Mediation is a form of Alternative Dispute Resolution (ADR) and is used extensively to try and resolve commercial disputes.
Some commercial agreements now include a dispute resolution clause which places a contractual obligation upon the parties to engage in mediation if there is any dispute arising about the terms of the agreement. Dispute resolution clauses can identify a mediator who has to be appointed or specify that mediation must take place within 14 days of notice of a dispute being given. This can be a useful tool to try and avoid the issue of Court proceedings.
Mediation is conducted on a without prejudice basis. An independent third party is appointed as the mediator. Often commercial mediators will be experienced solicitors or barristers.
One party will normally propose two or three mediators and invite their opponent to agree to the appointment of one of their choices. If agreement about the identity of the mediator cannot be reached, then the parties can ask a third party (such as a mediation provider) to select a suitable mediator for the dispute. It is usual (although not vital) to appoint a mediator who has knowledge and experience of the area of law which relates to your dispute.
To prepare for mediation each party will usually prepare a position statement setting out their case.
The parties will exchange their position statements and submit a copy to the mediator before the mediation. They will also usually prepare a schedule of the costs they have incurred to date and an estimate of costs going forward to a fully contested Trial. This can often help focus the parties’ minds on the cost and risk of continuing in litigation.
On the day of mediation, the mediator works with the parties to try and narrow the issues in dispute and ultimately reach a settlement. The mediator is not a Judge or adjudicator. They do not have the power to force the parties to settle the case or to determine who is right or wrong. The parties have the overall power to decide if they are going to settle the dispute and on what terms.
A good commercial mediator will take on the role of “devil’s advocate” to test each party’s case and make them consider the other side’s position.
The decision to engage in mediation can be made before Court proceedings have been issued during the pre-action stage. Alternatively, mediation can take place after the issue of Court proceedings. The Court will usually stay the proceedings to allow for mediation to take place.
Generally, mediation is considered to be a cheaper option than continuing to litigate. If mediation is successful, it will usually be cheaper than continuing to a fully contested Trial at Court. However, commercial mediation can still be an expensive process, as it will normally last for a full day and the parties’ are paying for the cost of the mediator and the attendance of their solicitor and/or barrister.
If you require any further advice regarding Commercial Mediation, then please don’t hesitate to contact me or another member of Farleys’ specialist commercial litigation department here.
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