Mediation is a consent based dispute method where the parties meet together with a third party called a mediator who assists the parties to reach their own settlement. Unlike arbitration, in which the arbitrator makes a binding decision, mediation does not result in an enforceable decision being made by the mediator. Unless the parties come to an agreement, the dispute is not resolved.
Mediation is often ordered by the Court in an attempt to settle a dispute before trial, with the aim of saving the parties time and money by finalising the dispute sooner rather than later.
You can also agree with parties you are in dispute with to have a mediation at any time both before or during litigation.
You may want to include a mediation clause in your agreements so that if a dispute arises, the parties agree to attend a mediation before any litigation is commenced.
It potentially reduces the time and costs of resolving a dispute
It provides all parties with an opportunity to voice their views and hear the other parties’ views in a brief and efficient manner
It allows the parties to have greater control over the procedure to be followed and the timings involved as compared with litigation
The relationships between the parties need not be destroyed and the parties may be more agreeable to continue working together following resolution of the dispute as compared
The mediation process is confidential. The dispute is not heard in public and any documents prepared or statements made for the mediation process are not able to be used as evidence in any subsequent litigation.
The parties will usually have a chance to speak to the mediator in private, away from the other parties involved in the dispute so that confidential information can be disclosed to the mediator (such as desired dollar amounts for settlement.) That information will not be disclosed to the other parties without permission, but may assist the mediator in encouraging settlement proposals from the other parties, that are more likely to be acceptable.
Because a mediator does not make a binding decision, the parties may be more open and frank in their discussions, which in turn may assist in the settlement process.
Factors that should be taken into account when deciding a dispute’s suitability for mediation include:
The parties’ capacity, willingness and preparedness to negotiate and seek resolution of the dispute in a way that benefits all parties;
The parties’ capacity to make an informed decision on their own behalf to participate in the mediation or to participate with a representative whose involvement is acceptable to all the parties;
The safety of the parties and the mediator
Any cultural norms that may make mediation an unsuitable dispute resolution process; and
The need of the parties to consult experts to obtain sufficient information to commence the mediation.
Important aspects of preparing for a mediation are:
Picking a mediator with an understanding of the technical and commercial problems which are faced by the parties and a good understanding of the process if a negotiated outcome cannot be reached.
Have the parties execute an agreement to mediate, including amongst other things, a confidentiality undertaking;
Prepare the mediation venue;
Organising the exchange of any initial information required by the parties to prepare for the mediation including all technical information necessary to ensure that all commercial and technical issues are understood to the extent that same can be negotiated to outcome; and
Obtain agreement from the parties regarding the attendance of any support people needed by any party.
Factors that should be taken into consideration when choosing a mediation venue include:
Whether the venue is on neutral territory and / or is agreeable to the parties;
Whether the venue is readily accessible to the parties;
Whether the venue provides the required level of formality or informality to suit the mediation;
Whether the facilities at the venue are adequate – for example telephones, facsimile service, photocopying and refreshments;
Whether the venue has separate rooms or discrete areas for the use of the parties when they are not in the mediation room; and
Whether the venue is available for the required length of time.
The reasons for there being an agreement to mediate include:
The protection of the confidentiality of the negotiations;
To obtain prior agreement to the mediator’s fees;
To obtain a practical demonstration of the parties’ commitment to participation in the mediation process.
Provision that should be included in the mediation agreement include:
The names of all the parties to the mediation;
Confidentiality undertakings; and
Agreement as to the mediator’s fees and when the fees are required to be paid.
