Benefits and Pitfalls of Mediation

Benefits and Pitfalls of Mediation

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Published by TOP4 Team

Mediation has numerous, obvious benefits: saving time, capping risk, and exploring wider settlement options that are available through the courts. All discussions are confidential and without prejudice to further proceedings, and mediation often represents the best chance of preserving a commercial relationship when disputes arise. Given that parties now run costs risks in the English court if found to have unreasonably refused an offer of mediation, the more relevant questions are not whether to engage with mediation, but how and when.

A common question, given that the overwhelming majority of disputes settle without the intervention of the third party neutral, is whether and in what circumstances mediation is preferable to inter partes negotiation. One of the best reasons to opt for mediation where negotiations are stalling is efficiency. Mediation brings structure to the negotiation, identifying and tackling the major points in issue. It also brings a different emphasis, shifting parties away from rights-based remedies (as defined by law) and onto commercial interests. This shift in mindset is often enough to reinvigorate seemingly intractable negotiations.

Unlike a court, or inter partes negotiations, mediation offers the parties the chance to discuss the past and vent frustrations. In some instances, pent up emotions are the obstacle to a settlement, even if it’s “just business”. From such a position, it is possible for the mediator to encourage information exchanges and initiate a forward-looking approach to finding a solution.

The role of the mediator
In summarising positions and interests, the professional mediator can be useful to both counsel and management in terms of re-evaluating not only their initial views of the merits of the case but also, and importantly, their commercial goals. In this way, mediators are often adept at breaking deadlock where other processes have failed. Such an assessment or suggested solution is often more acceptable when coming from a neutral third party than from a counterparty or one’s own counsel. This is human nature.

A mediation hearing initiates its own momentum: having committed the time and expense of traveling to attend the hearing, expectations of settlement are raised, and once the commercial parties are given a platform to meet and discuss the differences in a defused, neutral and privileged environment, the chances of a settlement are all the greater.

While mediation enjoys the backing of commercial clients, legislators, the judiciary, and favourable civil procedure rules in many jurisdictions, the process has its limitations and critics. Some commentators remain culturally opposed to the idea of mediation, viewing the court – with its legal precedents and procedural safeguards – as the proper forum for the resolution of disputes. Others are reluctant to engage in mediation because of cost and the lack of certainty as to the outcome.

If you are looking for a trusted mediator in Sydney, contact today!


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