Conference on Alternative Dispute Resolution 17-18 October 2019

The Fourth Conference on Alternative Dispute Resolution, held on 17-18 October 2019, addressed topics of small and medium-sized enterprises, in particular family businesses and the subject of alternative dispute resolution. It was about how alternative dispute resolution can help reduce the risks of these businesses and support them in choosing other solution to resolve conflicts rather than investing time and money into litigation. Five foreign lecturers also gave presentations at the conference.

The opening address was delivered by dr. Erika Kovács, Chair of the Financial Arbitration Board, followed by the welcome of the participants by dr. Sándor Vajas, Vice-President of the National Office for the Judiciary and dr. Csaba Szomolai, managing director of the Magyar Nemzeti Bank.

In his welcome speech, dr. Sándor Vajas, Vice-President of the National Office for the Judiciary hailed the excellent results of the Hungarian judiciary in European comparison. He stressed the importance of professionally substantiated, good judgments in the courts. He added that no matter how good the judgment, one of the parties or even others involved, would feel themselves a loser; not to mention that the conflict that causes lawsuit, despite the efforts of the judge, may not be resolved by the decision. Court mediation proceedings between the parties may be the solution.

The situation of the courts is specific and at the same time optimal for familiarising the parties with alternative dispute resolution in both civil and administrative cases. In his welcome speech, he highlighted also the results of court mediation, according to which, since 2012 - until the first half of 2019 - 5,300 court mediation proceedings have taken place in Hungarian courts, more than half of which have been settled by agreement. Dr. Sándor Vajas added that in recent years the legislator has also recognised the importance of alternative dispute resolution, so since 2018 there has been the possibility of mediation, in addition to civil court cases, in administrative court cases as well. The efficient judicial mediation process was also supported by the fact that 30 secretaries and judges, with special training for administrative cases, received specialised vocational training. Particular emphasis is placed on the institution of court mediation in family law disputes. The NOJ promotes the efficiency of mediation by training and professional preparation of judges hearing family law cases. Informing customers and the importance of psychological support in this area is emphasised, which will be integrated into the trainings. Court mediation is currently available at 70 courts, with more than 180 judges and court secretaries working in the proceedings, and an additional 30 judges and court secretaries obtained the necessary qualifications in the administrative area.

Training is extremely important for successful mediation, which is why the NOJ has announced the Werbőczy Universitas Scholarship, which supports the specialised post-gradual training of 100 judges. Twenty of this year's applicants are attending an alternative dispute resolution lawyer – specialty in mediation - training in Győr and Székesfehérvár. Mediation is a long-term investment to increase customer satisfaction and to settle disputes fast and by peaceful means. Everyone who works in this area and contributes to the widest possible use is involved in the work.

Dr. Csaba Szomolai, managing director, on behalf of the Magyar Nemzeti Bank welcomed the participants.

After reviewing the Alternative Dispute Resolution Conferences held in previous years, he said that the Magyar Nemzeti Bank is interested in, by the Financial Arbitration Board operated by the MNB, ensuring that actors of the financial sector and their private customers live and work with each other peacefully and in harmony. Additionally, the FAB assists them resolve their disputes fast and free of charge. Since 1 July 2011, the Board has been engaged in the settlement of financial consumer disputes through conciliation. Since its establishment, more than 30,000 consumers have applied for the out-of-court settlement of their financial dispute. As a result of legal settlement, additional 17,000 consumers requested a decision in 2015-2016. 99 percent of conciliation cases are domestic, 1 percent is the so-called cross-border case involving a domestic person or service provider resident in another EEA Member State. So far, the 14,000 money market, 8,000 insurance, 500 capital market and 100 fund cases have proven that it was worthwhile to opt for financial conciliation.

In his welcoming speech he emphasised that the Magyar Nemzeti Bank considers it important to take responsibility for its wider environment, society and long-term sustainable development in addition to its statutory tasks. One of its important statutory tasks is to promote and strengthen financial stability, to enhance the effectiveness of financial consumer protection, and to improve financial literacy. Therefore, it attaches a key importance to the enhancement of financial literacy, and in its framework, in conjunction with a number of consumer protection and financial market organisations, undertook a wide range of informative and educational activities to promote the financial literacy of the population. It also played an important role in developing a government strategy to improve financial awareness. In addition to financial education in public education, in the objectives of the strategy the enhancement of informed financial and consumer conduct, widespread financial convergence, prudent borrowing, the importance of self-care and also the spread of cashless payment instruments have priority. This is important not only for the general public, but also for businesses and family enterprises in particular. The seven-year strategy will be implemented through two-year action plans, with the first period ending this year. Its task and priority objective are to promote a positive attitude of the population and businesses towards finance, with the active involvement of the Financial Arbitration Board.

