AN INTRODUCTION TO MEDIATION
Elemental regularly act as advisors when contractual disputes arise and the clients want to find a cost effective way in getting to its money. There are many options available: adjudication; arbitration; or litigation. However, where the circumstances allow it is often best to consider mediation. This process allows the parties to retain control of the outcome and find a settlement that suits its business and maintain a business relationship with the other party.
I am going to briefly set out this procedure for those not familiar with mediation and look at the benefits of the resolution process.
WHAT IT IS AND HOW IT WORKS
This guide provides a useful introduction to the operations during a mediation, by far the most commonly used ADR process. It will outline the mediation procedures common to commercial referrals and the approach to the process by those required to participate in it.
WHAT IS MEDIATION?
Mediation is a confidential process in which an independent and neutral third party (the mediator) is appointed by the parties to help them reach a negotiated settlement of their dispute, principally through structured settlement discussions. The process can be conducted before the commencement of formal legal or arbitration proceedings or alongside such proceedings.
The mediator does not act as a judge and has no power to make binding decisions. Rather, he or she will explore options for settlement with the parties and attempt to broker a deal between them.
The key goal of mediation is to reach a settlement that brings the dispute to an end on terms that are acceptable to both parties – not to determine the parties’ legal rights or arrive at the ‘correct‘ legal position.
WHAT ARE THE MAIN ADVANTAGES COMPARED TO LITIGATION OR ARBITRATION?
The most obvious benefits are:
- speed – most mediations last one day and can be set up within weeks
- flexibility and informality – the extent to which lawyers are involved (if at all) is largely subject to the will and confidence of the parties. In fact, it is often the case that the more direct communication between the clients at the mediation, the more effective the mediation
- cost savings resulting from the above – in both legal expenses and management time
- confidentiality – anything said or done or any documents created for the purpose of the mediation are ‘Without prejudice. and, except in very limited circumstances, cannot be relied upon in subsequent litigation or arbitration
- better chances of preserving business relationships due to the conciliatory mature of the process
- the range of potential outcomes – mediation can result in any terms that suit the parties, unlike court orders which are limited to particular legal remedies
WHAT IS THE MEDIATOR’S ROLE?
The mediator controls the process and encourages open and honest communication between the parties. However, he or she has no power to make an order for the production of documents or to make a final determination. As such the parties remain in charge of the outcome and they must reach an agreement themselves and sign a written settlement agreement in order to be bound. Until such agreement is reached the parties are free to walk from the mediation.
The style of mediators can vary from pure ‘facilitators’ (who assist the parties in their negotiations) to ‘evaluators’ (who encourage settlement by expressing views on the merits and likely outcomes).
AT WHAT STAGE IN A DISPUTE CAN YOU USE MEDIATION?
In very simple terms, if you feel in a position to negotiate a dispute then you can mediate it. The ‘right’ time to mediate will depend on the circumstances of the case – and getting the timing right requires careful judgment.
The key is having sufficient information to make sensible decisions about possible settlement options. In many cases, this will be after the exchange of initial correspondence and documents about the dispute. For some larger cases, it may tactically be better to hold off until there has been more substantial disclosure of documents.
Generally speaking, the earlier you mediate, the greater the likely savings in legal costs and management time.
HOW IS A MEDIATOR APPOINTED?
If a proposal to mediate is accepted, the parties must then agree the appointment of a neutral to act as a mediator.
In most jurisdictions this can be done either:
- through an ADR/mediation service provider, more information on these appointment services can be found on websites such as www.PrimeDispute.com; www.theMII.ie; www.CEDR.com ; or
- through the parties agreeing to appoint and instruct an independent mediator, you can contact the offices of Elemental to discuss the availability of Jarlath Kearney, a Certified Mediator, to act in such a role, or contact him directly at JPK@ElementalConsultants.com.
Mediator fees vary but in large commercial disputes mediation costs are usually insignificant compared to the parties’ other costs and the sums in dispute.
In our next blog we will look at the process on the day and the pursuit of settlement.
For advice on this procedure or any contractual issue please contact our offices for a free initial consultation.
THIS OVERVIEW IS PROVIDED AS A SIMPLE GUIDE AND EACH INDIVIDUAL MEDIATION MAY ADOPT A NUMBER OF VARIABLES TO ASSIST THE PARTIES IN ACHIEVING SETTLEMENT. THE BENEFIT OF MEDIATION IS THE LACK OF RIGIDITY.
IF YOU HAVE ANY QUERIES ON ADVANCING YOUR DISPUTE TO SETTLEMENT THROUGH MEDIATION PLEASE CONTACT OUR OFFICES DIRECTLY.
+44 (0) 28 9043 4884