A Guide to Commercial Mediation for Businesses

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A Guide to Commercial Mediation for Businesses

There are many advantages of using mediation to resolve commercial disputes. Mediation is conducted on a private and confidential basis and is generally a voluntary process, entered into by all parties, for the purposes of attempting to achieve a settlement. 

Unlike court proceedings which focus on the parties’ rights and obligations based on evidence and the law, mediation is a more flexible process through which the parties can focus on their objectives and how to achieve them through compromise.

Prior to a mediation taking place, the parties can agree on the timing, location and format of the mediation session. Mediation can be used at any stage of a dispute, including while court proceedings are ongoing. There is often nothing or little to lose by engaging in mediation as if a settlement is not achieved through this process, the court proceedings will simply continue.

In certain circumstances, medication can allow the parties to maintain an ongoing dialogue and even preserve their commercial relationship after a settlement has been reached.

In this guide, we will explore the intricacies of commercial mediation, helping you to understand the process, the role of the mediator, and the advantages and disadvantages of this alternative dispute resolution method.

In Summary

  • Commercial mediation is an effective form of alternative dispute resolution that facilitates the resolution of disputes. This often limits the costs and minimises the management time and stress associated with court proceedings.
  • A mediator’s role is to act as an independent and neutral third party who has the necessary qualifications, skillset and experience required to build trust and facilitate communication between them. A mediator will encourage the parties to set out their respective positions at the start of the process, and to understand each others’ reasons for the dispute. This helps each party to consider the strengths and weaknesses of each case, and consider areas for compromise. The settlement discussions then take place with the mediator, in private.
  • Mediation presents numerous advantages such as cost savings, efficiency, confidentiality and certainty of outcome. It may not be suitable for all types of conflicts or circumstances (for example, in situations where an injunction is sought urgently, or where a point of law needs to be decided by a court) but most commercial disputes are capable of being resolved at mediation.

Understanding Commercial Mediation

Commercial mediation is a flexible and confidential process for individuals and businesses involved in a commercial dispute. Mediation is a form of alternative dispute resolution (ADR). The mediator’s role in a commercial dispute is to help two or more parties attempt to come to a settlement. Commercial mediations commonly occur face to face, but can also be conducted virtually via video conferencing, enabling legal representatives and parties to engage from afar.

Should the parties be unable to agree a resolution on the day of the mediation, the parties may seek to continue the negotiations without prejudice communications between their legal representatives. A settlement achieved after mediation but before trial still avoids lengthy, costly and stressful court proceedings.

By agreeing to engage in the mediation process, the parties can show a genuine desire to explore negotiations and in doing so, they do not lose their right to pursue or continue with any ongoing legal proceedings. Where court proceedings usually result in a fixed outcome decided by a judge, which usually represents a win for one party and a loss for the other, mediation often allows parties to achieve settlement terms which are favourable to both parties.

When to Consider Mediation

The right time for mediation will depend on the needs and intentions of the parties involved, and the nature and complexity of the dispute. In some cases, the best time for mediation will be before any legal proceedings begin. However, in most cases, mediation will be best explored as an option once the parties have clearly set out their legal positions in court proceedings and have received legal advice.

Based on our extensive experience of mediation, we find it works well when explored during court proceedings. For example, we frequently see mediation conducted before the first Costs and Case Management Conference (CCMC) or prior to trial, both of which require substantial work to be undertaken, and therefore result in significant costs for the parties. Mediation offers an alternative to these costs if it is conducted at the appropriate time.

The courts actively encourage mediation when it is a suitable option in a dispute, and should a party unreasonably refuse an offer of mediation and proceed to court, the court may take a negative view of this decision and even order cost sanctions against the refusing party.

For smaller claims with a value of £10,000 or less, the Ministry of Justice has confirmed that mediation will become compulsory, and parties could face costs, sanctions, or even have their case discontinued if they do not engage in court-imposed mediation.

Commercial mediation is suitable for a wide range of disputes, such as contractual issues, property disputes, insurance claims, contentious inheritance matters and construction disputes.

Your solicitor may suggest that your case is suitable for mediation and we will discuss this with you, talk through the benefits and make you aware of any risks. It’s also possible that the other party may propose mediation. 

