Nick Parker, partner and head of dispute resolution at Berry Smith Lawyers and a civil and commercial mediator, considers the continued growth and success of voluntary mediation between parties in resolving civil and commercial disputes.
Disputes are not generally considered to be ‘good news’ by the parties involved and resolving them quickly and effectively is, usually, a priority.
A recent survey shows the continued growth and success of voluntary mediation between parties in resolving civil and commercial disputes.
There can be a wide range of issues that businesses face regarding their day to day operations from time to time, including disputes with customers and suppliers. The most debilitating disputes for many businesses are often shareholder or partnership disputes involving the business owners. In the most serious cases these disputes can imperil the business itself.
Traditionally, the forum for resolving such business disputes has been through litigation in the courts. However, in the last 15 years or so, forms of Alternative Dispute Resolution (ADR) have grown in use in the UK, and mediation is now regarded as a mainstream dispute resolution option.
This fact is recognised by the courts, with an emphasis on encouraging parties to mediate their dispute before the court need to decide the outcome.
Mediation is however still a voluntary process, with the parties needing to agree to appoint an independent party to act as mediator and, usually, attending a one-day meeting with their advisers and the mediator in an attempt to reach resolution in a legally binding agreement.
One of the frequent misconceptions of mediation is that the mediator imposes a decision – that is not the case. The mediator facilitates the discussions in such a way that it focuses the parties on reaching their own solution.
A recent wide ranging survey carried out by CEDR, one of the leading mediation providers, concludes that around 12,000 civil and commercial law disputes were referred to mediation last year, an increase of 20 per cent from when the last survey was conducted two years ago.
The survey found that of the cases that proceed to mediation an impressive 89 per cent settle either on the day or shortly afterwards. In my experience, these cases are not just ‘easy wins’, with many disputes that have previously proven intractable also capable of being resolved.
In a further survey of dispute lawyers by CEDR, of the disputes that reach them (and many disputes are of course resolved before lawyers are appointed), 24 per cent are settled before court proceedings by direct negotiation between lawyers, 7 per cent are settled after court proceedings are issued by similar negotiation, 45 per cent settle at mediation and only 4 per cent of cases go to trial.
So, what are the particular features of mediation that make it a ‘good thing’?
- Speed: a mediation can be arranged within a matter of weeks and can be arranged either before or after court proceedings have been issued.
- Confidentiality: the discussions carried out at mediation are confidential. This means that proposals and discussions can be held in an environment which cannot be referred to if the dispute does not settle. Mediation therefore provides a safe harbour for holding full and frank discussions. In particular, each party has private discussions with the mediator that remain confidential from the other party. This is particularly useful to the mediator in seeing the whole picture of the dispute, enabling informed guidance of what it will take to get to a settlement.
- Informality: while both parties need to have an understanding of their position and that of the opponent in relation to the dispute, it is not essential for the parties to have progressed through the detailed procedural requirement needed in litigation (that can incur significant cost).
- Less cost and avoidance of risk: one of the main attractions of mediation over litigation is that it is a significantly cheaper process and, if successful, avoids the risk of losing and the wasted costs and adverse costs that may have to be paid to an opponent.
Possibly the major benefit for many businesses is the flexibility of outcome. While court proceedings often provide a binary solution – one party wins and the other loses, and usually the judgment involves the award (or not) of money – mediation provides an opportunity for the parties to reach a much wider agreement. That can cover a whole host of solutions – creativity in problem solving is encouraged.
If there is to be a payment of money from one party to another, a much longer period of time and structure can be agreed than would be obtainable in court; a solution could bring other assets or value in to the agreement that may not be directly relevant to the dispute (for example investment property held outside the company or partnership or an agreement to place future orders); or the division of a business or its assets or customer list on agreed terms to give each party a way forward.
Significantly, a mediated outcome can help preserve business or personal relationships – whereas litigation is often terminal to future dealings between parties.
In summary, mediation has much to commend it and usually ‘makes sense’ when faced with a business dispute that cannot
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