What is mediation?
Mediation is a flexible, and confidential form of alternative dispute resolution in which a neutral mediator seeks to explore the terms of a negotiated commercial settlement securing closure of a dispute.
The mediator is not judging any party, having to apportion blame or find a winner or a loser. The parties retain control of any outcome.
In advance of the mediation day (currently undertaken via Zoom) a mediation agreement will be signed requiring the parties to treat all discussions and documents as confidential and without prejudice. Practically, this means that the parties can make concessions or produce documents that they would prefer not to or are prohibited from doing in court proceedings.
During the mediation, the mediator meets privately with each party in breakout rooms to discuss matters in general or which arise which allows frankness without fear that weaknesses will be communicated to other parties.
What happens at a typical mediation?
Usually, the mediator will formally open the mediation with a joint session, attended by all parties and their lawyers where any procedure is explained and the principle of confidentially reinforced. Each party may make a brief opening statement, giving its perspective on the dispute and highlighting points of particular concern. After the opening, the mediator will have private discussions in breakout rooms with each party. The opening session can be disposed with.
Mediation does not always result in a settlement, but it generally has a high success rate. If no settlement is achieved, the mediatio0n may have clarified/narrowed issues in dispute which will assist in a subsequent resolution.
The potential benefits of mediation include:
- The ability to manage different personalities who may not be the best witnesses at trial.
- Working through deadlock situations by negotiation.
- In cross border disputes mediation can avoid many practical or procedural difficulties.
- Business relationships can be preserved or enhanced.
- Long-term relationships can potentially be rebuilt.
- Confidentiality ensures that negative or potentially embarrassing disclosures can be avoided.
- Legal costs are substantially reduced.
- Lost opportunity and management time can be saved.
- Mediation can produce outcomes that might not be possible through a trial.
- Client’s personal, commercial and other needs can potentially be achieved or preserved.
- Mediation can be organised very quickly.
Some of the disadvantages include:
- Time and cost involved in the mediation process.
- A fear that mediation will expose the client’s hand or strategy.
- As mediation is “non-binding” a party could try to manipulate it.
- Parties who consider that they have a strong case see it as a waste of time and money or even looking weak.
- Not suitable where allegations of fraud or other commercially disreputable conduct are alleged.
Mediation and costs
Generally, the parties share the mediator’s fee and the associated costs of mediation (venue, food and refreshments – avoided with online mediation). The parties agree to bear their own legal costs of preparation for and participation at mediation.
The parties can agree that if the matter does not settle at mediation, the court should assess the mediation costs. This will not enable the court to enquire about what happened at the mediation to inform any decision.
A party must justify a refusal to mediate.
Enforcement of settlement agreements
A settlement can be enforced as a contract or drawn in the form of a Tomlin Order.