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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
Five E and JLH
Colin J Wall
General Information
Jauja Luxury Hotels (“JLH”) owns 36 hotels throughout Latin America and its headquarters are in the Republic of Colombia. It is a publicly listed company and three years ago at its Annual General Meeting, a group of influential shareholders demanded that the management should do more for the environment. Accordingly, JLH’s management implemented a series of measures aimed at being more environmentally friendly. These measures included an immediate change to the hotel chain’s existing policy on reusing towels and bedding and a greater use of recycling. In addition, JLH wanted to study the longer-term economics of investing in energy-saving strategies, particularly across the less energy-efficient older hotels, which form about 50% of the hotel chain. JLH’s management decided to start the energy-saving strategy with their flagship hotel, the Queen Katherine Hotel in the Republic of Clovis Chico. The Queen Katherine Hotel was originally built in the 1920s and had been refurbished twice but was still very inefficient in terms of energy consumption.
JLH entered into a contract with Eduardo’s Energy Efficient Engineering Enterprises s.r.l. (“Five E”), based in Madrid, Spain. Five E is a consulting and engineering company that specializes in devising and implementing energy-saving measures in existing buildings. Prior to entering into a contract with JLH, all of Five E’s work had been carried out in office buildings, shopping complexes and transport interchanges. The contract between the parties is in two parts, the first being the consultancy service, which includes carrying out a detailed survey of the existing energy consumption patterns in the Queen Katherine Hotel and devising comprehensive energy-saving strategies in an energy-saving plan (“ESP”). The second part of the contract is the implementation of the ESP.
Unlike work previously carried out by Five E, in office buildings, shopping centres and transport interchanges, which could generally be carried out at night when the facilities were closed, it was decided that the work included in the ESP had to be carried out in phases and at certain times only in order to avoid noise and disruption to the normal workings of the hotel. Five E produced a detailed overall programme for implementing the ESP. JLH appointed Mr Santos, the general manager of the Queen Katherine Hotel, to act as its project manager for the contract and to direct day-to-day activities to suit the hotel’s operational requirements. This meant that sometimes work on implementing the ESP had to cease altogether. Five E sent a team of skilled technicians from Spain to implement the ESP.
The ESP included replacing all the light bulbs with low energy bulbs, getting the guest room key card to control the room lighting and air conditioning system, converting the hydraulic lifts in the loading bay to traction lifts, stripping out of the main passenger lifts a considerable quantity of marble and replacing it with a much lighter marquetry wood veneer (and reducing the size of the counterweights to suit), implementing a smart lift system for more efficient lift traffic management and installing energy-efficient devices, including variable frequency drives (“VFD”) to the two existing escalators leading from the hotel foyer to the Cockaigne Ballroom and Business Centre on the first floor. The escalators once fitted with the VFD move very slowly when no one is on them but change from energy-saving mode to full speed when the sensors recognize that someone has stepped on the landing platform. The escalators were designed to change from a speed of 0.15 to 0.6 metres per second, within a period of two seconds.
The original manufacturers of the escalators and lifts in the Queen Katherine Hotel had gone into liquidation about 10 years ago and because of this spare parts were difficult to find. So up until the time of Five E’s contract with JLH, several replacement parts had to be specially and individually manufactured by the Queen Katherine Hotel’s own in-house maintenance staff, so as to keep the escalators and lifts running. It was agreed therefore that Five E, as part of their contract for implementing the ESP, would not only carry out the physical alteration work, including the computer control systems to the lifts and escalators. They would also manufacture the necessary new parts and machinery to suit the existing lift and escalator installation and would provide, upon physical completion of the contract, a 10-year supply of spare parts for any new lift and escalator equipment installed by Five E.
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The contract between JLH and Five E comprises four different types of payment. There was an initial lump sum of US$8,500 for the consultancy service, a sum of US$375,000 for the implementation of the ESP (including supervision work, manufacture and purchase of equipment and testing and commissioning of the finished work), a lump sum of US$25,000 for the 10-year’s supply of spare parts and two incentivized lump-sum payments to be made respectively one and two years after physical completion of the full ESP. The amount of the lump-sum payments is dependent upon the energy saved in the first and second years of operation, when compared with the energy consumption before the implementation of the ESP. If the energy consumption calculations show a saving of 20% when compared to the original consumption, then Five E is entitled to 25% of the monies saved, if the energy saved figure reaches 35%, then Five E is entitled to 40% of the monies saved, and, finally, if the energy saved figure reaches 45% or more, then Five E is entitled to 50% of the monies saved.
