Mediation Service
Mediation (Bridging The Commercial Gap)
Mediation is a fairly recent addition to the alternative dispute resolution (ADR) arsenal. As a modern alternative to litigation it aims to keep costs down. Unlike litigation and arbitration, mediation focuses on the needs and interests of the parties rather than their rights and liabilities. Instead of focusing on the past it looks to the future and encourages the parties to re-consider their future requirements, and as a result of that, to re-evaluate their aims and objectives in light of changed circumstances.
Unlike expert determination, mediation encourages creative solutions. Its aim is to help parties think “outside of the box”. The whole mediation process is governed by the "mediation agreement" which includes a confidentiality undertaking on the part of all parties. Statements made by the parties within the mediation are, therefore, without prejudice and non binding. Once a consensus has been achieved, that consensus only binds the parties once it has been articulated in writing and signed by all concerned.
During the mediation process, the parties themselves are put in the driving seat and are encouraged to look at their wider business relationship. As such, it is the relationship between the parties that is key. Unlike the other forms of dispute resolution, a satisfactory conclusion to the result does not involve a winner and a loser, but a win-win solution for both parties, with the result that they are free to develop their business relationship further.
The mediator acts as a facilitator encouraging the parties to explore alternatives not ordinarily considered by the other forms of dispute resolution. A good mediator will ensure that the interests of all concerned are fully voiced and taken account of. Mediation should be seen as a creative process leading to future business opportunities, unlike litigation and other adversarial resolution processes which often lead to the ultimate destruction of the original business relationship and a further loss of future business.
The Benefits
When it comes to commercial disputes, mediation is one of the most valuable tools in the corporate arsenal. Its benefits include the following:
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Reduced Cost – Unlike litigation, which can cost many thousands of pounds, mediation can be a highly cost effective solution, with the potential to cost a fraction of the sum that would otherwise be spent on the litigation process.
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Increased Control – In a mediation the parties remain in control throughout the process, able to determine the areas of discussion, think outside the box, and agree novel settlements that repair and even build on their original relationship.
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Protection of Rights – Until a settlement has been signed by the parties, their respective rights against each other remain intact and are only relinquished once there is a good business reason to do so.
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Supporting Business Relationships – Unlike many forms of dispute resolution, mediation places a strategic importance in repairing the relationship between the parties. Such focus has the potential to develop new and more enduring business opportunities. Settlements may cover more than just the original issues in dispute.
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Confidential – Before entering a mediation, all parties sign a non-disclosure undertaking, promising to keep all discussions confidential. This is a distinct advantage over traditional dispute resolution techniques as it means that all disputes handled by mediation are conducted “behind closed doors”. This guards against unwelcome publicity and helps ensure that all statements made by the parties are made in confidence and “without prejudice”. Similarly, documents prepared during, and for, a mediation are also disclosed under a duty of confidentiality. As a result such statements and documents cannot be relied upon as evidence by the other party in future litigation.
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Increased Speed – Mediations can be set up and conducted at very short notice. Most mediations take less than two days and in many cases can be completed in a few hours.
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Successful Track Record – Mediation has proved a very successful process.
The Mediator
The mediation is coordinated by the “mediator” who acts as a sounding board and go between; an “independent friend” whose job is to guide the parties to “a meeting of minds”. Some mediations may even utilise a number of mediators to help speed the process.
The mediator does not make a judgment on the rights and wrongs of either side’s case. He or she is not there to force a settlement, but to help the parties to reach their own agreement on their own terms.
When choosing a mediator, one should ensure that the person chosen is an "accredited mediator" accredited by a reputable training organisation. The training provided by such organisations may itself even be approved, for example, for CPD purposes by other professional organisations.
The Mediation Process
Prior to any mediation, the parties will be provided with a mediation contract. This sets out the ground rules, such as the date, venue and obligations and responsibilities of each party with respect to the mediation and each other. Upon signature, the parties will then be asked to provide, both to the mediator and to each other, a written summary of their respective cases along with supporting documentation where appropriate. This may often be referred to as a “mediation briefing pack”. The mediator will normally need to receive each party’s briefing pack at least 14 days in advance.
The mediation will be held at an appropriate venue set up by the mediator. Schrodinger Consulting can provide a number of options, as regards venue, which will be appropriate to the needs of the mediation and the parties themselves.