He emphasised that the Magyar Nemzeti Bank is proud to provide financial support for the organisation of this conference as well as for the participation of young Hungarian people abroad. In fact, the International Chamber of Commerce hosts a unique negotiation and mediation competition in the world every year, in which 500 participants from 63 universities from 40 different countriescould match their knowledge and skills this February . The Hungarian team came from the students of the ELTE Faculty of Law again this year, which is being prepared by Éva Inzelt with increasing success year by year. The team, supported by the Magyar Nemzeti Bank, achieved its best result so far this year. It placed 6th in this world competition, leaving behind universities such as the Queen Mary University in London, Fordham University in New York, New York Law School, Rutgers University also in the US, Leuven University in Belgium, Monash University in Australia, or the Jagello University of Krakow, which has been on the podium several times in previous years. He congratulated on the wonderful Hungarian success.

Dr. Attila Beneda, deputy state secretary for family policy at the Ministry of Human Capacities, gave the opening lecture of the conference, which was entitled “The Family as a business”.

In his introduction, he talked about the characteristics of family businesses. The members of the family are the owners, the employees, the seat is usually a real estate of the family, the contribution is the family property, the purpose of the activity is the livelihood of the family.

The Government’s family-friendly measures support families, and also family businesses through families. He pointed out that, in developed countries, family businesses account for 75-95 percent of businesses, and most studies in Hungary also estimate the number of family businesses around this level.

The aim of the Government's family-friendly policy is the thriving Hungarians (“Hungarian model”), relying on their internal resources; support for responsible parenting; the birth of longed-for children; encouraging the desire to have children. In his lecture he presented the family policy measures implemented between 2010 and 2018, the outcomes of the family-friendly turn and the family protection action plan.

Among the family policy measures of 2010-2018 he highlighted the fact that family allowance is subject to school attendance; child care benefit until the child reaches the age of 3 (2010); family tax and contribution allowance (2011); use of extra paid vacation for the child by both parents (2012); Baby Bond-Treasury Start securities account; Job Protection Act (2013); child care allowance extra (2014); discount for first married couples (2015); family housing benefit (CSOK) and its amendments; VAT reduction/refund on homes (2016); sick leave or for care arrangements - 2 parents (2017); suspension/reduction/remission of student loan debts; fee reimbursement of the first or additional examination for a successful language exam; increase in family tax benefit; Umbilical Cord Program; extending support for the in vitro fertilisation; fee reimbursement of exam and course for driving theory test; reduction or cancellation of mortgage debt.

Among the outcomes of the family-friendly turn, he mentioned that the amount of budget resources dedicated to supporting families has doubled compared to 2010. The fertility rate rose from the previous 1.23 to 1.49; the actual population decline has decreased; the number of marriages increased, the number of divorces and abortions decreased. In 2018, 62.3 percent of women were already employed; the employment rate for women with children under the age of 3 rose from 12.4 percent to 15.4 percent by 2018; the employment rate for (25-49-year) women with children under the age of 6 rose from 33.1 percent to 43 percent by 2018.

As part of the Family Protection Action Plan, the following has been introduced: prenatal loan; family housing benefit (CSOK); expanding support for mortgages; personal income tax exemption for women with minimum four children; car purchase programme for large families; creche facility development programme; child care allowance for grandparents.

As a final thought, he said that the 2020 budget is about families and security, by spending HUF 224 billion more for families and HUF 174 billion more for security.

At the beginning of his lecture entitled Problems of Hungarian Family Businesses, Dr. László Rudas, president of the National Association of Family Enterprises, briefly presented the background of the establishment of the National Association of Family Enterprises and the aims of this social organisation. Furthermore, he defined the concept of family enterprise and summarised the criteria that distinguish this business from other businesses.

The lecturer specified the concept of family enterprises as follows: at least two family members of the founding family shall have an interest in the family business and at least two family members shall be involved in the management and operation of the company. In the case of a family business operating in the form of a limited liability company, a limited partnership or a general partnership, the founding family (at least two family members) shall have a shareholding of more than 50% in the company; or, if the company operates in the form of a private limited company, shall hold at least 25% of the voting rights + 1 vote. This business is characterised by long-term continuous operation of at least 10 years, as well as sound financial management and accurate and exact tax payment.