All appeared to progress well with the ESP until just before the implementation work was completed, when there was an unfortunate incident. Marcos Messi, the famous celebrity chef, had created a wedding cake in the shape of the Eiffel Tower for the wedding reception of the mayor’s daughter, who was going on honeymoon to Paris. On the morning of the wedding, Mr Messi personally carried the cake through the lobby of the Queen Katherine Hotel and stepped onto the escalator to be transported to the Cockaigne Ballroom, where the wedding reception was to be held later that day, when he slipped backwards and dropped the cake. The cake was ruined. Mr Santos was called at once to the scene of the incident and did his best to calm down a distraught Mr Messi. Mr Santos, in turn, immediately called for Five E’s two Spanish technicians who were working in another part of the hotel to report to the hotel lobby as a matter of urgency.
What exactly happened on the escalator is the subject of conflicting evidence. The three hotel staff that witnessed the incident all said in their written statements to Mr Santos that as the escalator jerked into life Mr Messi was suddenly thrown backwards. Mr Messi was not physically hurt, though he was very shaken and upset. When Five E’s two technicians arrived on the scene, within about five minutes of the incident, both of them said that they could smell alcohol on Mr Messi’s breath. Mr Messi claimed in his subsequent written statement that he had been given a large brandy by the hotel staff, from the nearby lobby bar, after the incident to calm his nerves.
When the mayor was told about the incident, he was naturally distraught and said it had ruined his daughter’s wedding and demanded full compensation. In order to placate the mayor, Mr Santos agreed to waive the entire hotel bill for the wedding reception amounting to US$28,000, agreed to pay Mr Messi US$2,450, which was the cost of the ruined wedding cake, and sent Mr Messi a complimentary case of champagne worth US$550. JLH says that the prompt and decisive action by Mr Santos avoided any adverse publicity for the hotel and for Five E.
JLH regards this incident as caused by Five E’s negligent design and/or installation of the escalator’s VFD system and has subsequently claimed these costs, which total US$31,000 from Five E. Five E has expressed regret for the incident but said that they do not believe that they are responsible because Mr Messi did not take sufficient care when using the escalator. Five E says it is not to blame and there is certainly no question of it paying any compensation. Five E has said that from the size and weight of the cake and the dimensions of the cake base, it was obvious that Mr Messi was not holding the handrail and could probably not look down to see where he placed his feet as he stepped onto the escalator. Without any admission of liability Five E wrote to JLH and told them it would make adjustments to the VFD. Those adjustments were made so the escalators now run at an energy-saving speed of 0.25 metres per second, have a maximum speed of 0.5 metres per second and take 2.5 seconds to reach maximum speed.
As a gesture of goodwill, in order to settle the matter and on an entirely without prejudice basis, Five E offered to contribute US$1,500 to the monies JLH claim to have lost. The offer of US$1,500 comprises 50% of the combined cost of the ruined wedding cake and the case of champagne. JLH refused to accept that offer and has currently withheld US$31,000 from payments otherwise due to Five E out of the US$375,000 lump sum.
Five E finished all of the ESP work but said it would not deliver to JLH any spare parts until it received the outstanding payment of US$29,500 (US$31,000 withheld less US$1,500).
Ms González, Five E’s South American manager, and Mr Santos met in July 2010 and subsequently on three other occasions to try to settle the dispute by negotiation, but without success. In fact as a result of their negotiations the parties have moved further apart. Following the last round of negotiations they reached the following positions.
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Mr Santos maintains that:
Ms González maintains that:
Ms González and Mr Santos have reached an impasse and neither is prepared to give way. Fortunately, the lifts and escalators have worked perfectly and there has been no need for any spare parts at this time.
Two summers ago, the Huaynaputina volcano, in south Peru, which had been dormant since 1600, experienced a Plinian eruption. This sent a huge plume of ash into the upper atmosphere and led to a ban on flights throughout a large part of Latin America, including Clovis Chico. The flight ban lasted for approximately six weeks and had a devastating effect on the tourist trade and in particular led to low occupancy rates at the Queen Katherine Hotel and to the cancellation of several functions and international conferences.
