Implementation – Managing Conflict
20.4 Mechanisms of conflict resolution
In cases when the conflict can not be prevented, there are
commonly used mechanisms to resolve them. How conflicts are resolved
will have a significant impact on the success or failure of the
PPP. The ultimate goal is to resolve any difficulties quickly,
in privacy, without disruption in service to the end user and
in a manner that opens channels of communication and reduces
the potential for disputes further on in the life of the PPP.
There are many alternatives for conflict resolution. Deciding
on the type of dispute mechanism to use depends on a variety
of factors including:
- the nature of the dispute;
- the relationship between the two partners;
- the sensitivity of the issues involved; and
- the likely outcome and cost of litigation.
When these factors are considered, mediation and/or arbitration
are the most commonly chosen options.
Negotiation offers the best option and opportunity for peaceful
conflict-resolution. When properly managed, conflicts can
deepen relationships and strengthen the community, be it local
or global. The basic rules of dispute-resolution are deceptively
Play fair. Apply the golden rules and principles of equality,
justice and honesty. If one party keeps on moving the goal
posts and changing the rules of the game, the other party
will eventually cry “foul” and stop playing.
Listen attentively and
proactively. Try to understand each
other's assumptions, ideas and intentions.
Respect each other. Respect is the key to keeping the
dialogue going. Don't insult, don't lie and don't play
the "blaming" game.
Find the common ground. Focus on sameness and common
Be clear about the objective. When either party is vague
about its desired objective, it is difficult to reach
an agreement. Be willing to consider other alternatives
and be prepared to explore those various alternatives
in order to find a win-win solution.
Focus on facts. Separate facts from fiction and emotion.
Agree on the basic set of realities that are directly
relevant to the dispute.
Use reason. Settle differences through meaning-clarification,
problem-solving, mediation or third-party arbitration.
Simply do what is reasonable according to most rational,
Resist the temptation
to use force. When there is a
power differential, the stronger one may want to settle
the difference through force or threats of force. Be
careful about achieving an unjust victory through superior
might, because there are always negative side effects.
Accept and tolerate differences. It is alright for
a person to have deep convictions about his or her own
beliefs and values, but that does not give him or her
the right to attack those who hold different beliefs,
no matter how offensive their views might be.
Learn to co-exist. When there are irreconcilable differences,
then the only solution is to agree to (a) go separate
ways and (b) live apart in peace.
Forgive each other. Both parties have to let go of
past grievances and forgive each other in order to repair
Be prepared to compromise. There has to be some give
and take for both parties. It is possible for a person
to compromise without sacrificing his or her principles.
Mediation serves to satisfy the needs of the two disputing
partners, while at the same time preserving or strengthening
their future relationship. A mediator sits down with the
two partners and guides their discussion. The mediator is a
neutral third party, with no independent authority or ability
to impose a settlement – his or her role is not to make the
final decision, but to guide the partners to a mutually-agreed-upon
…a confidential problem-solving
process where the mediator assists
the participants to reach
settlement of their differences.
Mediation works best when the partners want to retain control
over the outcome of the conflict resolution process.
Arbitration differs significantly from mediation. While the
arbitrator is a neutral third party, the parties to the public-private
partnership both argue their side of the dispute in arbitration,
rather than working together to come to a solution, as is
the case in mediation. The arbitrator then renders a final
binding decision as to the solution to the dispute (unless
the partners have agreed otherwise beforehand).
In addition to saving time and money, the advantages of using
either of these methods include:
- confidentiality – discussions to remedy the dispute
are conducted in private, in front of a mediator or arbitrator,
not in a public courtroom;
- the business relationship, which might be lost in the acrimonious
environment of a courtroom, can be preserved;
- the dispute can be resolved privately and by using terms that
both partners have agreed to in advance;
- complicated facts can be considered by the parties to the dispute,
with the advice of outside experts from the field if necessary,
rather than a decision being made by a judge or jury composed of lay people;
- the distractions that can be caused among employees when litigation
is involved are minimised.
…a method of resolving disputes where
parties argue their
case (with or without
legal representation) and the arbitrator
renders a decision or award.
In order to resolve a problem, using either mediation
or arbitration, the partners should:
- create the right atmosphere – find neutral territory
where the problem can be discussed civilly;
- clarify perceptions – determine where each partner is
coming from (perception is often stronger
than the reality of the situation);
- focus on individual and shared needs;
- build shared power – find out what needs to be done
so that both partners ca work together rather
than working against each other;
- look to the future, but learn from the past by discussing
how they have solved problems in the past;
- generate options – brainstorm to find many options to
solving the problem;
- develop actual methods and tasks to solve the problem based
on the solutions that came
from the brainstorming session; and
- make mutual benefit
agreements to create the best solutions for both partners.
If using alternate dispute mechanisms fails, the then partners
have two options – take the dispute to court or agree to
exercise the “off ramps” in the contract and dissolve
Taking the case to court is the least preferred option – it
increases the acrimony; it turns the conflict into a situation
where the final outcome is a win-loss one; and pursuing legal action
can be a drain on time and resources.
Requirements for arbitration
procedures and judiciaries
Clear and fair arbitration procedures and independent judiciaries
provide institutional safeguards because they provide accountability,
and thus help make the contracting environment predictable
and credible. These institutions help establish and maintain
a high level of trust and co-operation between the public and
Certainty is increased for both parties when clear procedures
exist for dispute resolution through arbitration or, when
arbitration fails, through independent courts. The quality
of these institutions is critical in signalling the government’s
commitment to constraining the discretionary power of regulators.
Thus, independent judiciaries provide a fundamental backstop
to a country’s legal and regulatory system. An independent
judiciary with a reputation for fairness adds credibility
and transparency to the legal framework and thus gives comfort
Ideally, domestic judicial or arbitral forums should
not only be in place, but should also have a track record
of predictability and fairness in decision-making. A consistent
track record can produce potentially significant reductions
in the risks associated with projects and with the associated
pricing of project delivery.
Recognition of the decisions of foreign judgments or awards
can also help. This can be promoted most appropriately
through a country being both a party to the New York Convention
on the Recognition and Enforcement of Foreign Arbitral
Awards and through the introduction of appropriate domestic
legislation to implement the Convention.
For projects in countries without independent judiciary
systems, international arbitration or the court system
of a predetermined third country is often used. There are
a number of international rules that could be applied:
- International Center for Settlement of Investment Disputes
- International Chamber of Commerce (ICC);
- United Nations Commission on International Trade Law (UNCITRAL);
- other rules.
E. Off ramps
Rather than taking the other party to court, it might be
better for all concerned to realise that things aren’t going to
be resolved and to fall back on the “off ramp” clauses
that the contract contains to formally dissolve the partnership.
The reasons for invoking off ramp clauses must be spelled
out in the contract and should cover such factors as dissolving
the partnership because (of):
- either partner feels that it should not continue in the
- the financial situation of the private partner;
- the scope of work or the price of subsequent phases of the
project have been assessed as being unrealistic;
- the private partner may not be able to successfully complete
the project; or
- the municipality may be unable to achieve satisfactory participation
by the private partner.
Much like the decision to partner, the local
government should know the costs and benefits associated
with the use of off ramp provisions before they are
used. The local government should also have a contingency
plan to mitigate service interruption should a public-private
partnership off ramp be used.