Resolving Commercial Disputes By Way of Mediation
In previous articles, we have explained how Alternative Dispute Resolution (ADR) offers parties in commercial disputes alternative methods of attempting to settle their differences outside of traditional civil court proceedings.
Mediation is the most frequently adopted form of Alternative Dispute Resolution, where a neutral third party, known as the mediator, is appointed with a view to facilitating communication and negotiation between the parties involved.
Mediation is regularly commenced as the result of:
- agreement between the parties to adopt the procedure,
- a Judge ordering or encouraging its adoption,
- a governing clause in the contract that specifies this form of resolution should a dispute arise.
Mediation is entirely voluntary. The parties retain full control throughout the process and are free to adopt mediation at any stage during their dispute, whether before or after formal legal proceedings in a civil court have been commenced.
Where mediation does not produce an agreed Final Settlement, it may assist in clarifying the points of contention between the parties and identify areas of potential compromise.
We are regularly instructed by clients contemplating ADR in commercial disputes. Invariably, they ask a multitude of questions concerning the nature and practicalities of the procedures available.
In this article, Stuart Southall from KANGS explains aspects of ADR that are often initially misunderstood by clients.
Considering Alternative Dispute Resolution
It is essential that the services of experienced and knowledgeable solicitors who will be able to advise on crucial issues in relation to commercial disputes are obtained given the considerations required some of which are set out below.
Correctness of procedure
When considering whether ADR by way of mediation is the correct procedure to adopt, the following are of relevance:
- it can be significantly more economical than proceedings through a civil court,
- the proportionately of the potential costs against the value of the claim,
- the courts in England & Wales expect parties to have considered proceeding by way of ADR and may order costs against any party unreasonably refusing to adopt it,
- mediation generally provides a much faster route to settlement,
- the process is generally found to be less stressful than a contested court hearing in a civil court,
- where any ongoing negotiations between the parties are not progressing, mediation can help improve communication, identify underlying interests, and guide the parties towards a compromise that addresses their respective concerns,
- the process of mediation is confidential with the parties agreeing not to discuss information outside of the mediation,
- confidential information disclosed to the mediator in private will remain confidential and will not be disclosed to the other party. This may benefit, for example, a party who is anxious to protect the reputation or sensitive business activities of a company or partnership.
- mediation is conducted without prejudice with the result that the details of offers made to settle cannot subsequently be raised in a civil court. Accordingly, discrete conversations can be conducted without fear of disclosure.
- as the parties themselves control any settlement decision, as opposed to an appointed court official, they will dictate the nature of terms included in any concluded Settlement Agreement which they enter into.
- parties engaged in mediation do not have to accept an outcome with which they are not happy.
Circumstances where commercial mediation may not be appropriate
Commercial mediation will not be appropriate in every case:
- if settlement discussions are underway and a positive outcome may be achievable, introducing mediation is likely to hinder progress. It is only when negotiations are clearly stalled that seeking an alternative remedy may be appropriate,
- where the disagreement involves a disputed point of law or a controversial legal issue, mediation will not be appropriate,
- if a Summary Judgement may be achievable relatively quickly and efficiently through a civil court, mediation may not be appropriate,
- if an emergency injunctive or protective relief is required, relief should be sought from a civil court. Mediation may become viable once the immediate crisis has been resolved.
- unless both parties are willing to co-operate constructively, mediation will not be appropriate.
Mediators
Mediators are not Judges or decision makers but, generally, are highly trained professionals whose role is to identify and establish the essential elements in a dispute. They will work with both parties through a structured negotiation as a facilitator to open up discussions and support the parties towards settlement.
When appointing a mediator, it will be necessary, amongst other things:
- to identify one who is professionally accredited,
- has experience in the areas of the dispute and
- is covered by professional indemnity insurance.
The Conduct of Mediation Proceedings
Informality and co-operation in pursuit of a settlement as swiftly as possible is the general intent of mediation proceedings:
- dependant on the nature and extent of the dispute, the mediation process may well be completed in a single day,
- the mediator will normally discuss the position with both sides separately in order to establish their version of events,
- if agreed, the mediator may bring all the participants together to talk. However, where necessary, it is quite conceivable that the parties need not come face to face throughout the procedure,
- mediation is possible online, where the circumstance permit,
- where a resolution is reached, the parties will sign a ‘Settlement Agreement’ containing the terms of the agreement reached,
- this Settlement Agreement serves as a legally binding contract,
- in those situations where civil court proceedings had already commenced prior to the introduction of mediation proceedings, the civil court may make an Order incorporating the agreed terms into a ‘Consent Order’ or a ‘Tomlin Order.’
How Can We Assist?
The team at KANGS brings extensive expertise in all aspects of Alternative Dispute Resolution in commercial disputes, regardless of their complexity or nature. Our ADR Team includes trained mediators who frequently assist parties seeking mediation to resolve an ongoing dispute.
Additionally, we are able to provide suitably equipped offices to conduct mediations with both private rooms and a ‘joint room’ for opening statements and ongoing discussions between the parties.
If we can be of assistance, our team would be delighted to assist you, simply contact us using the details below:
Tel: 0333 370 4333
Email: info@kangssolicitors.co.uk
We provide initial no obligation discussion at our three offices in London, Birmingham, and Manchester. Alternatively, discussions can be held through live conferencing or telephone.
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