Last summer, a year after the ESP work was completed, Five E did a calculation on the resultant energy savings and concluded that they had reached a saving of just over 45% and were entitled to 50% of the monies saved. This amounts to US$56,250. JLH has agreed that the energy calculations show a saving of just over 45% but say that this result was only achieved because of the low occupancy rates and cancelled functions caused by the flight ban, which, in turn, led to lower energy consumption. JLH has said that in normal circumstances and at the usual occupancy rates, the energy saved calculation would have reached about 38%, making the payment due to Five E at a rate of 40% of the monies saved. This amounts to US$35,000, giving a difference between the parties of US$21,250. Five E has argued that there is no force majeure, act of God or similar provision in the contract but just a simple formula to show how the lump sum payments are calculated. Five E has said that the risk of outside influences on energy consumption is something that JLH must absorb. JLH has, in response, said its offer of US$35,000 is fair as it reflects Five E’s real efforts but has refused to pay any money until Five E agrees to supply the spare parts. Five E thus now has a second dispute with JLF.
Ms González has said she can no longer deal with Mr Santos and the matter has been referred back to Madrid for them to seek resolution with JLH’s management based in Colombia. The parties have decided to try and resolve these disputes via mediation conducted under the ICC’s Mediation Rules.
Five E is the Requesting Party and will be represented by its CEO and external counsel. JLH is the Responding Party and will be represented by its Managing Director and its in-house counsel. Both parties have full settlement authority.
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Confidential Information for Five E
Requesting Party
You are the CEO of Five E and you have had extensive discussions with Ms González to obtain further information on what has become known within Five E as the “Messi cake incident” and you have personally interviewed the two Spanish technicians who were in the hotel at the time of the incident. While you have concerns that the escalator was arguably originally set to run too fast and accelerated too quickly (the original VFD settings were ideal for high-volume passenger traffic at transport interchanges), you also believe that the speed alone would not cause an accident. You are convinced that Mr Messi was either drunk or careless. There is no doubt in your view that he must have been holding the cake in both hands and could not see where he was putting his feet when he stepped on the escalator.
You are also convinced that Mr Santos waived all of the charges for the mayor’s daughter’s wedding reception simply as a means of gaining favour with the mayor and in the hope that Five E would end up paying the bill, so it would cost the hotel nothing. You see this as little more than Mr Santos paying the mayor a bribe, so as to ensure the hotel’s licences were renewed without delay or difficulty. If that is the way that business is done in this particular location, it is the hotel’s problem and Five E is certainly not going to pay for it. Although the survey and consultancy work proceeded smoothly, Mr Santos is apparently a difficult man and your technicians reported that he was constantly stopping the implementation of the ESP work, such as when there was an important guest in the hotel, rearranging working hours at short notice and generally complaining. As a result, your work was carried out inefficiently and has cost approximately US$40,000 more than the estimated figure of US$375,000. This is a loss you are currently prepared to absorb, as it was good experience working in a hotel and has raised Five E’s profile, but if you do not get a satisfactory settlement in the mediation, you would raise the inefficient working conditions as a counterclaim in any subsequent litigation. The prospect of litigation is not an attractive option. It would produce bad publicity, which you have avoided so far, require the use of technical experts and will have an unpredictable outcome. Mediation is a much better option.
You view the second dispute over the US$21,250 due to Five E in respect of the first-year incentive payment simply as a contrived argument designed by JLH to deny monies clearly due to Five E and yet another indication of JLH’s unethical business practices. JLH has not even paid the US$35,000 undoubtedly due for the first-year incentive payment, demanding release of the spare parts first. However, with the passage of time, you are not sure if JLH actually still wants the spare parts, as none have been required so far and you know that the hotel’s in-house maintenance staff have the experience and capability to make their own spares as needed. Perhaps they are now doing this already?
The spare parts have already been manufactured and are currently in your warehouse and are costing you storage charges, so you are keen to sell them to JLH if they still want them and provided you get paid for them and get most of the other disputed monies released. As the spare parts are specific to the Queen Katherine Hotel, they have no use elsewhere and could only be sold for scrap, so if necessary you could discount the US$25,000. Having discussed matters with your counsel, keeping the spare parts until you are paid the outstanding claims is the only leverage that you have over JLH and any mediated settlement agreement must reflect this.
These matters have been discussed with Five E’s Board of Directors who said that once these current disputes are resolved, it would be preferable if Five E had no further dealings with JLH. This means that you must also receive, as part of any mediated settlement, the monies due for the second-year incentivized lump sum payment. The calculations of energy saved for the second year will not be known until several months from now, but will probably be about US$35,000, as to your knowledge there have been no further volcanic eruptions or other external influences that JLH can use as an excuse to reduce your payment. However, if Five E is
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to be paid these monies five months early, you expect that JLH will want the second-year incentive payment to be discounted.
