If your business finds itself at the centre of a commercial dispute, don’t assume that you will need to rush off to court. There are many other options that are quicker and more cost effective for your business. This article discusses how commercial mediation can benefit your business and avoid escalating a dispute further.

What is Mediation?

Mediation is a form of alternative dispute resolution (ADR). It is a way of resolving a dispute without going to court.

Mediation involves discussions and negotiations between two parties facilitated by a mediator that is chosen by the parties. Commercial mediation aims to find a resolution so both parties can avoid needing to go to court.

What Does a Mediator Do?

A mediator is a neutral third person who the parties select. The mediator should have some knowledge of your business area, whether that be construction, franchising or retail disputes. In Australia, a list of accredited mediators can be found online at the Australian Mediation Register.

Many mediators have worked as barristers and have extensive experience in litigation. They will be able to discuss the expenses of taking your matter to court versus settling the matter yourself. They may also point out any defects they see in the other side’s case or your own. It is helpful to have a third party involved in your matter as it can be difficult to ‘step back’ when you are directly involved in, and impacted by, the dispute at hand.

How Does Mediation Work?

During negotiations, the mediator will talk to both parties together and then separately in strict confidence. Parties will usually be asked to sign a mediation agreement outlining the requirement of confidentiality before the mediation commences.

At the beginning of the mediation, the mediator will explain to the parties how the mediation will run and will allow each party to give a run-down of their case. This should be a succinct summary of the issues to date and any steps you have taken to attempt to resolve them.   

The parties will then split into separate rooms to discuss possible offers and actions going forward. The mediator will go between the two parties and continue to facilitate discussions with the hope of finding a resolution. At some point, the parties may re-convene to have another discussion about steps going forward. The duration of your mediation depends on the complexity of the dispute.

Why Should I Use Mediation Instead of Going to Court?

Mediation gives you the opportunity to share your view of the issues and hopefully find a mutually agreeable way of resolving your dispute. Mediation occurs in a relatively informal setting and you do not necessarily need legal representation. This can save you a significant amount of money.

Mediation is also generally a far more satisfying experience for clients. In court, you will not get the opportunity to ‘have your say’. Instead, your lawyers will present your case for you. In a mediation, you will be able to air your grievances on your own terms without having to worry about the formality of a courtroom.

Even if you choose to hire a lawyer for this process, it will be far cheaper than taking a matter to court. It is worthwhile remembering that, even if you win in court, you will most often not recover all of your costs.

Is Mediation Right for Me?

A court will sometimes order a mediation. On other occasions, the parties will agree to commence it. Mediation can occur at any point during a dispute. Some laws, contracts or codes of conduct will integrate mediation as a dispute resolution process. This means that before the parties can take the matter any further, they must engage with the mediation process.

Mediation is used in many commercial disputes, franchise disputes and construction disputes – though it is not limited to these areas. Mediation will not work if the parties are not interested in seeking a resolution.

When to Consider Hiring a Lawyer

Using a lawyer for mediation is optional. However, a lawyer may be preferable for larger, more complex disputes. You should notify the other side if you intend to use a lawyer. By the same token, you may both agree that you would prefer no lawyers to be present.

If a lawyer has handled your matter previously, you should discuss with them what will strategically be the best option moving forward. Having a lawyer present can also make the process less stressful for you personally as you will have someone to advocate on your behalf.

Mediation fees are usually split equally between the parties. Depending on the experience of the mediator and the cost of hiring the mediation venue, costs will vary. The mediator will tell you their fees beforehand. The mediator will usually calculate these fees on a daily basis or an hourly rate. Both parties will need to pay the mediator before the mediation commences.  

Is Mediation Binding?

Generally, the answer is no. However, mediators will require you to come to the mediation in ‘good faith’. If a mediator perceives that you are not acting in good faith, they may exercise their right to terminate the mediation and you will not receive a refund of the mediator’s fees.

If you do manage to reach an agreement at the end of the mediation, the usual course is to write the terms of that agreement down and the parties will confirm and sign them at a later date.

It can be helpful to have a lawyer to help draw up the terms of the final agreement. You should avoid signing anything on the spot if you do not adequately understand it or do not believe you can abide by its terms.

Key Takeaways

If your business is involved in a commercial dispute, consider whether mediation would be appropriate to reach a resolution. Using commercial mediation (rather than going to court) will save you time and money, as you can choose whether or not to involve a lawyer. Remember to find a mediator who has some expertise in your industry, so they can help you find a commercially sensible resolution.

If your business is involved in a commercial dispute or you need help with the dispute resolution process, you can contact LegalVision’s dispute resolution lawyers on 1300 544 755 or fill out the form on this page.

Stacey Stanley
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