This article is an extract from GTDT Mediation 2021. Click here for the full guide.
As I write this year’s Introduction, part of the world is still in lockdown due to covid-19 and that gives rise to certain special considerations, which will be discussed below.
Mediation is the most popular of a range of dispute resolution methods covered by the acronym ‘ADR’: alternative dispute resolution.
The terminology here can be somewhat confused. Some say that ADR stands for ‘alternative dispute resolution’ (ie, an alternative to traditional litigation and arbitration); others say it stands for ‘appropriate dispute resolution’ (in which case the term becomes almost meaningless, as it could embrace all known forms of dispute resolution); and some lawyers say it stands for ‘alarming drop in revenue!’ (because its effectiveness is such as to resolve in a matter of weeks disputes that might otherwise take years to resolve through the judicial system).
The definition I prefer places litigation and arbitration on one side of the fence and ADR on the other. In other words, the distinguishing feature is that the ADR neutral’s role is not to ‘decide’ the dispute but to facilitate a settlement.
Mediation, while it may have been engaged in privately, was more or less unknown in the common law world until about 35 years ago. The civil law codes, on the other hand, contain provisions dealing with conciliation; in practice, however, these provisions were only rarely brought into play.
Modern ADR had its birthplace in the United States, and some say that it is hardly surprising, given that in the US the twin evils of cost and delay in the litigation process are at their most acute.
Although there are many ADR processes, mediation has become by far the most popular.
As mentioned, the mediator’s role is not to make any decisions but, rather, to facilitate a settlement. There is considerable flexibility in the process, but a typical mediation will involve the following stages:
- the mediator is appointed by agreement between the parties or nominated by a third party (eg, the President of the Law Society);
- the mediator asks the parties to sign a mediation agreement, which will contain, inter alia, clauses enshrining the confidential and impartial nature of the process;
- the mediator invites the parties to send to him or her a ‘mediation position paper’ and, if they wish, a ‘mediator’s eyes only’ paper and, if possible, to agree on a set of documents relevant to the purpose of the mediation. The mediation position paper is not supposed to be a replica of court or arbitration pleadings but, rather, to set out relevant background circumstances and what each party hopes to achieve from the process;
- pre-mediation meeting or teleconference: it is good practice for the mediator to contact each party in advance of the hearing to discuss background facts and, importantly, who is to be present on each side at the hearing. It is of critical importance that there is a senior decision maker present on each side at the mediation hearing if a settlement is to be achieved on the day; and
- the mediation hearing: again, there are no hard and fast rules and the mediator will endeavour to adapt the process to the circumstances of the particular case.
In some countries (eg, Germany) the norm is for the mediator to conduct the mediation with both parties present throughout the day.
In England, on the other hand, it is the general practice for the mediator to hold private caucus sessions with each party. Indeed, in some mediations, the distrust, and sometimes loathing, between the parties can be so great that they refuse to participate in joint sessions throughout the whole process.
Generally, however, the norm in England is for the day to start with a plenary session where the mediator explains his or her role and both parties then have an opportunity to present their issues relating to the dispute.
It is thereafter that the mediation process tends to come into its own, with the parties retiring to separate rooms and the mediator shuttling backwards and forwards between the parties until a settlement is achieved, which is said to happen in approximately 85 per cent of cases.
At that point, the mediator will tend to bring the parties back together to draw up and sign the settlement agreement – a very necessary step to ensure the likelihood of the terms of the agreement being carried out after the mediation process has finished.
In mid 2021, although the worst of the pandemic may be behind us, face-to-face or physical mediation hearings may not be possible for some time. Because mediation is already carried out remotely in some circumstances, the systems are already in place and have been tried and tested. This means that during social distancing, disputes can still proceed smoothly through an alternative dispute resolution process. Documents can readily and confidentially be shared through online systems and the mediator will be able to set up virtual meetings for all parties together or for a single party with the mediator as needed. He or she will also ensure that no recordings are made, preserving confidentiality. Added value benefits are to the environment (elimination of travel) and to the costs (waiting and travel time are eliminated).
Now that more and more experience has been gained of remote mediation with virtual hearings, it will be interesting to see how many parties choose to continue with this – rather than go back to face-to-face meetings – even after coronavirus is behind us and the lockdowns are over.
A popular process?
The process is private and confidential, so it is not easy to provide reliable data. It has been suggested, however, that commercial mediations in the UK are running at approximately 16,000 per annum, although I suspect that the true figure is far higher. With strong support from the government, this number is set to rise. Indeed, in these uncertain times the government will be attracted to mediation if for no other reason than that it can serve to shave a considerable amount off the justice budget.
There is strong support also at the European level and an EU Directive on Cross-Border Mediation. In some countries, mediation has been made compulsory – Italy, Argentina and Brazil being examples.