On the day of the mediation, the parties will be asked to attend an initial joint session at which the mediator will outline the mediation’s aims and objectives, the mediator’s role, the procedure to be followed and any relevant ground rules. Where organisations are involved it will not be unusual for the mediator to request, at this stage, confirmation that those attending have full authority to represent their respective organisations and to sign any settlement agreement.
At this initial meeting the parties will then be invited to introduce their respective accounts of the events that have given rise to the dispute and an overview of their case. This initial “open” session will conclude once all the parties have had an opportunity to make their respective opening statements.
After the open session the parties will then retire to separate rooms and a series of separate meetings between each of the parties and the mediator will take place. These separate “closed” meetings, usually referred to as “caucuses”, give each party an opportunity to have a frank discussion with the mediator. It is the mediator’s responsibility, at these sessions, to help each party to explore their respective issues, options for possible settlement and future requirements, aims and objectives. The mediator will also use these closed meetings to consider middle ground on which to found a negotiated settlement and future relationship.
At any time the mediator may call the parties back to a joint session. Once a settlement appears likely a joint session will normally be held anyway. At that joint session, the details of the settlement will be explored and a settlement agreement will normally be drafted. The mediation process remains non-binding on the parties until such agreement is signed by all concerned, at which point the terms of such agreement will bind all signatories.
At all times the parties to a mediation remain in full control, and cannot be forced to agree a settlement unless they decide that it is in their interests to do so. At no time prior to signing a settlement agreement do the parties waive their respective legal rights.
THE ALTERNATIVES
Dispute Resolution
From time to time parties to a commercial relationships will find themselves in dispute. Often these disputes can be resolved through negotiation following escalation within the management structure of each party. Where negotiation fails, a number of methods can be employed to resolve the impasse. These include:
- Litigation
- Arbitration
- Mediation
- Conciliation
- Expert determination
Litigation
Historically the standard form of dispute resolution was through litigation. In most commercial disputes the process would involve a Judge hearing each side’s arguments as articulated by appropriately instructed Counsel (barristers and occasionally solicitors). Such cases involve significant preparation at a high cost in both monetary terms and management time. In most cases, the hearing itself will be public and will often be reported upon.
The other forms of dispute resolution are often collectively referred to as Alternative Dispute Resolution or ADR, so named because they are alternatives to litigation.
Conciliation
One of the most informal forms of ADR is conciliation whereby parties to a commercial dispute agree to try and resolve their differences in a round table meeting. Participants can range from sales staff to management, and at times may include each parties’ legal advisers. Any resultant agreement is non binding unless the parties agree otherwise. In which case they will formalise the terms of agreement into a memorandum or contract.
Arbitration
This has been described as a private version of going to court. Under this arrangement the parties agree on the appointment of an independent arbitrator who is impartial. The parties will then prepare their arguments and supporting information, which will be delivered to the arbitrator in a formalised manner in accordance with the timetable laid down by the arbitrator, or governed by official arbitration rules. On occasions such rules may be found within the contract which is the subject of the dispute. A hearing may then be arranged during which both parties may represent their case. Following the hearing the arbitrator will present his determination, which will be similar to a court judgment. In the absence of a hearing, the arbitrator’s decision will be based solely on the papers presented to them. The decision of the arbitrator will usually be binding, unless agreed otherwise or unless the arbitrator has made obvious legal mistakes or behaved improperly. In most cases the whole process is confidential.
Originally arbitration was viewed as a cheaper form of court action. However, as the process has become more established and standard rules have been employed, arbitration has become less informal and costs have risen. Today arbitration can often be as expensive as court action and on occasions can even be more expensive.
Expert Determination
In this form of ADR, an independent expert in an appropriate field will be asked to look at each side’s case and give an appropriate decision. In many cases the expert will be appointed by an independent professional organisation nominated by the parties, usually in accordance with the contract which is the subject of the dispute. On occasions the expert can be chosen jointly by both parties. In both cases the parties will normally agree to be bound by the expert’s decision. On occasions the parties may decide that an expert’s opinion should be non binding. In either case, a right to proceed to litigation may be preserved by the parties.
Expert determination can be a good means of resolution for disputes involving complex technical areas. This approach to dispute resolution has the flexibility to allow the parties to put in place a dispute resolution procedure tailored to the needs of a particular contract.
The Schrodinger Mediation Service
Schrodinger Consulting can provide accredited mediators with varied commercial experience. Please contact us for further details.