Advantages and Disadvantages of Commercial Mediation

Mediation offers numerous advantages, including cost and time savings, confidentiality and flexibility. The process is strictly confidential, and any statements or discussions that take place during the mediation cannot be referred to in any future court proceedings. Additionally, mediation is typically more cost-effective and less time-consuming than court proceedings, with the costs of the mediation sessions divided between the parties.

Mediation is less adversarial than litigation as the parties are required to take a more consensual approach to engaging in the process. With the help of the mediator, parties can make confidential offers to each other which can result in an outcome the parties would not have achieved at a trial. For example, the parties can agree on their own terms for settlement, which are likely to be more creative and less rigid than the terms determined by a judge. As a consequence, it is common for both parties to make concessions and reach a compromise that secures a more certain solution.

There may be some cases where complex technical legal points are in dispute, and in those circumstances, mediation may not be suitable. Even in those circumstances, the court may look more favourably on parties if they have at least attempted to engage in alternative dispute resolution such as mediation.

For many commercial disputes, mediation remains an effective and efficient alternative to traditional litigation, often resolving disputes more quickly and with less expense than resolving commercial disputes through court proceedings or arbitration.

What is the Role of the Mediator?

A mediator’s role is to:

  • Facilitate communication
  • Maintain neutrality
  • Ensure fairness in the mediation process
  • Ultimately help the parties agree on terms of settlement

A good mediator will understand the issues in dispute and, through a series of private and confidential meetings with the respective parties during the mediation, will help each party to understand the other party’s position. With the approval of each party, the mediator will make offers on behalf of the parties in an attempt to facilitate an agreement, the terms which are then recorded in writing and signed by all the parties.

The Importance of Neutrality

A mediator must remain unbiased and impartial, instilling confidence in the parties and driving them towards a resolution of the commercial disputes.

A mediator preserves impartiality during the mediation process by:

  • Abstaining from taking sides or favouring any party involved in the dispute
  • Ensuring effective dispute resolution
  • Guaranteeing an impartial balance of power between the conflicting parties in commercial mediation
  • Increasing the likelihood of achieving an agreement that is agreeable to both sides
  • Focusing on the parties’ goals
  • Fostering an environment where issues can be candidly discussed and resolved

Neutrality is essential for a commercial mediator, as it empowers them to fulfil these roles and responsibilities.

Facilitating Agreement

Mediators assist parties in recognising areas of agreement, examining areas for potential resolutions, and negotiating a satisfactory resolution. Mediators apply techniques like:

  • Negotiation facilitation
  • Reduction of emotional tension
  • Promotion of effective communication
  • Uncovering hidden interests
  • Use of specialised negotiation and active listening skills

A mediator assists parties in locating common ground by attentively listening to each party’s viewpoint and objectives. They pose open-ended questions to clarify and investigate the issues and then utilise those common interests to motivate each party towards discovering a mutually acceptable solution. The mediator’s purpose is to eliminate communication barriers, determine the issues at play (often stress testing them), and help the parties to look forward, towards achieving a realistic resolution.

Ensuring Fairness

Mediators ensure fairness in the mediation process by:

  • Requesting each party to explain its position
  • Conducting mediation sessions in an unbiased and impartial manner (and in confidence)
  • Raising questions to assess fairness and practicality
  • Preserving neutrality and objectivity
  • Striving for an equal balance of power between the parties

In situations where one party is more dominant, a mediator can still maintain balance and fairness by actively moderating the sessions and striving for parity of power between the parties.

Selecting the Right Mediator

The selection of a highly skilled mediator possessing the relevant experience and expertise is vital for the success of the process. JMW has instructed many independent mediators, and we work with professional bodies like the Centre for Effective Dispute Resolution (CEDR) and IPOS Mediation.

We will usually propose the names of mediators who we have previously worked with. When you are content with the names we have proposed, we will suggest two or three mediators to your opponent and they will do the same. Sometimes, the two sides will suggest the same mediator, making the decision easier. On other occasions, there may be some discussion between the parties to decide which mediator to instruct. JMW’s experienced lawyers will guide you in this process.

How Do I Prepare for Mediation?

