Mediation is like a business meeting, aimed at resolving a dispute. Instead of the two parties seeking to find the solution, an independent third party facilitates the discussion between the parties.
What does a mediator do?
The role of the mediator is to give each party a chance to speak about their views, then respond to the other, and then help the parties work together to come up with a solution to the issues.
Once the parties come to a verbal agreement, that agreement is written up and signed to become a binding contract. Mediation is an effective way for parties in a business relationship to resolve their disputes in a productive way so that they can both benefit from the solution.
Do I have to attend?
Some industries and piece of legislation encourage mediation.
For example, the Franchising Code encourages franchisees and franchisors to resolve their disputes through mediation, before trying to more costly avenues such as litigation. If you are a franchisee or franchisor, and the Mediation Adviser has notified you that your franchisor or franchisee have requested mediation, you must attend.
The first step is that the complainant, being the person who has initiated the mediation, has sent you a letter telling you what the issues are, what outcome they are looking for, and what action needs to be taken to resolve the matter. This is called the Notice of Dispute.
What happens if you refuse to attend mediation? This is a breach of the Franchising Code and may attract a penalty of 300 units, equivalent to $51,000.
What do I do at the mediation?
You are not just required to attend the mediation; you must also genuinely try to resolve the dispute. This means you must make clear what you are trying to achieve through the mediation process, and take care not to damage the reputation of the franchise system during the dispute.
Where will it be?
The Codes states that the mediation must be in Australia. Parties can come to their own agreement about where the mediation takes place in situations where the franchisor and franchisee are based in different states.
It is important to note that a franchisor cannot require a franchisee to attend mediation outside the State where the franchisee’s business is based. However, the parties can come to their own arrangement for the mediation to take place in a different State.
Where the parties do not agree on a location, the Mediation Adviser will determine a location that is mutually convenient to both parties.
A Notice of Dispute can be a formal letter, or it can be in an email. We recommend dealing with contentious issues when they are raised before they escalate. You or the other side can make suggestions for rectifying problems. This gives you an opportunity to respond and resolve any disputes yourselves, before having to go to mediation. You could save yourselves time and money if you work it out between you.
If however you receive a notice of the dispute, LegalVision can help you. LegalVision provides businesses and individuals with tailored online legal advice including dispute resolution. We have experienced business lawyers who will help protect you. Call LegalVision today on 1300 544 755.