Other facts that are likely to lead to increased mediation include the following:
- parties are increasingly including multi-tiered dispute resolution clauses in their contracts, for example:
- step 1: good faith negotiation between the parties;
- step 2: mediation; and
- step 3: arbitration or litigation.
- there is English High Court authority for the proposition that a mediation clause is enforceable;
- even if a particular litigation lawyer is not a fan of mediation, it may amount to professional negligence to fail to advise a client that he or she has the option to mediate and on whether mediation would be suitable for the particular case;
- the courts themselves are increasingly concerned by the high costs of litigation and lawyers are under a duty to ensure that costs are proportionate. During the case management conference, the judge is likely to raise the subject of mediation, even if the parties do not, and the judge has the power to direct that the court proceedings be stayed so that mediation can take place. In such circumstances, if one party unreasonably refuses to participate in mediation (or fails to engage with a proposal from his or her counterparty to do so or, having apparently engaged, fails to advance matters with reasonable diligence), then the court has the power to impose costs sanctions. I have suggested that arbitrators have the same powers as the judges in this respect (https://www.clerksroom.com/downloads/547-London-Leading.pdf); and
- perhaps the most important reason for the increasing popularity of mediation is that it works. Unlike the fractured relationship that is the sequel to a fully contested court or arbitration proceeding, mediation enables the parties to preserve their relationship, and it is not uncommon for future business to be a term of the settlement agreement that is concluded at the end of the mediation.
What are the disadvantages?
Mediation will not give parties security for their claim, the publicity that they may want, the binding precedent that comes from a court judgment, or enforcement. On analysis, however, these disadvantages will evaporate.
If a claimant is concerned that the defendant may not be financially secure then there is nothing to stop the claimant from mediating and concurrently starting court or arbitration proceedings and then applying for a freezing injunction or ship arrest to ensure that there are assets to meet whatever entitlement the claimant has.
If it is publicity that a party wants (or more likely a published apology), then this can be made a term of the mediation settlement.
Very few parties are keen to fund the extensive costs involved in seeking a binding court precedent. In most cases it is the gathering and analysis of the facts that consumes the bulk of the costs. It has been said that 20 per cent of the overall costs is spent in presenting 80 per cent of the facts and then 80 per cent of the costs is spent dredging for the remaining 20 per cent of the facts, which only rarely make any substantive difference to the outcome of the case. This is hardly a successful economic model.
That said, if there is an issue of law on which a court decision is wanted (for example, on the construction of a clause in a contract) then the parties should seriously consider mediating everything but the contract issue and referring only the latter to the court.
It is also said that there can be difficulties in enforcing the mediation settlement agreement, which is simply another contract that can be broken. However, this ignores the fact that in many cases court or arbitration proceedings will have been started before the mediation takes place and, by agreement of the parties, it is perfectly possible to convert the mediation settlement agreement into a consent judgment or consent award with all the possibilities of enforcement that attach to a judgment or award.
Importantly, and still on the subject of enforcement, in December 2018 the UN General Assembly adopted the UN Convention on International Settlement Agreements Resulting from Mediation. The new Convention is named the Singapore Convention on Mediation and opened for signature in Singapore from 7 August 2019. Last year, 2020, it came into force internationally. We mediation enthusiasts hope that the Singapore Convention will do for mediation what the New York Convention has done for arbitration.
Another suggested disadvantage is that mediation can be used (or abused) by a party as a ‘fishing expedition’ (ie, the party has no serious interest in settlement and simply wants to prise as much information from his or her opponent as possible to increase the chances of winning the subsequent court or arbitration proceedings). Again, this does not really stack up. If a party’s evidence (documentary or witnesses, or both) is weak then this will come out before or at the trial. What then is the real disadvantage of this becoming apparent earlier, when only a fraction of the likely ultimate costs has been incurred?
The future of ADR
There is an increasing number of mediation issues coming to court (eg, confidentiality). It will be most important for the court to resist the temptation to pry into the mediation itself.
Another issue is that it may be difficult to mediate early, before each party knows what the other will say and has seen the evidence to back the case (or defence) put forward. I have devised a solution to this, which I have called ‘Early Resolution’, described in greater detail at https://www.lux-mediation.com/wp-content/uploads/2019/04/Lux-Mediation-Agreement.pdf.
ADR is relatively young – certainly by comparison with the second oldest profession, the law. There is still considerable ignorance even among lawyers as to what it is and how it works. It is crucial that in these early years we take the time and trouble to grow a cadre of professional mediators who can be trusted to take good care of the process. If this occurs then parties can only be impressed by the singular cost-efficiency, speed, potential for left-field solutions and ‘relationship’ advantages that mediation offers. This may lead to mediation becoming the dispute resolution process of first recourse and this publication is no doubt a helpful step in that direction.