Mediation is an informal alternative dispute resolution process, an alternative to litigation and arbitration, where an independent and neutral mediator assists the parties in dispute to come to a mutual decision.
After the commencement of court proceedings, courts often look to encourage parties to resolve their dispute by way of mediation as opposed to continuing with costly proceedings.
Some commercial contracts contain dispute resolution clauses, which require parties to attempt mediation before commencing any proceedings, in order to potentially save costs.
What does a Mediator do?
Unlike a judge in court or an arbitrator in arbitration, a mediator does not make decisions for the parties. A mediator’s role is to encourage the parties to discuss the issues and come to a mutually beneficial arrangement. The decision to settle the matter rests with the parties, and the mediator cannot force any settlement.
During a period of mediation, the mediator may have a meeting with both sides or separate meetings with the parties to facilitate them coming to some form of settlement. The mediator may ask that the disputing parties provide settlement proposals to each other to help open discussions for settlement.
Benefits and Drawbacks of Mediation
The primary benefits of mediation over litigation and arbitration are the substantial cost savings, a more informal process encouraging discussion, and the speed in which parties can resolve an issue. It is an effective way of avoiding lengthy court or arbitration proceedings. Mediation is also confidential between the parties.
The disadvantages of mediation over litigation and arbitration are that mediation is mostly voluntary, and any decision by the parties is not necessarily binding, depending on the terms of the settlement.
It is important to record any settlement between the parties accurately by entering into a formal Deed of Settlement and Release. Entering such a Deed ensure the release of one or all relevant parties depending on the circumstances and acts as a bar to commencing legal proceedings. If a party does not comply with the Deed, e.g. to pay the settlement amount, it can be enforced by the other relevant party.
However, notwithstanding some disadvantages, it is always better to attempt to come to some commercial arrangement by mediation, rather than spend large amounts of money on lengthy court proceedings. There is also the added advantage that if the parties come to a negotiated settlement, there is more likelihood that the parties may preserve or renew their existing business relationship. In litigation or arbitration, it is often harder to preserve existing relationships, particularly in litigation with its adversarial processes.
If your business trades overseas, then mediation can be an efficient alternative dispute resolution method to resolve disputes between parties from different countries, rather than potentially complex and expensive cross-border litigation.
Who governs international mediation?
Some of the administrators and rules of international mediation include those of the London Court of International Arbitration (LCIA), which has a presence in London and Singapore, and the International Chamber of Commence (ICC), which has a presence throughout the world.
LegalVision has dispute lawyers who can advise you in relation to mediation or other alternative dispute resolution options and can attend mediation to assist you before a mediator and the other party.