Dr. László Rudas then introduced the criteria for distinguishing family businesses from other businesses. The owner of the family business takes care of succession, in crisis situations profit orientation has no priority, but the philosophy of long-term survival pervades the family business. This business is a long-term, intergenerational investment (equal treatment!), the backbone of the economy, and the largest employer. Most of the domestic GDP is produced by family businesses. Afterwards, the president of the National Association of Family Enterprises went on to present generational change issues and solutions to these problems. Generally, after 30-40 years of entrepreneurial activity, one of the biggest challenges for founders is solving succession. According to the data of the HCSO, 8,500 family businesses are currently facing a generational change. Two types of succession were distinguished: (a) typical succession, and (b) atypical succession. He defines typical succession by that if the founder and the heir work in the family business, the heir gains adequate experience in operating, directing, and managing the company, accepts (and continues to maintain) the objectives of the founder, in which case the question of succession may be decided at the Board meeting. He classified atypical succession, generational change into the following types:

sale of ownership interest - “exit sale”,
management buyout (MBO), which may be a partial buyout (majority or minority),
fiduciary asset management,
listing of the shares of the family business (this requires a proper proposal and a comprehensive financial, economic and legal due diligence prior to listing),
establishing a fund to the operation of the business.

According to the lecturer, atypical succession may be impeded by several factors: e.g. if the company is not eligible for listing for any reason, or if due diligence or auditing is expensive. He emphasised that completely unbundling, separating the company property and family property is necessary in the event of the mentioned cases.

Dr. László Rudas then talked about other policy objectives that do not require a budget source but would help family businesses on several issues. Such an objective is the provision of a legal bridge (i.e. compliance with legal requirements regarding the activity and operation of the company) as well as financing listing, exit financing, training, eligibility of expenditures on education, recourse to EU funds, and obtaining moral support. The lecturer suggested that the state shall provide normative funds to family businesses that facilitate listing, financing audit and exit sales. If the founder has deceased without succession, the family members shall assess by asking assistance from the notary competent in the place where the deceased resided whether the deceased had a business that had become inoperable and, if any, a trustee shall be requested to head this business until the issue of succession is resolved. (This is in the interest not only of the heirs, but also of business and society.) The lecturer then encouraged the audience to settle disputes by amicable negotiation in conciliation proceedings, in the event of disputes arise concerning to family (or family business) arrangements. In the spirit of the thought of “A bad peace is better than a victorious war”.

Géza Egyed, strategic business management consultant of Grant Thornton, gave a lecture titled Does the weaker have a chance? Or small and medium-sized enterprises in the maze of law - as the independent consultant sees it.

In his view, prevention is the most effective way of resolving disputes and problems. The aim would be to minimise the number of legal problems in the operation of the SME sector, he pointed out in his presentation. However, there is a fundamental human, subjective problem that will make this theoretical demand unfulfilled in reality, in practice. This human problem is procrastination. In addition to general human habits, the SME sector, for an objective and subjective reason, is even more exposed to face relatively large and significant legal disputes, many of which remain latent. One and a subjective cause of the emergence of legal issues affecting the SME sector is that the legal entity and the owner's personal identity is merged, the owner is an operational manager at the same time, who exercises full control over the company. This is a very special psychological phenomenon, especially when it comes to the founder, who practically sees the company as part of his or her identity. The objective causes of legal problems are primarily the limited availability of resources - knowledge, capital.

He said that the SME sector accounts for more than 90% of all domestic enterprises, employs 70% of domestic employee and produces more than half of GDP. There are a significant number of micro-enterprises in the sector, some of which were established as forced enterprises or in the purpose of outsourcing employment or are not currently operating. Small- and medium-sized enterprises are represented in the sector in a much smaller number. Together with all these, the SME sector currently represents 350-360 thousand active businesses. He pointed out that the SME sector is not a homogeneous sector, but a heterogeneous group of companies. However, despite this, broadly similar principles, a similar culture and similar subjective and objective prerequisites may be found in companies belonging to this group. One of the most important reasons for exposure of the sector to litigation is when the owner/managing director does not manage the company as an entity independent of him or her. A further problem is caused by the lack of or poor quality assurance of administrative processes, that the owner/managing director withholds confidential information, avoids internal professional discussions, does not use an expert, does not like paying for consultancy. In his view, the SME sector is characterised by resignation, pessimism, inequality of power, and limited resources. According to a survey conducted among his clients, he explained in which segments the most legal problems occur. The lecturer has described several typical lock-in situations in which dominance appears. The situation is given, the question is what solutions are available to solve this situation. However, this is not a legal issue but a tough economic issue.