Detailed preparation, which involves reaching an understanding of the positions of both parties and forming a mediation team, is vital for a successful mediation outcome. This involves:

  • Reviewing your position and your opponent’s position to establish your mediation strategy
  • Maintaining regular contact with your legal team to plan for the day
  • Selecting a suitable venue for the mediation which is agreeable to you and your opponent. Usually, law firm offices are used for this purpose
  • Assembling your mediation team, which may include one or more lawyers and, in complex mediations, a barrister may also be required to attend on the day

Your opponent’s agreement to the mediation indicates a willingness to settle the dispute. Your solicitor will engage with your opponent’s legal representatives on your behalf to make arrangements for the format of the mediation. For example, prior to any mediation, the following steps will be taken:

  1. Suitable mediators will be proposed by the parties for the mediation
  2. A ‘position statement’ will be drafted and shared with the mediator (once identified and agreed upon) and your opponent, serving as an introduction to the dispute for the mediator
  3. Supporting documents will be disclosed to the mediator and your opponent in the form of a mediation bundle
  4. Other documents may also need to be disclosed if agreed between parties

Following this, we will communicate with the mediator about the logistics for the mediation, finalising the terms of the mediation agreement, and liaise with you to take detailed instructions on your aims and priorities for the mediation.

You may choose to provide the mediator with some information or documents that are not to be shared with your opponent, and the mediator will treat this information as confidential.

What is the Commercial Mediation Process?

Each party is allocated a room for private discussion, and the mediator will usually have their own meeting room. Often, there is also a larger, central room for everyone to meet in, if the parties agree to do so. 

At the start of the day, the mediator may ask the parties to meet in the central room so the mediator can explain the process and identify the issues in dispute. The mediator may also take the opportunity to invite the parties’ legal representatives to deliver an opening presentation of their client’s position, which can be an effective way to commence the mediation and open a dialogue between the parties and their advisors.

Following the initial meeting, the mediator will conduct private and confidential sessions with each party, facilitating negotiations and working towards a mutually acceptable settlement. The mediator’s role in exploring potential resolutions is crucial to helping parties evaluate alternatives and achieving mutually beneficial outcomes.

Throughout the course of the mediation, the parties can meet the mediator in private (in the mediator’s room), particularly if either party wishes to propose an offer of settlement.

If the negotiations have reached an agreed resolution, a settlement agreement will be drafted by the legal representatives, which, once signed by all parties, becomes legally binding and enforceable.

Cost and Duration of Mediation

Typically, mediation is less costly and less time-intensive than court proceedings, with the costs being divided equally between the parties and a duration ranging from a few hours to a day, or a few days. The fees associated with mediation are based on the time spent in preparation and during the mediation itself, as well as the mediator’s fees and associated costs, such as venue hire. Costs can be further reduced if the mediation takes place remotely or at the offices of one of the legal representatives

If the mediation takes place while court proceedings are ongoing, the parties will incur the costs of both processes (unless the court proceedings have been paused to allow the parties to explore settlement).

Court Proceedings and Mediation

Mediation is frequently used alongside court proceedings. This is done for many reasons, including the parties wanting to reduce their expenditure on legal fees associated with court proceedings, to save the time it can take to progress a matter through the court system, and to ensure a greater degree of certainty when it comes to the outcome of the dispute.

The potential of substantial cost and time savings, and the ability for the parties to maintain their commercial relationships, serve as incentives for successful mediation, even where court proceedings have begun.

Mediation Outcomes and Enforceability

Usually, settlement agreements drafted by legal representatives and signed by all parties as a result of mediation are binding and legally enforceable. If settlement is reached while court proceedings are ongoing, it will be necessary for the relevant documents to be filed in court,  indicating that a resolution has been achieved and bringing the court proceedings to a close.

Why Choose JMW?

Commercial mediation has proven to be an effective and efficient alternative to traditional litigation for resolving disputes. By understanding the process, businesses can unlock the power of dispute resolution and preserve valuable commercial relationships. Embracing mediation as a tool for dispute resolution can lead to quicker, more cost-effective outcomes and foster a harmonious business environment.

We have successfully secured a vast number of positive outcomes for our clients at mediation. Our specialist solicitors have significant experience in preparing mediation strategy, advising throughout the negotiations, and achieving the most beneficial outcome possible. No matter the nature of your dispute, how far the parties are apart in terms of settlement, or the result you want to achieve, we can assist.

Talk to Us

For advice on whether mediation is appropriate in your circumstances, or how to approach the process if you are involved in a dispute, contact JMW. Call us on 0345 872 6666, or complete our online enquiry form to arrange a call back at your convenience.

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