The long awaited Mediation Act 2017 (the Act) came into force on 1 January 2018. The aim of the Act is to assist parties in resolving their disputes by engaging in discussions and reaching a negotiated settlement amicably, avoiding court proceedings.
What is mediation?
Mediation is a voluntary process in which the parties to a dispute, with the assistance of a mediator, attempt to reach a mutually acceptable resolution. There are a number of significant advantages to mediation, which include:
Control - the parties maintain complete control over the outcome and a resolution is only reached if both parties are willing to accept it.
- Preserving Relationships - mediation assists parties in preserving relationships due to its non-adversarial nature.
- Costs - mediation results in a significant costs savings and dramatically speeds up the resolution of a dispute.
Mediation to be considered before court proceedings
Under the Act, solicitors are now required to advise their clients to consider mediation before initiating litigation. If the client chooses to issue proceedings, a solicitor’s declaration, confirming that the client was advised to consider mediation first must be produced in court. In-house solicitors should also be aware that this obligation extends to them and they will be required to advise their employer company before initiating proceedings on their behalf.
Following some concerns that mediation may not be appropriate for certain situations, for example domestic violence cases, the Act now states that solicitors must advise clients that mediation is voluntary and it may not be an appropriate means of resolving disputes where the safety of the client and / or their children is at risk.
Failure to reach a settlement
Under the Act, if mediation occurs but settlement is not reached, the mediator’s report will include an opinion from the mediator on whether the parties engaged fully in the mediation process. The court may take failure to participate in mediation by either party into account when awarding costs.
Statute of limitations
Under Section 18 of the Act, if the parties engage in mediation and an agreement to mediate is signed by all parties, the clock can be stopped on the limitation period for bringing the action before the court. This essentially means that the time limit for taking a case before court is adjusted to allow time for mediation to take place. This will provide comfort to the parties as the mediation process will not interfere with their options to take further action if a settlement cannot be reached.
Future of mediation
The new statutory obligation on solicitors to advise clients of mediation is likely to result in a swift increase in the the number of mediations. This in turn will lead to a greater demand for mediators, not only in the legal profession, but also with particular specialist expertise. For example, complex financial disputes will likely benefit from mediators with experience of business valuations, taxation, accountancy and commercial common sense.
The Act provides a significant departure from the existing procedure and encourages a practical solution, which will hopefully in turn save on costs and resources.