Finally, he stated that prevention was perhaps the first and most important objective in order to improve the situation of the SME sector. In his view, prevention may include teaching “Corporate governance" literacy to the SME sector, allocating EU funds into it, at an eligible cost. Greater involvement of professional chambers and industry associations would also help to achieve this objective. In addition, in the course of subsequent management of legal issues, it would be necessary in case-law to take greater account of the fact of an abuse of a dominant position, the inequality of power, in order to balance Iustitia's scales. Last but not least, it would be important significantly for the actors of the SME sector to be made aware of the possibility of alternative dispute resolution forums and the use of these forums by SMEs in resolving legal problems that arise in their operation.

This was followed by a panel discussion entitled Conflicts arising from generational differences in family businesses.

Dr. Ágnes Zsitva, deputy head of civil division of the Székesfehérvár Tribunal, who spoke as a legal expert on the case. Dr. László Andói court mediator was the mediator of the case, Krisztina Hunyadi professor of the Metropolitan University, coach was the mediator expert of the panel discussion, the parties were represented by Sára Göblyös and Dr. György Rágyanszki. The discussion was moderated by Dr. Kata Tolnai, national coordinator of judicial mediation at the National Office for the Judiciary. The impulses and lessons learned experienced in a court-mediated litigation between a father and his daughter over a conflict in their joint venture were presented by participants of the panel discussion.

In the case described, as a result of a conflict arose during the operation of a family business, the 30-year-old daughter with 49% ownership, in an employee status, and holding a university degree, sued the company in order to repeal the decision that was adopted at the general meeting convened and held in an improper manner. The defendant was represented by the applicant's father, who was the owner in 51% and managing director of the company.

Pursuant to the rules of Civil Procedure Code, the acting judge offered to the litigants the possibility of resorting to mediation. During the mediation process, the emotional grievances and the lack of needs that they failed to discuss led to the initiation of the lawsuit were explored. As a result of the discussions in the mediation process, which was not about the interpretation of company law rules, the parties themselves realised what their priority is in their lives, where they had "made mistakes”, when they passed each other. They set out together the goal of continuing to run the business together. Emotional conflict was processed with the help of the mediator, and as a result, they did not want to pursue the lawsuit in resolving the legal conflict. Conflicts go hand in hand with life and are part of it. A successfully resolved conflict creates harmony but, if not resolved, consumes a great deal of energy. Therefore, it matters how long it takes and what kind of storms the parties succeed in resolving the difference.

The lecture entitled How mediation contributes to increasing the role of family businesses in the Italian economy was presented by Dr. Ivett Paulovics (Urs Domain Dispute Case Manager, MFSD IP Dispute Resolution Center).

In her lecture, in addition to presenting the Italian rules on mediation, she outlined the key information on the order of precedence of countries' competitiveness established each year by the World Bank. The order of precedence established by the World Bank is based on various indicators, one of which is the validation of contracts. For example, they take into account the time and cost required to settle a commercial dispute in the local court of first instance and evaluate the quality of the court system. In determining the order of precedence, they also consider the length of court proceedings, the amount of litigation costs and the possibility of alternative dispute resolution. With regard to the latter, she emphasised that mediation may ensure the prompt and out-of-court settlement of disputes through proceedings tailored to the needs of the parties.

At EU level, Directive 2008/52/EC on certain aspects of mediation in civil and commercial matters contains provisions relating to alternative dispute resolution. The Directive defines the terms of mediation and mediator, which were taken over by Italian law, the detailed rules being laid down in a legislative decree. In Italy there are three types of mediation, voluntary, court ordered and compulsory; the latter group includes, for example, cases relating to tenancy, bank agreements, press litigation or inheritance. As a point of interest, she highlighted that a scholarship program was set up in Florence the aim of which is that university students help judges to select cases where mediation may be ordered. The Italian mediation system also contains financial incentives (e.g. tax relief, tax credit) and sanctions for the parties, and its further feature is that in the lawyer's contract there is an obligation to inform the parties about the possibilities of alternative dispute resolution.

In closing her lecture, she presented a legal case between two small- and medium-sized family businesses. Both companies had similar trademarks for a similar product (in one case wool and in the other silk product), partly with the same customer base. The mediator in this case was able to help create a creative solution to the dispute between the parties. Finally, the parties agreed that the silk/wool content of certain products shall be decreased (below 10%).

The mediator Srđan Šimac, judge at the High Commercial Court of the Republic of Croatia, presented his lecture titled Mediation - a strategic tool for early risk management in business disputes.

