When a commercial dispute arises, the primary options for parties are negotiations, court litigation or alternative dispute resolution (ADR), usually offered when approaching experienced commercial law firm.
When informal face-to-face negotiations have failed but the cost of court litigation appears to outweigh any perceived benefit of commencing court proceedings, mediation, a well-established form of ADR, is a great alternative. It is flexible, voluntary and confidential, and uses the help of a neutral third-party to reach a negotiated settlement between parties in their dispute. There are many benefits to the use of mediation in commercial disputes.
The presence of a neutral third party facilitates unbiased supervision and guidance to ensure all parties have an equal and fair chance to advocate for their wishes during deliberations all the while allowing the parties to retain control of the decision of whether or not to settle and on what terms. Thus, provided that the mediation is successful, both parties should be happy with the outcome.
The confidentiality that mediation ensures means that if the process were to be unsuccessful, the associated details cannot be used in any further litigation. This can offer a source of comfort and sense of security for parties, encouraging the disclosure of information that may be imperative in the resolution of matters, but which might otherwise be withheld.Research carried out by the Centre for Effective Dispute Resolution (CEDR) found that mediation is the preferred form of dispute resolution by a significant number of businesses, likely for reasons such as that discussed.
Though already credited for its flexible nature, mediation appears to be improving further in terms of its ability to accommodate for different cases. There is evidence to show that in cases where slightly more direction for the parties is needed, the role of the mediator can evolve from an enabler to more of an evaluative position where parties can request that the mediator decide at least some of the merits of the case. This can prove beneficial in reducing the time that it takes to arrive at an agreement as well as ensuring better informed deliberations to deliver a successful and appropriate outcome for all parties involved.
Another benefit to mediation is that, as a form of ADR, it aims to resolve disputes and establish agreements between parties without the need to go to court and incur the subsequent costs. Where a party decides not to engage in mediation but rather to go directly to court litigation, the judge will want to know the reasons for that decision. Additionally, even if such a party is successful in their court case, it is not guaranteed that the judge will award them costs and could potentially even order that party to pay some of the costs of the other party. Hence, further benefits of mediation can be observed here.
Mediation can also be incredibly beneficial when focussing on the aftermath of resolving a commercial dispute. It is important that parties maintain a healthy, workable and professional relationship, something that can better be ensured by a flexible and voluntary form of dispute resolution like mediation, rather than through court litigation which can become quite tense.
On the other hand, one can argue that a disadvantage of mediation in commercial disputes is the need for extensive and thorough preparation, which is ultimately very time-consuming. As with almost everything, the greater the amount and quality of preparation done, the more likely the desired outcome is. However, it can still be a tiring and stressful task to effectively prepare for mediation. One needs to gather all the necessary evidence with relevant documents to prove their case and set clear objectives for the outcome of the mediation while also taking important steps to mentally and emotionally prepare for the process.
There are also other points to be considered when mediation may not be entirely beneficial. If a dispute leads to a situation of urgency, a form of emergency relief such as an injunction may be more appropriate to prohibit or require a person to take a particular action, depending on the nature of the circumstances. Additionally, if it is apparent from the parties’ standpoints that mediation is unlikely to be successful, to engage in it would simply be a waste of time and resources, as well as an unnecessary cost.
Mediation can undoubtedly be a great option for parties in commercial disputes, however, the nature of their dispute and surrounding circumstances are strong determinants in the ultimate success of mediation, or lack thereof. Thus, careful consideration of such factors should take place before any attempt to engage in mediation is made for the use of the process in inappropriate circumstances is arguably futile.