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Take the sting out of disputes

More businesses are turning to mediation to resolve their disputes as an alternative to litigation.

This is unsurprising given the time and cost involved in court or arbitration proceedings. There are many benefits from mediation, not least of which is speed.

Unlike court or arbitration proceedings, which can run for months or years, mediation can often resolve disputes after a one or two day session.

The knock-on effect of this is that the cost of resolving a dispute can be significantly reduced.

The settlement agreed at mediation is based on terms that all parties can accept, avoiding the uncertainty and dissatisfaction often experienced in court or arbitration.

There is also room for creativity in deciding a settlement, so that personal, commercial or other important issues can be addressed.

Resolutions such as public apologies, structured payment terms or the restructuring of existing contracts are not options under normal court or arbitration proceedings.

Playing nice

Whereas litigation can lead to bad blood, removing punitive outcomes from the equation has the advantage of maintaining business relationships.

Another major advantage is the privacy of mediation. What transpires is confidential, which avoids potentially damaging or embarrassing publicity in court proceedings.

Similarly, the entire process is “without prejudice” – for example, weaknesses revealed in mediation cannot be relied upon in court proceedings if the mediation is unsuccessful.

The flexibility of the entire process, in contrast to court proceedings, is the real beauty of mediation. It can take place at any time – before a dispute escalates, after proceedings have been lodged with the court and even during a trial.

There can be multiple parties involved, each with different interest in the dispute.

We have experience of a six party mediation at which the employer, contractor, subcontractor and insurers were all in attendance, each party contributing to the settlement deal.

Even once mediation has started, parties may withdraw at any time. The parties’ desire to reach a voluntary agreement is key to a successful mediation.

The mediator will normally open the mediation with a joint session attended by all parties and their representatives.

At this session, the mediator will give an overview of the process and procedures and will then give the parties the opportunity to outline their case, what they are looking for out of the session and the chance to express their feelings on the issues in dispute.

Confidential disclosure

The mediator will have frank discussions with each of the parties about their respective cases at a series of confidential meetings, the content of which will not be communicated to the other parties.

He will examine early on in the session possible areas of agreement as well as disagreement and he will test the parties’ resolve to fight rather than settle.

Crucially, he will also outline the likely costs involved in taking the matter to litigation should an agreement not be reached.

The mediator will often encourage decision makers from each party to meet, either with or without legal representation, to explore possible settlement options.

Where experts appointed for both parties are present, the mediator may also encourage them to meet and seek to narrow the issues in dispute.

When a deal is reached, a joint session will usually be convened at which the terms of the settlement are agreed.

If a deal is not reached, however, the parties can agree to adjourn the session until a later date or can agree to attempt to resolve the issues on an ongoing basis.

Where negotiations have broken down, the mediator may explore with the parties alternative forms of dispute resolution and the benefits of each in relation to this particular dispute.

For those wishing to avoid lengthy, expensive and fraught court proceedings, mediation can be the ideal way to resolve disputes as quickly and as painlessly as can be expected.

No method of dispute resolution can claim to have all the answers, but the rise in the number of disputes going to mediation would surely indicate its value to companies that would rather concentrate on their day job than exchange blows in court.

Louise Shiels is an associate in the construction and engineering group at UK law firm Dundas & Wilson