In his presentation he pointed out that mediation is a strategic tool for early risk management of business disputes. He presented the positive aspects of it. He highlighted that family businesses have many advantages but also have to face many difficulties, such as intergenerational gap, new marriages, illnesses, divorces, etc. He mentioned that in most conflicts the parties do not communicate properly or at all, although conflicts indicate that something is not working well either in the family or in the business. Conflict is an indication for the need for change, so conflicts shall be considered as opportunities. Conflict itself is not a negative factor, it is at most a response to the conflict. He also emphasised that the primary purpose in the world of business is to reach a deal, not to pursue debates. This latter is not economical, the debate is an unproductive pastime.

Litigation is time consuming and expensive, thus litigation shall be a last resort for businesses to resolve disputes. During this, it also should be borne in mind that litigation is, in fact, a kind of “war” where aggressive confrontational tactics are ineffective because the response to them will be even more aggressive. In his lecture, he also posed the thoughtful question of what can be considered success at all in disputes? Many people believe that victory is the success, but he emphasised that in the case of a dispute, instead of winning, the focus should be on agreement and the solution, victory may only be the goal in sport. Problems should be treated as business and not legal issues. In this context, he underlined that mediation, which is not an alternative to courts but the primary route to dispute resolution, is the best tool for any type of risk and dispute resolution, whereby the parties can negotiate not in a court but in a more open environment. In the closing of his lecture he also raised the question of what may cause anyone to be unsatisfied after court judgments, at the end of proceedings. He saw, the reason for this is that the judgment terminates the business or family relationship between the parties, but the conflict between them remains forever. During mediation, the parties themselves find a solution to their conflicts and this ensures that their family relationship, partnership is maintained. He stressed that we should not treat our problems as purely legal issues, legal advice is only a possibility for solution. We should consider them as a business problem and be aware that we can achieve better results with negotiation than without it. Let us replace the desire for victory with mediation.

Dr. Zsolt Hajnal, associate professor of the Faculty of Law of the University of Debrecen, in his lecture titled The system of conciliation in Hungary emphasised the demand for uniform proceedings and application of the law and a professional approach of the conciliation boards.

In his presentation he talked about the suitability of this form of procedure and the system of consumer protection rules for the protection of consumers other than natural persons, as well as how the amendment of the Consumer Protection Act changed the system of conciliation. First, he presented the key rules governing the procedure and operation of conciliation boards. He said that the Consumer Protection Act set up a system of conciliation as a kind of model that operates along the lines of maximal enforcement of defined principles. However, over the past 20 years, this type of set of rules has been proven to be inoperable, thus changes were needed. By way of example, he pointed out that, contrary to previous practice, the set of procedures shifted in the direction of single members dealing with cases subject to simple judgment.

Concerning who can turn to conciliation boards, he said that the legislature recognised that small- and medium-sized enterprises, condominiums, non-governmental organisations may have disputes similar to those of consumers, thus allowing them to act as consumers in addition to judicial redress. The aim is to provide a forum for easier enforcement than judicial redress, however without the right to additional protection granted to consumers in civil law. He mentioned that the legislator thereby gave the companies complained the possibility of a continuing objection on the ground of the lack of competence, and that there is a requirement for a constant review by the conciliation boards to decide the capacity in which the petitioner is acting. He explained in detail the criteria used by the boards during their proceedings to distinguish consumer-entrepreneurial quality in the case of certain petitions, thus, they examine whether the service is for personal use, whether it is used for end-user purposes, how significant the business objective is, and whether the petitioner is an expert in the field of consumer litigation. He said the number of cases in which conciliation boards can provide real and effective assistance to family businesses is relatively limited. In particular, the competence of the boards may be established if the petitioner contracted for a purpose other than that of his contractors. He pointed out that the most common litigation is concerning public utility services, for example, when the seat of the business is registered in the petitioner's own home. He added that, in his view, the original intention of the legislator, in its current form, cannot be fully realised, as only a few cases pass through the "filter" of competences, therefore changes would be needed.

In the second half of his presentation he talked about how the rules of conciliation have changed recently. He said that these are primarily technical amendments and does not affect the substance of the proceedings, in particular, the rules on the selection of members changed. He mentioned that there are cases where the same case in different counties, with the same rules, the boards decide differently, which situation needs to be addressed. There is a demand from the boards for a single procedure and to provide real, professional assistance with market effects to both businesses and consumers. He added that, in his view, the changes have many positive effects, but this means a chance for renewal only if greater integration will be expected, members will take greater responsibility, boards will move towards uniform procedure, law enforcement, and predictable and consistent application of law.

