Index

1. What is Mediation?

·        Mediation is a procedure to resolve disputes.  It is voluntary and non-binding.

·        Mediation is not simple negotiation nor is it a decision making process.  Mediators do not decide preliminary issues, nor grant freezing orders nor issue awards and judgments.

·        Mediation introduces a neutral dispute manager between the parties.  This is the key distinguishing feature of the process.  The dispute manager is usually selected by the parties for technical or legal expertise and broader mediation experience.  He/she is there to facilitate communication and to change the structure and dynamic of dialogue.  Much depends on his/her skill.

2. Why is it important?

3. When is it best used?

·        Mediation is best attempted when all sides see an interest in resolving differences.  It may well take place when negotiations have failed, before or after the start of the legal process.  Broadly, the earlier mediation is attempted the greater possible saving in time and cost and the better the opportunity to preserve relationships and reputations.

·        Mediation is not the first line of approach for all disputes.  As a standard dispute strategy, negotiate first, mediate next and then, if settlement is not achieved, arbitrate or litigate.  However, another approach may be essential.  Legal proceedings may be needed to interrupt a time bar.  A freezing order may be needed to preserve rights and property.  The parties may variously want summary judgment, establishment of a formal precedent or judgment in open court.  One party may even wish to delay or avoid settlement negotiations.

·        Mediation can, however, be used effectively in parallel with arbitration or court processes.  For example, once a court order has been issued to protect the positions of the parties, they can mediate without fear of disadvantage.

4. How does it work?

·        Mediation requires no set procedure.  It is wise, at the outset, to sign a mediation agreement governing the procedure.  Thorough preparation is then vital.  The parties need to approach mediation with an open mind, to understand how the procedure works and to focus on their interests and needs (rather than their rights and wants).

·        The mediation itself can take just a day.  This is generally preceded by an exchange of short written submissions.  The process is informal, bound neither by strict rules of evidence nor legal argument.  Ideally, decision makers from each side should attend.  Alternatively, mediation may be conducted through a series of meetings, some attended by all parties, others by the Mediator and one party (with or without advisers).  The Mediator may conduct "shuttle diplomacy", forging a basis for settlement.

·        If successful a settlement agreement will be drawn up between the parties, which is enforceable as a contract. 

5. What are the advantages of mediation?

Mediation offers many advantages.  To highlight just a few:

·        Quick – Mediations take typically about three weeks from start to finish, but can be organised more quickly than that.

·         Inexpensive.

·        Involvement of a neutral person –The Mediator is in a unique position.  Those who have no experience of mediation sometimes comment that the parties can settle their disputes, if they are inclined to do so, so why involve a Mediator?  The answer is that if the parties can settle their dispute they should do so.  They don't need to mediate.  But often they can't.  Or settlement is taking too long or has become bogged down.  In those circumstances, the involvement of a Mediator can bring new and different dynamics to the process of settlement negotiations.

A Mediator offers a neutral and independent catalyst and can bring a fresh mind to the problem.    He/she is trustworthy.  He/she has no personal stake in the outcome.  He/she can aid communication between the parties.  Often they will say things to him/her, once he/she has their trust, which they would never say to the other side.  He/she can focus parties on the problem rather than on, for example, the personalities of those involved in the process.

A Mediator can help the parties understand the other parties' case.  Parties don't always explain their cases well.  Also they can become blind and deaf to what the other side say.  Filtered though a third party who is neutral and a good communicator, a point may be better understood and appreciated.

The Mediator may be able to overcome emotional or other blockages to settlement, save face or overcome deadlock because he is independent and detached.  The Mediator can often suggest new avenues to explore.  He/she can explore settlement proposals in more depth, help the parties assess chances of settlement realistically and win approval for settlement proposals.

The fact that he/she is hearing and speaking to both sides confidentially provides him/her with a unique perspective.  This is probably the most important point – the reason why the process works -and may enable him/her to build a settlement when the parties have not been able to do so.

·        Not adversarial.

·        No delay to case – It is not necessary for court or arbitration proceedings to be held up.  A mediation can run in parallel.

·        Without prejudice and confidential.

·        Parties present – Disputes which go to litigation tend to be run by the parties' lawyers and the parties themselves can feel distanced from them.  Mediation brings the parties back into the front line and gives control back to them.

·        Aids communication – Issues can be clarified and parties helped to understand the case and their opponents' positions.

·        Substitute "day in court" – The parties get a chance to put their case.  The process can be cathartic in the same way as a trial.

·        Helps overcome deadlock and emotional blockages.

·        Helps parties reassess their cases.

·        Preserves business relationships and reputations – Businessmen exist to do business, not to engage in litigation.  Often, it is not in their interest to fight an important customer or supplier.  Mediation offers a way of seeking a prompt, amicable solution, thus freeing the parties up to do further business together.  It is interesting to see how peoples' relationships can change during the course of a mediation.  A mediation that is unsuccessful on the day will often have changed the parties' perceptions of each other as well as the case which, if the change has been positive, may facilitate a subsequent settlement. 

·        Suitable for multi-party disputes – In the shipping world, for example, a common situation is a string of back to back charterparties (contracts).  A mediation can bring everyone together to try to resolve a string of disputes.  Perhaps less obviously, there may be two parties named on a writ or in an arbitration but more than two in the background,  For example, one of the parties' insurers may have reserved their position.  The involvement of all concerned in the process may enable a solution to all disputes – on the face of things and in the background – to be reached.

·        Flexible resolutions – Mediation can produce results which courts and arbitrators cannot.  For example, non-monetary solutions – e.g. agreements as to future business.

6. What are the remedies and benefits not provided by mediation?

Mediation cannot provide all the remedies and benefits available though other means of dispute resolution.  For example:-

·        Jurisdiction – The commencement of a mediation does not constitute the commencement of legal proceedings.  In a complex dispute which might be litigated in one of a number of jurisdictions, it might be wise to consider whether steps should be taken to secure a favourable jurisdiction for the dispute, before mediating.

·        Time bar – The commencement of mediation does not interrupt a time bar.  The parties can institute legal proceedings and then proceed to mediate once their position is protected.

·        Freezing and Search & Seizure Orders – A Mediator cannot grant a freezing order or a search and seizure order (or their equivalent in jurisdictions outside England and Wales) for the purpose of preserving rights and property.  An application to court can, however, be made with a view to obtaining such orders.  The parties can then proceed to mediation without fear of disadvantage.

·        Publicity – If one party needs publicity, for example the issuance of a judgment in open court, that publicity cannot be obtained through the mediation process.  Parties should consider, however, whether the publicity of a judgment will genuinely satisfy their interest and needs or whether reputations and business relationships may be preserved by other means.

·        Precedent – No judgment, whether summary judgment or after full trial, is issued by a Mediator.  If one of the parties' objectives is to obtain a legal precedent, then the process of mediation will not satisfy that need.  In the writer's experience, many disputes can at some point appear to be a matter of principle.  One party may feel that its requirements can only be satisfied by the establishment of some form of precedent.  Careful consideration should always be given to whether this is in fact a genuine need.

N.R.Clift
08/10/03