Mediation

Mediation is one of the most popular and accepted forms of ADR. It is a confidential and without prejudice consensual process in which parties to a dispute appoint a neutral individual (the mediator) to facilitate negotiations between them with a view to achieving a settlement. It can be conducted under the guidance of a mediation institution, such as the Centre for Effective Dispute Resolution (CEDR), or (increasingly in complex commercial disputes) ad hoc as agreed by the parties themselves. A mediation can take place before court proceedings are issued or once litigation is underway. It is possible for proceedings to be halted to enable the parties to mediate if the judge considers that this may result in an end to the dispute. An unreasonable refusal to mediate a dispute which is later litigated though the courts can lead to adverse cost consequences for the recalcitrant party.

Many parties only agree to mediate once proceedings have already been commenced or, at the least, seem likely. Increasingly, however, parties to a commercial contract are including a clause in their agreement obliging them to attempt to resolve by mediation any dispute that may arise between them during the contract’s life. The UK High Court has expressly recognised the enforceability of agreements to mediate and is prepared to stay (suspend) any court proceedings brought in breach of such clauses.

Mediation: "Any dispute arising out of or in connection with this Agreement shall be referred first to mediation [in accordance with the model procedure of the Centre for Effective Dispute Resolution, London ("CEDR")], such mediation to be completed within [30] days of signature of the [CEDR] Mediation Agreement."

Typically, for a large commercial dispute, a mediation is a one-day event which can be arranged for a time and at a location which is convenient for the parties. There are no rules as to the procedure to be followed and it can adopt a style and format that best suits the parties’ needs. The mediator will usually conduct a combination of full sessions, which all parties and their advisers attend, and private or "caucus" sessions with each party and its adviser. In those sessions, a party may provide confidential information to the mediator. The mediator may not disclose this information to the other party without permission, but it does enable him to have a fuller picture of the commercial aspects of the dispute. The mediation will continue with private and group sessions until either a settlement is reached, the parties agree to suspend the mediation, they and/or the mediator realise that one will not be achieved, or the time set runs out.

If the parties are able to reach a settlement of their dispute, this will be reflected in an agreement which is, generally, signed by them on the day. It is usually is a requirement of the mediation agreement that someone with authority to bind each party is present at the mediation. If the mediation does not succeed in resolving the dispute, the parties may walk away. However, this does not preclude them from meeting again with or without the mediator. Alternatively, if it is clear that no agreement will be reached, the parties may resume more formal dispute resolution methods, such as court or arbitration proceedings.

Advantages

The advantages of mediation compared to more formal forms of dispute resolution include that:

  • the process is flexible and can take account of commercial issues (such as a desire to maintain a business relationship) as well as the legal strengths of the parties’ positions;
  • a good mediator will be able to introduce novel ways of breaking deadlock that the parties may not have considered;
  • the fact that parties have gone to the trouble of arranging the mediation means they are more likely to enter into negotiations with a view to settling, rather than “going through the motions”;
  • discussions with the mediator are private and confidential. Any offers or concessions made in the mediation are “without prejudice” and cannot be revealed by the other side in later proceedings in court;
  • mediation may be cheaper than litigation.

When is mediation unsuitable?

Mediation may be less suitable where:

  • a fundamental principle is involved which requires judicial determination to set a precedent or interpret legislation, eg. a civil rights matter;
  • emergency protective relief, such as an injunction, is sought by one of the parties;
  • one party has clearly demonstrated its unwillingness to negotiate.

CEDR is the leading provider of training and ADR services in London. Please refer to the External Links section for other ADR providers. ADR providers maintain lists of trained mediators (lawyers, accountants and other specialists) and will recommend appropriate mediators if details of the dispute are provided to them. They also assist in the administrative side of setting up a mediation. Most commercial mediations today are arranged by discussion and agreement between the parties and their advisers. Linklaters, like other leading litigation advisers, is familiar with the commercial mediation community and its members and can recommend and advise on an appropriate choice for a particular dispute.