Dr. Giorgi Tsertsvadze (managing partner, J&T Consulting LLC, Tbilisi, Georgia), in his lecture titled “Cultural obstacles to alternative dispute resolution in Post-Soviet Countries”, first spoke about the fact that the form and content of alternative dispute resolution significantly depends on society and its culture. As is well known, private property did not exist in the Soviet Union, and this fact still affects people's attitudes towards dispute resolution. People born in the Soviet Union became accustomed to having others settle disputes in their place and, because of this mentality, certain methods of dispute resolution still do not work effectively. There are many factors that influence the ADR culture. The regulatory environment, in his view, is most helpful in raising awareness of the institution, it cannot be implemented without the support of the policy, civil society shall respond to demands, and the legal community should not consider the alternative dispute resolution as a competitor but as an opportunity.

In his lecture, he pointed out that mediation was previously thought to require no legal regulation. But this idea became by now outdated. There is a demand for the law to spread mediation so that people know that it is a legal institution. Until there was no legislation, people doubted the legitimacy of the institution, and they waited for the resolution of the state and the courts. At that time, the only answer to the question was that mediation was not prohibited by law but was not regulated. Business was sceptical about this. According to the lecturer, mediation may develop without law, especially in the beginning. However, mediation should not be over-regulated. Arbitration legislation is older than mediation. Azerbaijan was the first to support the introduction of arbitration in the region due to the presence of international companies there, which demanded this type of dispute resolution. There are several places in the region where mediation evolves differently because there is no corporate interest or lobby in legislation and no NGO under political involvement is interested in the development of alternative dispute resolution. A good example of this is Ukraine, where 11 attempts have been made to pass a mediation law in parliament, unsuccessfully, or Armenia, where, despite legislation in 2015, there are still no accredited mediators in the country.

This illustrates the obstacles to development. Thus, law can support the development of mediation by promoting it and answers the question of legality in most countries of the region. However, creation of legislation alone is not enough to introduce the institution. A further problem is that those who believe in mediation do not dare to engage in straightforward support of mediation despite legal regulations. The government should passively support the process of mediation development. In his view, this is the minimum standard that all states should follow. Excessive government support makes business sceptical.

People living in post-Soviet countries became accustomed in the past 70 years that every aspect of life is regulated by the state. There is no culture in these countries that tolerates self-expression. In the post-Soviet states, people like delegating the responsibility for decisions to the state or the court, people are afraid to make their own decisions. Because of this, it is often asked how the mediator would decide the case. However, the mediator cannot tell his opinion on the case, he can only give advice on the case; the final decision shall be made by the parties. People shall be convinced that making a decision is a good thing, even if they make mistakes. The point of mediation is that the involved parties are free to decide in setting up an agreement, agreeing or rejecting certain terms and conditions. In post-Soviet countries, two models for regulating ADR have emerged. According to the Azerbaijani model, it is mandatory to use mediation prior to the court proceedings, but not mandatory to reach an agreement. This obligation will make people more aware of mediation. In the Georgian model, mediation must take place within the framework of court proceedings by mediator judges, but this requires the training of judges. It cannot be said that one model is better than the other, both can be used in parallel, but they are not alternatives. Lawyers were hostile to mediation from the outset, with the majority stating that mediation does not help their clients or, if it does, takes away their livelihood. The judges were also afraid of mediation because if all cases can be resolved by this method, they would be left without cases. Therefore, the legal society must be convinced that in the event of choosing mediation, they do not lose any case because a bigger cake (more cases) gives everyone more slices. In Georgia, mediation by other professions (e.g. psychologist, accountant) may take place, but there is a struggle that accreditation of the activity should be restricted to lawyers only. He stressed that not all cases are suitable for mediation. Mediation works only in cases where there is a hope for a peaceful solution. If there is one kind of decision to make it is a dead end, if there are two kinds it is a dilemma, there is only a chance for mediation in case of three kinds of decision.

A lecture titled Solving complex problems and emotional disputes in family businesses was held by Jennifer Brandt (lawyer, mediator, Brandt Law & Mediation, New Jersey City, USA).

In her presentation, she emphasised that family businesses represent 2/3 of all businesses in the world, contributing 60-70% of the GDP of each country, and that companies employing most of the employees come also from this category. For example, 50% of employees in the USA are employed by family businesses. Some of the family businesses are worldwide, with the best known being Walmart, Samsung, BMW, Ford, M&Ms, which have a history over several generations, decades or centuries. According to a US statistical survey, 40 percent of family businesses reach the second generation, while 10-15 percent are still in operation after the third generation, furthermore, 24 percent have a female executive manager and 31 percent have a female executive manager belonging to the second generation. She pointed out that the best way to sustain family businesses is to manage and solve conflicts, especially emotional conflicts through mediation. Dealing with emotions is the key for the business and the family to survive.