What has upset Five E’s management the most is the fact that your technicians have done a fantastic job at the Queen Katherine Hotel. As far as you are aware there were no complaints from the hotel guests during the ESP implementation works and the only complaints Five E received were from Mr Santos. An energy consumption saving of 45% (or even 38% based on JLH’s arguments) is excellent by anybody’s standards and something to be proud of. Five E has used the technical success of the Queen Katherine Hotel project to good advantage and is not only pre-qualified but is the preferred bidder on a European Government tender for a €20 million refurbishment contract, spread over numerous locations and lasting over three years. There is, however, a problem. In order to secure the European Government contract, you need from JLH written confirmation that the Queen Katherine Hotel project was free from accidents due to Five E’s fault (as all your other contracts to date have been) and that the saving of 45% in energy consumption is an accurate figure. It will be hard to get JLH to agree to provide these written confirmations if you are still in dispute.
As you do not trust JLH and believe that they engage in duplicitous behaviour, you recently instructed Ms González to purchase a few shares in JLH and thereby obtain an advance copy of its last year’s Annual Report. As you suspected, JLH’s Managing Director has reported to the shareholders that after implementation of energy-saving strategies at the Queen Katherine Hotel there are energy savings over 45%. However, JLH is saying to Five E that the real saving is only 38%. So, if JLH does not cooperate in the mediation and provide the written confirmations, you will threaten to expose this behaviour by asking Ms González to raise this matter at the JLH Annual General Meeting to be held next month. Such disclosure will make JLH’s Managing Director look like a liar as far as the group of environmentally influential shareholders is concerned. That said, if you get the written confirmation that the contract with JLH was free of accidents due to Five E, you could use the figure of 45% in JLH’s Annual Report as indirect evidence of the energy saved figure to satisfy the European Government contract requirements.
In summary, you:
The monetary amounts total US$147,250 but in order to get a deal in the mediation you are willing to settle for anywhere between US$130,000 and US$115,000, including selling the spare parts to JLH, but only if you get written confirmation from JLH that the Queen Katherine Hotel was completed without an accident due to Five E’s fault.
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Confidential Information for JLH
Responding Party
You are the Managing Director of JLH and together with your in-house counsel you will represent JLH in the mediation. In preparation for the mediation, you have travelled from JLH’s head office in Colombia to visit the Queen Katherine Hotel, where among others you have interviewed Mr Santos.
You are very impressed at the changes that have been made in the hotel by the implementation of the ESP. It has been a huge success and according to Mr Santos the implementation work was carried out without complaints from the hotel guests. Mr Santos puts this achievement down to the cooperative attitude of Five E’s technicians and his own project management skills. Apparently, Mr Santos stopped work altogether on many occasions, so as not to disrupt the operations of the hotel. The savings in energy costs are quite spectacular too, especially when compared with the capital investment in the project. Such are the energy savings that it will only take a few years for the capital costs to be recouped. This means that similar energy-saving measures to those implemented at the Queen Katherine Hotel can be implemented across the remainder of JLH’s older hotels.
You have recorded the success of the Queen Katherine Hotel project in your report of the company’s activities in last year’s Annual Report and stated that there are savings of 45% in energy consumption at the Queen Katherine Hotel as a result of the changes that management implemented. That should please the shareholders demanding that you do more for the environment. It is a pity that such a technically successful contract should end up in dispute but at least this is going to be resolved by confidential mediation.
Having discussed the disputes with your in-house counsel, you are optimistic that you can settle the matters with Five E in mediation as you are sure that they will be interested in compromising some of their claims in return for carrying out further work for JLH on the other older hotels owned by the company. It is also important that when you report to the shareholders in person at the Annual General Meeting in a few weeks, you can give them firm proposals on the programme for carrying out energy-saving work on the remaining older hotels. As you wish to implement the programme quickly, across several hotels at the same time, you would prefer Five E just to act as consultants and only to carry out the survey work and produce the detailed energy-saving recommendations. One possibility is that Mr Santos with the assistance of the various hotel managers could then supervise the implementation work, which could be done at a much cheaper cost by using local contractors and technicians.
