The use of mediation has grown significantly in recent years. Any party facing the prospect of, or already involved in, legal proceedings and who is willing to contemplate settlement will nowadays wish to consider mediation as part of the process of resolving the dispute. Other possible options may include simply making a Without Prejudice offer of settlement, lodging a claim via the Financial Ombudsman Service prior to proceedings, appointing an expert to make a non-binding appraisal, a judicial appraisal or, in the small claims track, a dispute resolution hearing conducted by a judge.
Features of mediation – Court proceedings, arbitration proceedings and expert determinations result in binding decisions (subject to the ability to appeal them). Mediation is not an alternative to these in the sense of inevitably producing a binding decision, but rather a voluntary process worth considering prior to or during the course of the formal proceedings. The crucial point is that mediation can prompt settlement where settlement might only be achieved much later, or not at all.
Advantages – Advantages of the mediation process can include speeding up resolution of the dispute, bringing all the parties who should be involved into a single set of negotiations, saving cost, confidentiality, a greater role and more control for the parties themselves, a more equal environment for the discussion of issues, preservation of relationships and solutions that benefit all parties.
Standard requirement to consider mediation – The Rules of Civil Procedure now require the parties to proceedings not to refuse alternative dispute resolution unreasonably, with possible adverse costs consequences if they fail to act reasonably in relation to the process. Accordingly, it should no longer be regarded as a sign of weakness for a party to propose mediation.
The process – Prior to the day of the mediation, a mediator will usually be appointed jointly by the parties. The parties and the mediator then usually enter into an agreement providing that communications in the course of the mediation will be Without Prejudice and therefore protected from being referred to in the proceedings if these have to continue because the matter cannot be resolved at the mediation.
The issues in dispute will usually be defined in the parties’ Mediation Statements, and a set of the key documents compiled. The mediator will read the documents and usually discusses the dispute separately with each party, in confidence. The mediator also clarifies with the parties who exactly will be attending the mediation.
On the mediation day, a representative authorised to settle must be available on behalf of each party. Representatives of each party will also usually be in the same building, in different rooms. The mediator presides over any plenary meetings of the parties and holds confidential discussions with each of the parties in turn, the objective being to identify the real issues of disagreement and the points that are most important to the parties. The mediator seeks to achieve agreement by carrying between the parties such messages as he or she is authorised to convey.
Mediators can suggest solutions to the parties but cannot impose one. It is simply a question of whether the mediator can bring the parties to agree between themselves.
The parties may or may not prefer to have their legal advisers present. However, it may be advantageous to have a legal adviser available to record the terms of any settlement agreement reached, to be signed before the parties disperse.
Choice of mediator – The choice of mediator is important for achieving a successful outcome. A number of organisations have grown up to provide training and accreditation, for example the Centre for Effective Dispute Resolution (CEDR). The mediator must be trusted by each party to do the job properly, for example, by acting impartially and saying no more to the other side about a party’s position than they have been authorised to say. The mediator needs to be a good communicator and it will assist hugely if each party believes that the mediator can provide an accurate assessment of the prospects of their case. Thus it is likely to assist if the mediator is a qualified professional, for example, a barrister specialising in the area of law in dispute, a chartered surveyor, or a qualified accountant, depending on the subject-matter of the dispute.
Mediation strategies – The flexibility of the mediation process is one of its strengths. For example, in one case, settlement may be facilitated by a plenary session of all parties at the start of the day, at which a party might apologise for what the other has suffered. Alternatively, the purpose of a plenary session might be to confront a recalcitrant defendant, albeit that an overly aggressive stance can set back the prospect of settlement and it may not be advantageous to be represented by counsel at a mediation. In another case, it may facilitate settlement for the parties not to set eyes on each other until a settlement can be reached. Logjams in the discussions might be eased by the mediator suggesting that just the parties’ professional advisers break out for a discussion, or just the decision-makers from each side. The timing for a proposal to mediate is also important. Too early, and the issues may not be sufficiently clear. Too late, and the costs already incurred may have become a barrier to settlement.
A party can withdraw from a mediation at any time. Parties often use the threat of departure to move along the negotiations. Even if the parties do not settle on the day, they often settle shortly afterwards, because they appreciate more vividly any difficulties with their own case and what would be involved in terms of time, effort, depth of investigation and expense in pursuing the proceedings to a conclusion.
Government schemes to reduce the cost of mediation – Various schemes operate to reduce the cost of mediation. If the dispute is over a money claim for less than £10,000, it may be possible to use the government’s free small claims mediation service (where the procedure may be slightly different to that described above). There is also a free rental mediation service for house possession cases. For claims under £50,000 in value, the Civil Mediation Council hosts a fixed fee mediation scheme.
It is worth considering mediation as it may be a quicker, cheaper and more controllable process than formal proceedings. It would only be in specific cases, such as where a party is seeking an injunction, or to establish their rights, or considers that there is no genuine dispute, that mediation may not be appropriate.
When drafting commercial agreements, it may be worth including a provision requiring the parties to consider mediation prior to submitting a claim to court proceedings or arbitration.
For more information, please contact Wendy Miles, Chris Earl or William Sturge at Lovetts.
About the Author
The author of this article is William Sturge a Consultant Solicitor at Lovetts Solicitors. William is a leading lawyer in the insurance industry. He has advised on insurance and reinsurance claims on behalf of reinsurers, reinsureds and their insureds, both in the UK and worldwide. He has conducted insurance and reinsurance litigation and arbitration, acted in professional indemnity and financial lines business and in shipping and international trade disputes. William has also provided non-contentious insurance and reinsurance advice, usually with an international context.
For further information or advice please feel free to contact William by emailing [email protected] or calling 01483 457500.