What is mediation?
Mediation is a procedure that parties to a dispute can follow as a way to try to resolve that dispute without using court proceedings. The procedure involves the parties to a dispute meeting together with a neutral third party, called a mediator, who tries to help them to settle the dispute. The mediator does not impose settlement terms, the parties have to agree the terms, otherwise there is no settlement.
What types of disputes are suitable for mediation?
The vast majority of claims are suitable for mediation, from small value disputes which do not justify the expense of litigation, to high value disputes which require speedy, confidential and commercial solutions. Mediation is not appropriate in every case, however, for example if there is a legal principle which requires determination by the court, or one party needs the urgent protection of a court order.
When can a mediation be held?
A mediation can be held at any time, both before and after court proceedings have been issued. However it is normally sensible to wait to have a mediation once the full nature of the claim is clear and a proper investigation of the claim has been made by both parties.
Who will be the mediator?
The mediator must be someone whom both parties agree upon. There are a number of organisations which will provide mediators in a wide range of disciplines. These include ADR Group, the Centre for Effective Dispute Resolution (CEDR), a number of barristers’ chambers, and other professional bodies. Some trade organisations also offer mediation as well as arbitration schemes to members.
Mediators will usually be accredited by the organisation they belong to and will have undergone appropriate training to ensure they are competent as mediators.
Once the parties have agreed that it is appropriate to refer a problem to mediation, the agreed mediation body can nominate a number of possible mediators for the parties to consider. The selection of the mediator will depend principally upon the nature of the dispute. In some circumstances it will be appropriate for the mediator to be a solicitor or a barrister or, for example in a dispute over a building contract, a surveyor. The selection of a suitable mediator is critical to the chances of the mediation succeeding.
What happens at a mediation?
At the mediation, the parties may be accompanied by their legal advisers and possibly their advisers on any expert issues. If a party is a corporate entity, the person attending the mediation on its behalf must have authority to settle the claim. The parties will have previously sent documents to the mediator that are relevant to the dispute that they think he will need to see in order to understand the dispute.
The parties first make a short presentation of their case to the mediator with everybody else present. The parties then withdraw to separate rooms and the mediator goes between them, exploring with them the issues arising in the case and the basis upon which they might settle. To help this process, the mediator may point out any strengths and weaknesses he perceives in a party’s case.
If settlement is achieved, the terms of that settlement are drawn up at the mediation and signed by the parties. It is only at this stage that the parties become bound by the terms of settlement.
How do I know the other side will keep to the terms of the settlement?
Once terms of settlement are agreed, it is a contract between the parties. If either party breaches the contract, the other party can enforce it through the courts.
Won’t any admission made during the mediation harm the court action?
No. Mediations are held on a ‘without prejudice’ basis, and this means that anything said or revealed in the course of the mediation cannot later be relied upon in court.
What if the parties don’t agree to resolve the dispute at the mediation?
Sometimes, even if the parties don’t settle the dispute at the mediation, it unlocks the deadlock and a settlement can be achieved a short while later. Sometimes, unfortunately, no settlement is achieved through a mediation.
What are the benefits of mediation?
Mediation is statistically a very successful way of settling disputes. The fact that the parties are attending a mediation focuses minds on settlement and also the strengths and weaknesses of the case. If a mediation leads to a settlement then it can save time and costs for both parties which would otherwise be incurred through the court action.
Because the terms of settlement are agreed between the parties, the terms can be much more flexible than any decision reached by the court, for example they can re-negotiate terms of a commercial contract. Further, the parties can agree that the terms of settlement are to be kept confidential, and as the mediation is held in private, there is little danger of adverse publicity or commercially sensitive information being revealed in court.
Are there any drawbacks to mediation?
If the mediation is not successful, then costs and time can be wasted, and can result in a delay in progressing court proceedings.
Do I have to mediate?
Mediation is a voluntary process and so you do not have mediate. However the courts are very keen that parties do mediate wherever possible, because of the potential saving of time and costs. Therefore the courts can and will penalise a party in terms of costs if they consider that party unreasonably refused to mediate. Therefore before you refuse to mediate, you should consider very carefully the reasons why you wish to refuse. If it is because you do not have sufficient information about the claim in order to mediate, for example, the courts may accept this as being a reasonable ground for refusing to mediate at a particular stage in proceedings. However the courts are likely to view negatively a blanket refusal to mediate.
Can’t we just negotiate on a ‘without prejudice’ basis?
Mediation does not replace ‘without prejudice’ discussions which are normally ongoing throughout a dispute. In many cases where the issues are clear, or where the parties take a commercial approach to the dispute, there will be no need for a mediator to facilitate discussions. Mediation, however, can assist where there is no clear solution to the dispute or where the involvement of an independent mediator will encourage the parties to address the prospects of settlement.
This information is necessarily brief and is not intended to be an exhaustive statement of the law. It is essential that professional advice is sought before any decision is taken
© Stevens & Bolton LLP January 2008
Michael Frisby