You have interviewed two of the hotel staff members who witnessed Mr Messi’s fall and they told you that although it is correct that Mr Messi was given a large brandy to help him overcome the shock after the cake was dropped and ruined, it was obvious to them that Mr Messi had already been drinking alcohol. The staff members did not see the actual moment when Mr Messi stepped on the escalator and only looked up when they heard Mr Messi scream in panic and watched in horror as the cake first wobbled and then crashed to the lobby floor. The third staff member who signed a statement as a witness to the accident has now left the employment of the hotel. Mr Santos did not of course see the incident first-hand but felt it prudent to get hotel staff to put the blame on Five E by submitting “helpful” written statements. That was done in case Mr Messi decided to bring legal action against the hotel, so that the hotel in turn could blame Five E. Fortunately, Mr Messi did not sue and was content with receiving full payment for the ruined cake and a case of champagne.
You have questioned Mr Santos as to why he waived the whole of the wedding reception bill rather than offering a discount on the bill, free rooms or something similar, as would be standard JLH policy. Mr Santos has told you that the mayor was very angry indeed and he feared that if he did not waive the bill in full, there would be serious consequences and the major could make life difficult for the hotel when it came to the time to renew the various licences. Mr Santos added as an aside that he had been at school with the mayor’s daughter and encouraged her to
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have her wedding reception in the Queen Katherine Hotel, so he felt a high degree of personal responsibility when the day was ruined because of the wedding cake incident. Furthermore, Mr Santos has attempted to justify his action by saying that the mayor calmed down quickly, there has been no adverse publicity and the licences were renewed without any difficulties. Both you and your in-house counsel think that Mr Santos over-reacted and appreciate that Five E cannot be expected to pay all these costs, as they do not directly arise from Mr Messi’s fall, but given the large sum of money involved some contribution would be very useful. While the value of the bill to the mayor was US$28,000, the actual cost to the hotel was only US$19,000, as the remainder was the hotel’s mark-up and profit.
You have concluded that the escalator was almost certainly set to run and to accelerate too fast and that Five E should accept some responsibility for this and make a contribution to the costs incurred — considerably more than the token US$1,500 originally offered. You think a 50:50 split of the total loss would not be unreasonable. That would amount to US$11,000 (half of US$19,000 + US$2,450 + US$550).
In respect of the second dispute, relating to the first-year incentive payment, your in-house counsel has advised you that it would be difficult to justify the claim for a lower monetary figure when you have openly used the figure of a 45% energy saving in your Annual Report and this could become publicly available. So, if the matter went to court this would prove to be useful evidence to assist Five E’s claim. You may therefore have to pay most of what Five E is demanding, even though the monetary saving was not achieved by its work alone but by outside influences. Perhaps Five E could be persuaded to split the monetary difference in some way? Counsel has advised that the contract with Five E will also need to be clarified so that a similar problem does not arise with the second-year incentive payment, due in several months, although so far occupancy rates are normal and there have been no outside influences that would affect matters.
Five E has done such a high-quality job that so far no spare parts have been needed but it is only a matter of time before they will be required and it is vital that the hotel gets these spare parts as soon as possible. The two staff members of the in-house maintenance department who used to make the spare parts have now left the hotel, so there is no one left within the hotel with the necessary skill and experience to make those spare parts now. This means that the hotel is reliant on Five E. That was why Mr Santos refused to pay the undisputed US$35,000 so as to put added pressure on Five E to supply the spare parts as soon as possible. You do not even know if Five E has manufactured the spare parts yet and worry there could be a delay before they could be made available.
JLH has currently withheld US$31,000 and US$56,250 (and has still to pay US$25,000 for the spare parts) and you consider Five E should make a contribution of US$11,000 in respect of the losses arising from the first dispute and offer a discount of about US$10,000 in respect of the first-year incentive payment. You can therefore offer to pay around US$66,250 in respect of the claims, together with US$25,000 for the spare parts, making a total of US$91,250.
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Case Analysis
This is an involved and complex role-play, which reflects not just one but two different disputes. It was used in the preliminary rounds of the ICC International Commercial Mediation Competition in 2012 and won the best preliminary round role-play award. It was written in honour of Ms Katherine González, whose brainchild it was in 2005 for ICC to host an international mediation competition.
