Mediation – the structured process in which a third party is asked to help parties reach agreement – is well established as one of the standard forms of alternative dispute resolution. Although mediation as a means to resolve disputes is known to most lawyers - both to in-house and external counsel – it is very often not considered. Negotiations are habitually conducted with one of the parties having already threatened to litigate or start arbitration should negotiations fail. And when negotiations indeed turn sour, it is only logical to file the writ of summons or request arbitration. However, when devising a dispute resolution strategy, it is best practice to always consider mediation, especially if the parties have on-going relations.
Why should mediation always be considered?
Quite simply: because it often resolves disputes that would otherwise end up in court or before arbitrators. If mediation is successful, considerable time and costs involved with litigation and arbitration are avoided. And there are other benefits to mediation. Relations are preserved and sometimes even strengthened. Also, even though the parties are assisted by a mediator, they keep control over the process and outcome. Mediation tends to create a buy-in to faithfully execute a settlement agreement reached during the mediation. There may be different reasons why mediation regularly proves successful, where parties previously could not settle. The structure and dynamics of mediation are different from negotiations and that in itself may bring parties closer. A good mediator may get the right focus on interest-based discussions, where previous negotiations were more strongly focused on positions. Various mediation techniques can prove useful, of which caucusing (i.e., the mediator having separate sessions with each party) is probably the most well known. Mediation may also prove useful to overcome incompatibilité d’humeur between persons involved in the negotiations. But also where no such conflicts exist, getting the individuals together that ‘own’ the dispute within the respective companies often creates much needed understanding for the other parties’ interests and motives, and creates trust.
Should mediation always be an intermediate step in the dispute resolution process?
No. The positions may just be too far apart, or for one of the parties litigation in itself may serve a purpose. Also, in some cases, a principled court decision is needed. Trying mediation in those instances may only lead to extra time and money being spent. And if immediate relief is required, there may not be time to try mediation first. However: one should be wary not to dismiss the possibility of resolving a dispute through mediation too quickly.
When and how should mediation be proposed?
Proposing mediation is not a sign of weakness. Yet it may sometimes seem odd to suggest mediation after long and unfruitful negotiations. If mediation is generally supported as one of the means to resolve business disputes, it is important to integrate it into the company’s dispute resolution policy. Mentioning that policy at a very early stage to the opposing side avoids the difficulty often felt when later on raising the option to mediate the dispute. A simple statement at the early stages of negotiations may be sufficient, for instance: “our policy is to negotiate first, and if our negotiations get stuck, our company has a policy that encourages mediation.” In fact many large corporations already have signed on to this policy. The most successful global initiative to encourage alternative dispute resolution, including mediation, has been promulgated by the International Institute for Conflict Prevention and Resolution (CPR). More than 4,000 of the world’s largest corporations have subscribed to the CPR Pledge, which reads: “Our company pledges to commit its resources to manage and resolve disputes through negotiation, mediation and other ADR processes when appropriate, with a view to establishing and practicing global, sustainable dispute management and resolution processes.” By conveying a message that a company – including its global subsidiaries – will routinely consider mediation where appropriate, the Pledge makes it clear that choosing mediation reflects company policy and not a lack of confidence in the company’s bargaining position.
Should mediation rules be chosen?
If parties opt for mediation, they have a wide range of options. The most important observation here is that opting for a set of predetermined rules is preferable to having to negotiate mediation terms on an ad hoc basis. Besides, tailor-made additions invariably can be made to the standard forms. Which particular set of rules is chosen is in our experience not directly relevant to the success of the mediation. Far more important for the success of mediation is the quality of the mediator. It goes beyond the scope of this short opinion to discuss how to choose a mediator, how to prepare for mediation and how to conduct the mediation process. The point being made here is that any legal counsel, at any early stage of a dispute, should consider whether mediation should be tried.