Counsel and witnesses

Are the parties typically represented by lawyers in commercial mediation? Are fact- and expert witnesses commonly used?

The mediation process is flexible and can be adapted to what is appropriate for each particular case. Depending on the nature and value of the dispute, the parties may have solicitors, counsel and potentially other professional advisers or experts (eg, accountants or surveyors) in attendance. It is common for parties to attend with at least their solicitors. The parties should notify the other parties and the mediator in advance as to who will be attending the mediation. 

Procedural rules

Are there rules governing the mediation procedure? If not, what is the typical procedure before and during the hearing?

In keeping with its flexible nature, no particular rules govern the mediation procedure (the exception to this being a minority of cases where the parties have agreed to mediate under the mediation rules of a specific institution, such as the London Court of International Arbitration). However, there are likely to be terms regarding the mediation procedure set out in the mediation agreement on matters, such as:

  • the preparation of position statements or case summaries – these will be prepared by each party, and copies exchanged with the other party and provided to the mediator in advance of the mediation; and 
  • the preparation of a bundle of key documents (the mediation bundle). As in litigation, the parties will usually agree a bundle index, following which one party will take responsibility for production of the bundle, providing copies to the other party and the mediator ahead of the mediation. The mediation bundle will normally include:
    • key contractual and evidential documents;
    • key items of correspondence; and
    • statements of case and other relevant documents (eg, witness statements and costs budgets) if proceedings have been issued. 

Prior to the mediation day, the mediator will usually contact each party or their legal representatives by way of a telephone call. 

On the day itself, a typical one-day mediation will run roughly as follows:

  • The parties arrive at the venue and go to their separate rooms, where they consult in private with their lawyers and any other advisers. The mediator comes to each room to introduce themselves to each group.
  • The parties gather together in one large room for a joint opening session (the plenary session). The mediator explains the terms of the mediation and emphasises its confidential nature. Each party then has an opportunity to speak, explaining the issues that concern them in the dispute and their hopes for the mediation (this is known as the opening statement).
  • The parties return to their separate rooms and the mediator ‘shuttles’ between the rooms, exploring each side’s concerns and challenging and testing their positions. Eventually, the mediation will reach the negotiation phase, whereby one party makes an opening settlement offer, and then further counter-offers are made. The mediator will communicate each offer and encourage the parties towards settlement, until an offer is accepted in principle.
  • Once an offer has been accepted, the parties’ lawyers work together to draft a settlement agreement recording the terms of settlement.
  • The parties reconvene to sign the written agreement.

There may be variations to the above, such as the lawyers having a joint session without clients present to debate a point of law, or the parties having a joint session without lawyers present to discuss commercial considerations.

Tolling effect on limitation periods

Does commencement of mediation interrupt the limitation period for a court or arbitration claim?

The domestic position is that the commencement of mediation does not interrupt the limitation period for bringing a court or arbitration claim. If parties to a dispute wish to suspend the limitation period in order to attempt mediation, they may enter into an agreement to that effect called a ‘standstill agreement’. A standstill agreement suspends or extends a statutory or contractual limitation period. Alternatively, the claimant can issue a protective claim before limitation expires and then seek an immediate stay (ie, pause or suspension) of the proceedings to enable a mediation to take place.

The position differs in cross-border disputes within the scope of the EU Mediation Directive (2008/52/EC). In these disputes, the limitation period may be extended in certain circumstances (set out in Section 33A(2) of the Limitation Act 1980) where a cross-border mediation has started before the expiry of the relevant limitation period.

For cross-border disputes which do not fall within the scope of the Mediation Directive, the position is the same as for domestic disputes.

Enforceability of mediation clauses

Is a dispute resolution clause providing for mediation enforceable? What is the legal basis for enforceability?

No special requirements must be met in order for a dispute resolution clause providing for mediation to be enforceable. Rather, the clause must satisfy the normal requirements of English contract law. This means that the clause must be sufficiently certain in order to be enforceable (ie, it must specify with particularity the procedure that the parties must follow before they can refer the dispute to court proceedings or arbitration). This means that each step of the process should be set out clearly, with a specified timeframe.

In Ohpen Operations UK Limited v Invesco Fund Managers Limited ([2019] EWHC 2246 (TCC)) the English High Court set out the factors that the court will consider when deciding whether to stay proceedings and uphold a dispute resolution clause. These included that:

  • the agreement must create an enforceable obligation for the parties to engage in ADR;
  • the obligation should be expressed clearly as a condition precedent to court proceedings or arbitration;
  • although the dispute resolution process to be followed does not have to be formal, it must be sufficiently clear and certain by reference to objective criteria, including machinery to determine any necessary steps in the procedure (eg, appointing a mediator) without the need for any further agreement between the parties; and
  • the court has discretion to stay proceedings brought in breach of an enforceable dispute resolution clause.
Confidentiality of proceedings

Are mediation proceedings strictly private and confidential?

Mediation is private and confidential in nature, and terms as to confidentiality will normally be included in the mediation agreement and any settlement agreement. Confidentiality usually extends to what happens in the mediation and any settlement arising out of it, but not to the fact that a mediation is taking place. Sanctions and remedies for breach of confidentiality provisions will apply in accordance with the normal principles of English contract law.

As well as express contractual confidentiality terms, a mediation will also be protected by without prejudice privilege, given that it is a process aimed at settling a dispute. 

Express non-disclosure provisions and without prejudice privilege will usually prevent information regarding the mediation from being subsequently disclosed. However, there are limited exceptions (see ‘In what circumstances can the mediation settlement agreement be challenged in court? Can the mediator be called to give evidence regarding the mediation or the alleged settlement?’).

Success rate

What is the likelihood of a commercial mediation being successful?

According to the Centre for Effective Dispute Resolution’s 2018 mediation audit, the overall success rate of commercial mediation is high, with an aggregate settlement rate of 89%. The proportion of cases achieving settlement on the day of mediation currently stands at 74%, with the proportion of cases that settle shortly after the mediation standing at 15%.