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Mediation

Mediation is a flexible, voluntary and confidential form of alternative dispute resolution (ADR), in which a neutral third party assists parties to work towards a negotiated settlement of their dispute, with the parties retaining control of the decision on whether or not to settle and on what terms.

There are different styles of mediation but the most common is facilitative in which, unlike a judge or arbitrator, the mediator will not decide the case on its merits, but will work to facilitate agreement between the parties. Sometimes, mediators may be called on to evaluate the claim or issue and the strengths and weaknesses of a particular case (evaluative mediation).

The mediation agreement will usually require the parties to treat all discussions and documents as confidential and without prejudice. Usually, what is said or written cannot be used in later proceedings if the mediation does not settle, but there are some limited exceptions. The confidentiality of the process can avoid issues being made public that the parties want to keep private, as might happen in court proceedings.

Except in unusual circumstances, the parties themselves should attend the mediation. Unless it is a small claim, parties are usually accompanied by their lawyers. In the case of a party that is a company or association, its representative must have authority to reach a binding settlement at the mediation.

Mediation provides a private forum in which the parties can gain a better understanding of each other’s positions and work together to explore options for resolution. During the mediation, the mediator meets privately with each party to discuss the problem confidentially. This allows each party to be frank with the mediator and have a realistic look at their case in private, without fear that any weaknesses discussed will be communicated to other parties.

Most commonly, mediation is used to narrow issues in dispute, to prevent conflict from spreading, and to resolve disputes. The process allows more creativity and flexibility over settlement options than court or arbitration.

What happens at a typical mediation?

The mediator usually has discussions with the lawyers (or the parties if they are not legally represented) in advance of the mediation to ensure that the formalities have been complied with, and to identify the key issues. This helps to ensure that time is not wasted.

The mediator will greet the parties on arrival at the session and show each party to its own private room. Usually, the mediator will formally open the process with a joint session, attended by all parties and their lawyers. During this session, s/he provides an overview of the process, his or her role and the procedure. Each party then has an opportunity to make an opening statement, giving its perspective on the dispute and highlighting points of particular concern. After the opening, the mediator will have private discussions with each party to assist in the negotiating process.

Ultimately, this may result in the parties reaching a settlement that is either documented at the mediation or shortly thereafter, usually in the form of a settlement agreement. Alternatively, the parties may use the discussions at the mediation as a springboard for further settlement talks after the mediation.

Mediation does not always result in a settlement but it generally has a high success rate. Mediators who responded to the seventh mediation audit carried out by the (CEDR) in May 2016 reported that just over 67% of their cases settled on the day, with another 19% settling shortly thereafter.

Benefits

Some of the potential benefits of mediation include:

  • Communication problems between the parties can be overcome. The mediator is a neutral third party who can act as an intermediary between the different personalities and negotiating styles of the parties.
  • The mediator can help the parties work through a deadlock situation that can be created by competitive or positional negotiation.
  • Business relationships can be preserved or enhanced by mediation. Long-term relationships, arrangements in small or sensitive markets, joint ventures and similar relationships can be restored.
  • Confidentiality and privilege are cornerstones of the mediation process. Agreements to mediate usually provide specific protection for confidentiality and privilege.
  • The parties have complete choice over the selection of the mediator and can therefore choose the mediator who is most appropriate for the dispute. Conversely, the parties cannot choose a judge if the matter goes to full trial.
  • The legal costs, lost opportunity costs and management time can be reduced.
  • Mediation can produce outcomes that might not be possible via determination by the court or arbitration. The limited scope of legal remedies in court or arbitration may be inappropriate to resolve the wide range of business or commercial issues that might arise (for example, the need for new financing). The result can be new business opportunities and restructuring of old relationships.
  • The client’s personal, commercial and technical needs, interests, aims and objectives can be achieved. The process helps the client to identify underlying interests and the implications that various alternative outcomes may have on those interests.
  • The process is entirely flexible and can be tailored to meet the parties’ needs and all issues.
  • The clients have active participation in the process and control the outcome.
  • It is voluntary. The parties can withdraw from, or terminate, the mediation at any time. The mediator has no coercive powers.
  • The process is culturally sensitive and adaptable. A team of mediators can be employed, representing the diverse cultural backgrounds, in multi-party cases. A bilingual mediator can establish credibility and authority in a case involving language obstacles.
  • The process provides a tool for project managing large, complex or multi-party disputes.
  • It can provide a speedier resolution. It can be arranged quickly, often within a few days or weeks.
  • A mediation can take from a few hours to one or more days. Mediations rarely take more than a few days, even in relation to complex or multi-party commercial disputes.
  • The process is low-risk; there is “nothing to lose” by attempting a mediation.
  • It has a high success rate and produces durable results. The statistics vary, but range from 65% to 85%, representing cases that settle at mediation, and some mediators advertise success rates in excess of 90%. The outcome is likely to be more palatable to clients than any solution that a court or arbitration tribunal imposes, as the clients themselves have responsibility for creating it.

Disadvantages

The long list of the benefits shows that it can be difficult to argue against mediation.

However, some clients may still have reservations. Some of the disadvantages include:

  • If unsuccessful, mediation will add time and cost to the process of resolving the dispute.
  • There is a fear that the process will expose the client’s hand or strategy. As nothing said may generally be used in later proceedings, the risk is the inadvertent release of information to the other side that may give some indication of future litigation strategies or may alert the opponent to possible avenues of inquiry if the dispute does not settle. Generally, however, strategic discussions will occur in private session with the mediator, who is acutely aware of his duties of confidentiality.
  • Mediation is “non-binding” and some argue that an uncooperative party could manipulate its voluntary nature. The assistance of a mediator is a powerful tool for overcoming a lack of co-operation in mediation; the mediator may even terminate a process where he considers that a party is not participating in good faith. There is a misconception that settlements reached in mediation are not enforceable. Most mediation agreements stipulate that the settlement reached will be enforceable as a contract once it is in writing and signed. There are other forms of giving effect to an agreement reached at mediation, including by court order (if there are associated proceedings).
  • The mediator cannot order or require disclosure, which a party may feel is required prior to agreeing to a mediation, although the extent of disclosure can be agreed between the parties as part of the process.
  • Parties who consider that they have a strong case, may feel that this is not adequately recognised through the process. If this is the case, it may be worth considering a more evaluative approach.

Confidentiality

Mediation agreements will usually include express provisions about confidentiality in relation to:

  • The process as a whole. Therefore, neither party can disclose any information arising out of, or in connection with, the mediation without the express consent of the other party.
  • Information given to the mediator during the process. This includes the private sessions with the parties. Therefore, the mediator cannot disclose this to the other side or any third party, unless the party disclosing it consents.

As confidentiality is integral to the process, a confidentiality clause is likely to be implied in the absence of an express confidentiality clause.

Who pays the costs?

Who should bear the costs of the mediation is a matter for agreement between the parties. One common approach is as follows:

  • The parties agree to share the mediator’s fees, expenses (for example, travel) and other costs of the mediation (for example, venue, food and refreshments).
  • The parties agree to bear their own legal costs (this includes preparation for, participation in and representation at the mediation).

For any questions you may have concerning mediation contact Joanna McKenzie or Patricia Rosario.

EM Law Joanna McKenzie Patricia Rosario

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