Unlike other businesses, family businesses are mostly destroyed for non-economic reasons. Instead, family dynamics, emotional disputes, intergenerational and cultural conflicts, and gender inequality are the sources of failure. A family business always needs a long-term mindset, so it is in the best interest of these businesses to maintain long-term relationships in business and in the workplace as well. In a family business, it is very important to maintain a balance between family and business, which often proves very difficult. In most cases, owners tend to lose their business opportunities rather than their families. It is also typical that family values and mindset determine and convey the business model and business mindset. It is also typical that some of their profits are spent on noble purposes, which is especially important for today's generation. Preserving reputation of the family and resolving conflicts without public consultation in the event of a conflict is also important. Experience has shown that litigation does not resolve conflicts within the family but further deepen them, meaning that this way never leads to a solution. This is where mediation helps.

However, it is not enough to seek mediation opportunities when you are in trouble. It is also a key for the success of family businesses to predetermine the availability of alternative dispute resolution options, resolving disputes both within and between enterprises. In her view, it is never too late to use mediation in emotionally overheated disputes in family businesses, i.e. in any of the four types of disputes: in the case of minor conflicts (e.g. father-daughter conflict), serious conflicts (e.g. disrespect, lack or loss of communication), destabilising conflicts (e.g. aggression and separation), and conflicts escalated into "war" (e.g. litigation, termination of contracts, agreements). In the case of a generational change, mediation is also great for consulting about the vision of the entrepreneurs' children to find an heir who is happy to take over the baton, without having to automatically transfer the business to the favourite or eldest child to make it even more successful. It may also help in case the manager of the business does not share enough information with others, making exclusive and non-transparent decisions without involving other stakeholders, and in case of rivalry between heirs. The most difficult transition between roles is between family members' out-of-work and work-related roles, because, for example, the father may be the boss of the child in one person.

Mediation is not compulsory in general in the United States, but it is in some states, as in New Jersey, and it is proving to be very successful. Based on more than her 20 years of mediation experience, she believes that “the worst deal is better than the best lawsuit”. In the United States, lawyers' attitudes towards mediation are very interesting: many of them fear losing their influence if they do not initiate proceedings in the court, or that mediation will reduce their income. Jennifer trains lawyers and experts in other areas (such as IT professionals) in many countries, demonstrating the benefits and techniques of mediation. She stressed that, in the same way in everyday life within a family, it is very important for family members to have technical mediation skills and apply them. Perhaps, the most important of these are learning empathy and active listening, the ability to listen to and understand one another. You do not have to be born with them, they are all skills that can be learned and further improved.

Finally, she said that it is very useful for conflict resolution of businesses if a mandatory mediation is prescribed from the outset, of which role could be played either by a third party known and respected by every member of the family. For a larger business, this can be a regular quarterly meeting with an advisory group where issues can be discussed in an independent, bias-free group. It is very important to perfectly separate the time spent with the family from work so that they can spend time sometimes when it is not allowed to talk about work. And maybe it also helps to have a family constitution, a statute that can be turned to in the event of a problem, that sets the rules, defines responsibilities, and the ways and channels of communication as well.

Economic Efficiency Mediation (EEM): Addressing Global Business to Improve Process Efficiency was the title of the lecture presented by Professor David Weiss (New Jersey City University and Founder & Director of the Institute for Dispute Resolution (IDR)) from the United States of America.

In his presentation, he addressed a fictitious mediator from the perspective of a business enterprise, explaining in detail the interests of an enterprise at certain stages of its business life cycle, the challenges it faces, and how mediation and the professor's new theory, EEM, will solve them. In his lecture, he emphasised that a business enterprise is not only a possibility but a risk at the same time. Basically, an enterprise is not interested in conflict but rather in creating value and predictability. However, risk may not be viewed only as an enemy, but it may also be considered by a business as a “friend”. In many cases, a business can create value with business risk and can benefit from it. At the very beginning of a business, when everyone is enthusiastic about what benefits a business may bring, the potential risks shall be assessed and the necessary solutions for them shall be found. It is also essential to assess the risk itself and the cost of managing it. In other words, we have to identify the points in the life cycle when risk is “no longer our friend” and we have to prepare for these periods.

Basically, a business enterprise is very complex in structure, and versatile and diverse at the same time. The purpose of investing capital is to gain profit, to increase market share. As an enterprise, the basic goal is to create something, as an innovator to develop products and services. If we apply the same to family businesses, we can see that no matter whether they are small or large businesses, they are the foundation of societies, they sustain them and even make people's lives better.

