This week we mark International Mediation Week which provides a useful opportunity to consider what role mediation plays in commercial disputes and reflect on how that role has changed in recent years.
What role can mediation play in commercial disputes?
Mediation is the process whereby parties to a dispute meet to discuss the case with a 3rd party impartial person who will assist with and facilitate that process.
As Abraham Lincoln noted "A good settlement is better than a good lawsuit" and there are several advantages to businesses, as well as individuals mediating, as part of the dispute resolution process. Firstly, it can be cheaper and certainly quicker than proceeding to a long evidential hearing. Secondly the outcome of mediation is private – the risk of proceeding via court is not only that a court might make a decision against your business, but that the evidence the court hears becomes public, either because the press report on it during the hearing itself or when the judgment is published on-line. By reaching agreement at mediation parties can resolve their dispute privately and keep the detail of the dispute and any settlement reached confidential.
However, as I always remind clients at mediation – the process is voluntary and there is no obligation to reach settlement during mediation where no acceptable proposals are made. Going on with the court process remains a option. However, even where settlement is not reached at the meeting itself, it can provide the springboard for further discussions in the following weeks that make settlement possible. That is why mediation is an effective tool – it is simply the opportunity to explore whether a mutually acceptable solution can be found and is not a process that forces parties to settle on unacceptable terms.
The future of mediation in Scottish commercial disputes
As with many other aspects of business life, the restrictions of Covid-19 have meant adapting our approach to mediation. Restrictions on travelling, and on participants being physically present in the same venue make traditional forms of mediation more challenging. Even in the days prior to social distancing, mediation required a lot of space with the expectation that each of the parties, as well as the mediator, would have their own meeting room and often a larger space for all participants to meet.
Since March 2020, mediations have moved to the virtual sphere. As with other elements of business and litigation that have moved to virtual meeting spaces, I was probably sceptical about how effective mediation could be on a Zoom call. However, the Courts (and particularly the Commercial Court in the Court of Session) continue to expect parties to discuss possible settlement of disputes in advance of a hearing and mediation remains the most productive way of doing so
In the last few months, I've participated in 2 remote mediations and my experience of both has been overwhelmingly positive. Once you are familiar with the technology, it's easy to recreate the important contact points of a mediation; the initial opening meeting where a statement for each party is made in front of all participants; the private rooms to discuss progress and strategy; and then breakout rooms where the mediator might speak directly to legal advisors, or experts for each side can have a frank exchange of views. Mediation can still be a stressful experience for individuals expected to take big decisions on settlement –and I think there is an element of stress taken out of the mediation when the participants are dialling in from their own offices or homes. My own experience, and that of colleagues, is that remote mediations tend to be concluded within a shorter time- avoiding marathon sessions into the small hours.
Remote mediation has also forced us to adapt in ways that are positive. I recently represented a business at a remote mediation where one of the participants was based in Australia. While it meant the mediation starting far earlier in the morning that we might have wanted, there is no doubt that had an additional trip to the UK been required to allow the mediation to take place in person, it likely would not have happened at all.
Mediation will therefore continue to play a significant and valuable role in resolving commercial disputes. And for the reasons outlined above, I am not convinced that when the Covid 19 restrictions are a thing of the past, it will mean a return to long hours spent in meeting rooms.