When a business dispute arises, whether this is a supplier failing to meet their obligations or non-payment by a customer, it’s important that it is resolved quickly to minimise business disruption and escalating costs.
Many businesses often think that initiating court proceedings is the only option in commercial disputes. The cost and hassle of going to court may mean that many disputes go unresolved or are escalated.
Often overlooked, commercial mediation is an effective alternative to the usual litigation route. According to research by the Centre of Effective Dispute Resolution,* 89 percent of disputes that are mediated are settled, with settlement reached on the same day as mediation taking place in almost three quarters of all cases.
Going to court is rarely a quick fix. The court process is often destructive in terms of personal relationships and can cause cash flow issues for a business. At court, it’s a judge who decides the outcome of a dispute. With commercial mediation, both parties agree to the appointment of an independent third-party mediator who facilitates the settlement of a dispute rather than making a judgement.
The mediation process is confidential and without prejudice. This means that nothing mentioned in the mediation process can later be used or referred to, should court proceedings become necessary. Mediation is voluntary process and once an agreement is reached, that agreement is recorded in writing as a confidential and binding agreement.
One of the reasons why mediation can be a much more effective solution than going to court is the facilitative nature of the process. The aim is to find a solution that is acceptable to both parties. This is particularly important where there is likely to be an ongoing relationship, for example, between employer and employee or supplier and customer.
It’s also important to be aware that the court rules state that issuing court proceedings should be regarded as a last resort. Where possible, parties should try to resolve their disputes by alternative dispute resolution (ADR) and an unreasonable refusal to engage in ADR can lead to a party being penalised in terms of costs in any subsequent court proceedings.
Mediation is not litigation – the aim of the process is to resolve a dispute amicably and come to a solution that, as far as possible, satisfies both parties.
A neutral third party mediator who will act as a facilitator will usually be appointed by your solicitor. It’s helpful to chose a mediator with experience of the type of dispute involved and who is accredited by a leading mediator training and accreditation provider such as the Centre for Effective Dispute Resolution (CEDR).
Once a date for mediation has been set, the solicitors acting for both parties provide the mediator with an overview of the dispute. They also agree issues such as how information will be provided and structured. The better the preparation, the smoother the process is likely to be. Before attending a mediation session you should consider the following factors:
It’s expected that you should provide your mediator with relevant information such as details of any previous negotiations, witness statements and the costs associated with the dispute. If there are confidential documents that you only want the mediator to see, then these may be sent to the mediator separately.
You can attend mediation alone, with other relevant parties or with legal representation. If you don’t have a solicitor in attendance, it’s a good idea to have agreed access to them in advance so you can contact them should you require advice. It is essential that the parties attending the mediation have the authority to settle the dispute.
The mediation process may or may not include an opening meeting with all parties, at which the mediator will introduce the process and address issues around confidentiality. Each party can then present the key points in their side of the dispute.
The two parties then go into different rooms while the mediator goes between them, running exploratory sessions in which they aim to understand the facts of the case and each party’s version of events and facts. After this, the mediator will discuss settlement options with the parties and work with them to help reach a settlement.
A major benefit of the mediation process is the potential for reaching a settlement that is more acceptable to both parties than in a court case where there is a winner and a loser. Mediation almost always costs significantly less than going to court.
Of course, not every dispute can be settled by mediation, but with all the advantages that they process has, it’s hard to see why most businesses facing a dispute wouldn’t seek mediation as the simplest, most appropriate and logical solution.
Source: *2018 Centre for Effective Dispute Resolution Mediation Audit
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