Communication is the foundation of a successful business, which provides the company with the right information on which to base its decisions. Therefore, information symmetry should be sought, since it is not good for anyone if information just goes around and does not get to the right place, which creates information asymmetry. As information is constantly changing, it is important for a business to be able to adapt accordingly: it is so essential that it is the key to success or failure. He gave an example of a business decision when someone buys a bankrupt business. At first sight, this seems like a very risky business decision, but if we look at the business situation from multiple angles and use tools during this process that can add value to the bankrupt business, we find ourselves in a completely different situation. How can EEM help in this? - the lecturer asked.

EEM, also known as Economic Efficiency Mediation, covers a risk and conflict management policy recently developed by Professor Weiss. EEM combines economics and philosophy with the values of mediation in order to improve efficiency built into the process and to manage conflicts by incorporating a new implementation of the mediation process into all life cycles of agreements. The mediator is a third party, completely neutral, and whose role is to resolve conflicts. Mediation is a great tool, the process of which is described, limited by legal means, and is actually born as a by-product of court proceedings. In mediation, there is a value creation because, for example, bringing a conflict by the enterprise to court would create another risk, such as reputational risk. During mediation, control is not lost by the parties, they continue to be in full control of the case and, compared to court proceedings where a third person decides upon their fate, they can decide upon their own fate. This changes the mindset of businesses, thus the language of their communication. EEM can be used in traditional product and service platforms as well as in e-commerce to create a value-generating offer in order to minimise the side effects of artificial intelligence by evaluating the underlying code. Essentially, EEM will improve disproportionate risk and provide a more balanced understanding of decisions through information sharing.

Therefore, David Weiss's view is that in the case of businesses it is not the "disease” that shall be cured but must be prevented, and the new theoretical tool for this is EEM.

The last lecture of the conference, titled The effect and significance of economic dispute resolution in the business sector – the practical experiences of the ICC competitions, was presented by Dr. Éva Inzelt, associate professor at the ELTE Faculty of Law, who prepared her university students for the fifth time at the ICC world mediation competition.

At the most recent ICC (International Chamber of Commerce) world dispute settlement competition, ELTE students achieved great results, finishing sixth in the field of 65 prestigious universities. Dr. Éva Inzelt is convinced that the experience of the competitions can be utilised in practice and can make Hungary more efficient by appropriate domestic transposition.

Conflict is a form of competition between people or groups of people, part of our lives, interweaves family, friends and work relationships. It occurs when two or more individuals compete for goals or limited assets that are not actually or in their perception available to all of them - the lecturer quoted Boulding's definition. Conflicts occur within a specific person, between persons - groups - organisations, but also at a social level. They can be based on their types: information, relationship, demand, value, structural, situational, or interest. The phases of the escalation of conflicts were presented by the lecturer in a graphic illustration, which showed the typical evolution of conflicts in six well-defined stages, from the signal of conflict, from the debate to the phase of exhaustion. The lecturer pointed out that the possibility of facilitation or mediation is provided in the initial stages until the parties reach a state of destructive behaviour. Conflicts also occur in business, both inside and outside the company. Organisational culture - that is, the principles and values that the members of the organisation accept and follow - significantly determines how conflicts are handled. It is a typical and well-known conflict situation in the domestic practice when the organisational culture of a national and a multinational company collide.

The lecturer raised several questions regarding the organisational culture and mentality of the citizens of Hungary, Croatia, Germany and the United States (e.g. typical power distance, individualism, masculine nature, avoidance of insecurity, long-term thinking). Participants of the conference had the opportunity to use the SmartEvents mobile application to answer questions. (There were several surprising results, but for example the audience was “guessing” that in the case of Germany and Hungary the greatest difference is in long-term thinking, Hungarians tend to plan for the short term.)

As a final thought, the lecturer stressed that mediation is an excellent way to avoid litigation. Developing the culture of conflict management in society, and building consensus in economic life, strengthens long-term economic relationships and positively impacts GDP growth. In this context, she raised the possibility or demand for state-level support for alternative dispute resolution. (For example, reviewing, amending legal conditions, expanding education.)

The lectures of the conference are available:

Conference on Alternative Dispute Resolution 19-20 October 2023

Conference on Alternative Dispute Resolution 29-30 September 2022

Conference on Alternative Dispute Resolution 17-18 October 2019

Conference on Alternative Dispute Resolution, 3-4 December 2018

Conference on Alternative Dispute Resolution, 28-29 September 2017

Conference on Alternative Dispute Reesolution, 30 November – 1 December 2016