Tony Blair’s Glencore intervention was cheaper and more effective than litigation
Tony Blair’s diplomatic skills were credited for the rescue of the $50bn merger deal that was in danger of collapse between Glencore and Xstrata. Whether or not the deal holds, Blair’s intervention A better approach to disputes
Whether or not the deal holds, Blair’s intervention at least encouraged the parties to continue talking. In the space of a few hours he managed to keep a mega-deal that had been simmering since last November on the table.
The former PM’s skill as a negotiator were acknowledged throughout his time in Downing Street. One highlight in office included persuading opposing sides in the Northern Ireland conflict to come to the table for the signing of the landmark Good Friday Agreement.
However, on this occasion it was clearly his skills as a mediator rather than a negotiator or diplomat that came to the fore. A good mediator needs the latter skills, along with patience and perseverance, together with the ability to seize an opportunity that is not obvious to the parties in dispute, to get that elusive agreement over the line.
Accordingly, while Blair’s fee of around $1m may appear to some to be excessive, it is a small price for the two corporations to pay in the context of the multibillion-dollar merger and the massive sums at stake. Moreover, it is a fraction of the legal fees that would have been involved in full-blown litigation, as the recent Abramovich (£200m) and McKillen (£20m) cases have amply illustrated.
The Glencore/Xstrata deal is undoubtedly an extreme example and very much at the top end of the scale, but the skills required of mediators in the more routine disputes that come before the UK courts on a daily basis are precisely the same, while the savings in terms of legal costs are proportionally just as significant – and just as good a justification for retaining the services of an independent neutral who can come to a problem with a clear mind and an objective viewpoint.
Very often the parties involved in complex commercial disputes can become so bogged down and obsessed with the detail and complexity of the issues that they lose sight of their objective. Such issues can bring negotiations to a standstill. In a similar way the more common problem of a clash of personalities can reduce the prospects of an amicable resolution to a problem.
The Blair intervention also challenges the general perception of the efficiency of principal-to-principal negotiation in achieving the right result by the process of positional bargaining.
An independent, open and astute mind is capable of narrowing down the fundamental factors important to each side, then guiding negotiations towards resolving those issues, leaving the other less important aspects to be resolved at a later stage.
This is as true of M&A scenarios as it is of contentious litigation.
Blair has inadvertently provided us mediators with the type of advertising that money cannot buy, while presenting a genuine working example of how a top-class mediator can pull the rabbit out of the hat, often against the odds.