict manager role might evolve similarly to that of compliance officers. Disputes are a contingent reality for companies, and the key to good management is to combine a proactive approach with a practical reactive outlook focused on obtaining a favorable outcome. The conflict manager or ADR Champion might be the key to achieving these goals.