Dispute resolution and sustainability – a delicate and evolving relationship

Posted on

22 Jun


Dittmar & Indrenius > Insight > Dispute resolution and sustainability – a delicate and evolving relationship

Disputes are perhaps the most traditional area where law firms assist their clients. While many different types of processes go under this rubric, they have customarily been viewed to have one common trait: they aim to provide a legally correct decision regarding a specific problem. This decision does not typically claim moral or ethical superiority, just legal correctness. Nothing more, nothing less.

At the same time, sustainability has become a fundamental value and goal for organisations and the general public. It underlines the need to make ethically correct decisions, and it is embedded in every decision and all aspects of business, even if it is not always visible at first sight. Accordingly, making sustainable choices is at the core of corporate social responsibility. Organisations are constantly put under scrutiny for their social, economic or environmental impact in surprising situations, and ignoring the demands of sustainability might have even existential consequences for them.

A responsible law firm always aims to advise its clients in a way that guarantees an optimal solution overall. However, the relationship between sustainability and dispute resolution poses a dilemma, as their traditional goals do not appear to be easily reconcilable. While sustainability is inherently value-driven, legal processes and decision-making claim to be value-free. How, then, are these two to be combined?

First, despite initial appearances, some dispute mechanisms can be extremely effective for the goals of sustainability. A great example is provided by the emerging sector of climate litigation: while providing a way to seek the enforcement of rights critical to the goals of sustainability, this also forces nations and corporations to actively heed the demands of sustainability by putting the spotlight on their behaviour. Such processes have, via great media attention, increased public knowledge and helped in building momentum for positive change. This makes the impact reach far beyond individual decisions. While, in Finland, politics is typically left outside courtrooms, there is no reason to believe that sustainability-related legal disputes, sometimes described as activism, will not begin to become more run-of-the-mill here, too. This is especially so, as more and more agreements include stipulations relating to the requirements of sustainability and corporate social responsibility, whether they are codes of conducts, social responsibility policies, assurances on the treatment of employees, environmental pledges, or something else. This is a welcome development, as it allows for a modern and realistic depiction of the factors that organisations take into account when looking for partners and investments.

“Values are major assets and motivational drivers; there is no reason why they should be excluded from the realm of disputes.”

However, as, notably, the illegal attack by Russia has shown, these need to be true requirements in the relevant agreements, preferably drafted in the form of guarantees. Otherwise, when push comes to shove, sustainability and responsibility appear as empty promises between contractual parties, with no way to enforce them. Values are major assets and motivational drivers; there is no reason why they should be excluded from the realm of disputes. Responsible lawyers take this, as well as all foreseeable topics of dispute, into account when agreements and dispute resolution clauses are negotiated, which in itself decreases the likelihood of costly disputes in the future.

Second, even if the final product of a dispute (i.e., a legal decision) or the topic of the dispute has nothing to do with sustainability, nor is the process relevant in the eyes of the general public, this does not mean that the relationship between dispute resolution and sustainability fades or should fade completely. This is because of the different procedural aspects related to dispute mechanisms, which have economic, social, and environmental consequences. The focus then shifts to how sustainable the process itself is for the organisation in question.

For example, arbitration allows the parties to agree on procedural orders that ensure a limited environmental impact, such as via digital proceedings, while courts remain rigid in their procedures. In other situations, lessening the impact on social capital, be it that of the organisation itself or external, and maintaining a prosperous relationship may be more important when factoring in different mechanisms, putting mediation and settlements at an advantage. As the underlying conflicts are often a mixture of both legal facets and personal differences, de-escalation should always be a priority.

Furthermore, the optics of the chosen path should always be given extra consideration. This is especially true when a clear imbalance exists between the relative resources and vulnerabilities of the parties. Indeed, advice on sustainable dispute resolution often revolves around the by-products of procedures. The possible environmental, social, and financial impacts are inherently context- and mechanism-specific. For dispute lawyers, the key is then to put the dispute into a wider context, and to truly understand the need for organisations to make sustainable choices and be socially responsible in all situations.

Among dispute lawyers, the little discussion that has been had on sustainability has mostly focused on how to make the industry itself more sustainable, with sometimes repetitive or even redundant results. Typical topics, while important, have been a variant of “Did you really need to fly to that convention or print all those emails?” What has been missing from the discussion is how sustainability should be promoted through the advice provided to clients. For dispute lawyers, the time has come to understand the true extent of sustainability, and to make it a key part of the counsel provided to clients. Otherwise, the advice is as bad as if it were based on the wrong law.

Latest insights

Fostering Continuous Development

Article / 1 Jul 2024

Advocate for Change: Good Governance and Sustainability

Article / 1 Jul 2024