The disputes are complex and, as often happens in direct negotiations in conflict situations, those more intimately involved have reached an impasse and developed an intense dislike of each other. In this case the dislike and distrust are such that the negotiation has caused the parties to move further apart and Ms González can no longer deal with Mr Santos, who is not living up to his name! In these circumstances it is sensible for a mediator to use telephone or video conference calls or, if possible, separate preliminary meetings to ensure those who attend the mediation with settlement authority can be as dispassionate as possible. In this case, the company representatives with settlement authority for each party have thoroughly prepared for the mediation by interviewing those concerned with the first of the disputes relating to the cake incident. The second dispute, concerning the contingency payments, is more legalistic and resolution is not affected by conflicting evidence but more dependent on the respective lawyers’ advice. Here as usual there is a level of uncertainty as to whose legal argument would prevail, should the matter be subjected to some form of adjudication.
The thorough preparation means that each party has a clear understanding of what it must achieve in the mediation and the fact pattern is such that each party needs each other’s cooperation to help to meet wider business objectives. Five E needs JLH to confirm that the Queen Katherine contract was accident-free and preferably also that energy savings were made. JLH needs Five E to assist it in its future energy-saving programme across its older hotels. However, as Five E has made a substantial loss of US$40,000 in the implementation phase of the ESP, due to Mr. Santos’s overzealous wish not to disturb guests, it is not keen to continue the same relationship with JLH on further contracts. Fortunately, JLH also wishes to change the contractual arrangements, so that the production of the ESP is carried out by Five E, but the implementation work is carried out by local and cheaper contractors.
It is sensible for the parties not to get stuck in an exchange of who did what to whom, especially in the case of the first dispute, with disputed facts and the suspicion that Mr Santos had ulterior motives. If the mediator neutrally and mutually frames the parties’ objectives after hearing their opening statements, this should steer them towards a focus on how to achieve their business objectives and help the other party to achieve its own interests too. These interests are currently unknown, based on the General Information for this role-play, so using the mediator to effect an exchange of confidential information is of paramount importance. Due to the sensitive nature of some of the information, it might be best to explore some matters in caucus, before a direct exchange takes place in the plenary session.
Each of the parties has full settlement authority, but Five E’s CEO is restricted by what s/he can do given the decision of Five E’s Board of Directors on future contracts with JLH. The authorized financial settlement figures of each party leave a small gap of a few thousand US$, but this gap can be closed by considering each party’s wider business interests and so creative solutions are possible.
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Greg Bond
Commentary for Training
It Wasn’t Us — It Was a Volcano
This case tells a very rich story with a number of issues to manage. Here, the mediator can be encouraged to do some thorough agenda setting at the outset. What do the parties need to talk about? What do they need to make decisions about? All sorts of issues will come up, from the accident at the mayor’s daughter’s wedding, to the actual energy savings made due to refurbishment and their confirmation in writing, to the sale and provision of spare parts, to the question of the quality of Five E’s work on the Queen Catherine Hotel, to detailed financial claims each party is making. Naming the issues before discussing them is a standard mediation procedure that makes a lot of sense here. The mediator can be encouraged by the trainer to keep control of the mediation process and take plenty of time collecting and visualizing the issues, and then understanding them, before moving to discussion on interests or even options.
The case also contains a good degree of humour. Although it was not funny at the time, and the dispute that has arisen is not very funny either, the idea of the celebrity chef slipping and seeing the wedding cake fall to the ground, and then having to be calmed with drink, is the stuff of slapstick film and theatre. Is there a chance here for both parties to see the funny side? There would be common ground in seeing what triggered this whole dispute as something laughable. Blaming it on the unfortunate chef and the irate mayor, and then together showing some pity for them, would channel the emotions in the right direction. There is a good place for humour in mediation when it is authentic. If the mediator sees an opportunity in humour to get things on the right track, he or she should take it. A mediator should be sensitive to brief moments of mutual understanding and make sure that the most is made of them.
If the mayor is a third party who has contributed to the dispute, the same can be said of the volcanic eruption of Huaynaputina. The chef’s and the mayor’s flared-up emotions and the hotel manager’s over-reaction are akin to the volcanic ash that disrupted the holiday season. Both were matters beyond the parties’ control that have led to them being in dispute. Surely, here too, the mediator has a good chance to frame this as an externally caused problem they share and not one that either party has willingly caused. This could be an opportunity to move to collaborative problem solving — “blame” the others, and see our problem as a shared problem we can set about solving together. There are certainly enough common interests for this to work. The agenda may then be expanded to include the future interests that mean that the parties need each other’s cooperation — Five E needs JLH’s cooperation to be able to gain European contracts, and JLH needs Five E’s continuing cooperation on spare parts, for example.
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