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The way conflicts are managed, both in the business world and on a personal level, has always been of vital importance. Therefore, in family businesses, where personal ties and business relationships are intertwined, the way in which their members approach conflict management can make a difference both in family harmony and in the survival and continuity of the business.
This becomes particularly relevant as of April 3, the date on which Organic Law 1/2025 (“LO”) comes into force, requiring parties in conflict to resort to an Appropriate or Alternative Method of Conflict Resolution (MASC) as a prerequisite for access to the courts.
In this context, it is advisable for family businesses to plan in advance which MASC they will resort to in the event of a potential conflict, for which it is essential to know and understand what each ADR available to the parties consists of.
We should note that the LO does not refer to arbitration (and, therefore, neither will we in this article), given that, although it is the MASC par excellence as it is the only one in which the solution is necessarily imposed by a third party (and, consequently, it is the only ADR that actually replaces legal proceedings), the LO refers only to those that precede legal proceedings.
Types of MASC according to Organic Law 1/2025
The LO covers various MASC methods and leaves the door open for both the State and the autonomous communities to regulate other methods of conflict resolution in the future.
In this article, we will briefly refer to those mentioned in the aforementioned law, distinguishing between those that require the intervention of a neutral third party and those that can be carried out directly by the parties:
MASC involving a neutral third party
- Mediation: a neutral and impartial third party (mediator) facilitates communication and helps the parties in conflict to reach a compromise, without proposing a solution.
- Conciliation: similar to mediation, but the conciliator does make proposals to the parties in order to reach a solution.
- Independent expert opinion: a professional with specialized knowledge issues an opinion, which is not binding on the parties. This opinion may help the parties in conflict to understand what an expert's criteria might be and, as a result, they may realize that their position on the conflict may have aspects that make them see the benefits of reaching a consensual solution.
- Collaborative law processes: this involves team negotiation between the two opposing parties and their lawyers, who must be accredited in collaborative law and must expressly waive the right to take the matter to court if they are unable to reach an agreement.
MASC without third-party involvement
- Confidential binding offer: One of the parties issues a confidential proposal for a solution, which will be binding if the other party accepts it. If the amount exceeds €2,000, legal assistance will be mandatory.
- Direct negotiation: The parties involved negotiate directly or through their lawyers to reach an agreement without the intervention of third parties.
If a solution cannot be reached using these MASC methods, the parties in conflict may resort to legal proceedings, but to do so, they must have complied with certain requirements set out in the LO. It is therefore highly advisable that, in the event of a potential conflict, expert advice be sought on the matter even before initiating ADR.
MASCs most advisable for family businesses
Although the LO regulates for the first time the obligation to attend MASCs, the reality is that these have existed for a long time and have always been of paramount importance in resolving conflicts in family businesses, where mediation (which is often used not only to resolve conflicts but also to strengthen personal relationships and, with that, the smooth running of the family business) and conciliation have always been prominent.
The latter can be carried out before the Family Council or any trusted person in the family business, who usually appoints a person of authority for the members of the family business, whose criteria and opinions are always taken into consideration.
Implementation of MASCs in family businesses
The most common way to regulate the company's relations with the family is through a Family Protocol. However, not all family businesses need to implement a family protocol (whether due to the number of members, being a first-generation business, etc.), which does not exclude the use of simpler formulas, such as a partnership agreement that merely regulates how to resolve potential conflicts.
Therefore, whether through a family protocol or a partnership agreement, it is advisable to include clauses aimed at managing conflicts that may arise within the family business.
The way in which these MASCs are established can vary greatly, and may include staggered clauses—that is, resorting to successive methods if the first one does not work—or even hybrid or mixed clauses, deciding on one method or another depending on the nature of the conflict to be resolved.
Benefits of MASCs for family businesses
The implementation of MASC in family businesses offers multiple advantages. On the one hand, it helps preserve personal relationships, which ultimately benefits the company itself. Thus, when the parties in conflict resort to legal proceedings instead of ADR, relationships end up being completely broken, making it very difficult to repair them, which often leads to the loss of viability of the family business.
On the other hand, ADR is more agile and efficient, as it is completely flexible, and if successful, it provides much faster access to a solution to the conflict, which can be much more satisfactory and in line with the real claims of the parties, When legal action is taken, the solution must be based on law, and as a result, there are claims that cannot be exercised within the legal proceedings but are exercised as a mere instrument of pressure to achieve a different end (for example, challenges to corporate agreements that actually seek to remove a partner from the family business and not to nullify the agreement itself).
Finally, we must not lose sight of the fact that ADR is confidential, which makes it a highly recommended method for family businesses, where confidentiality and discretion are highly valued characteristics.
In short, turning to MASC is not only advisable, but since April 3, it has been mandatory, except for family businesses that have decided to resolve their disputes through arbitration, where it will not be necessary to turn to another ADR provider beforehand, however advisable it may be.
In any case, it is essential that family businesses prepare for this new reality by incorporating ADR and raising awareness among family members of the need to find consensual solutions through the ADR that is most appropriate for each case and, above all, that from now on, the use of ADR before resorting to legal action is inevitable, which makes it highly advisable to have expert advice on the subject that can inform and raise awareness among family business members about the nature, characteristics, benefits, and consequences of each ADR method and help them choose the most suitable method(s) depending on the circumstances.
Our group of lawyers who are experts in this field can help you manage conflicts in your family business, advising you throughout the MASC process. Contact them here.
- More information about Family Business
Patricia Martínez – Family Business Group
Director in the litigation and arbitration area
