Mediation is not truly understood, its benefits when used correctly, the lower costs to both parties and the realistic way to resolve many conflicts within many differing fields. Although it is widely known it is still an under-used method of settling disputes between parties. Alternative Dispute Resolution (ADR) is a much lesser expensive solution to a Court or Tribunal action. Depending on the dispute there are three forms of ADR, first Mediation, Adjudication and Arbitration before the very expensive lengthily and confrontational process of litigation.
In litigation many do not understand the resources they will have to commit in a long term litigation suit, many of the company employees will be tied up investigating and processing the information that is required to peruse a dispute through the Courts. The cost to the company are not only those which are generated during the Court proceedings but throughout the process from day one to the final decision of the Court. However, this is not to say that there will be no costs involved in any form of ADR, in relation to litigation the costs to the parties involved will be negligible in comparison.
When you find yourself in a position of dispute and both parties still have a good working relationship, mediation is the best area to begin negotiations, it is a cost effective course to take in resolving many of the disputes below £50K, it is a confidential forum which in many instances allow both parties to, reduce conflict and allow a continued working relationship. This also shows the virtues of mediation as a cost effective solution to traditional litigation.
The Civil Justice Committee’s (CJC) Final Report on ADR and Civil Justice – published in November 2018 has shown how favourable the use of ADR, in particular the use of mediation in the use of conflict has grown greatly over the last few years and will continue to grow in the future.
Para. 3.3 Of the CJC Final Report stated; …Mediation is flexible, massively successful and consistently surprises professionals and parties alike in its ability to achieve settlements where the parties appear implacably opposed. We wish to stress that support for mediation has been fully shared by all those involved…
In para, 3.4. Of the CJC Final Report, it continues with a small but effective definition of mediation, first described by the, Centre for Effective Dispute Resolution (CEDR) in 2004.
Para,3.4 “Mediation is a flexible process conducted confidentially in which a neutral person actively assists parties in working towards a negotiated agreement of a dispute or difference, with the parties in ultimate control of the decision to settle and the terms of resolution.”
The CEDR also stress the importance of mediator’s involvement and how they should be proactive in assisting parties to find solution, however, they still acknowledge that the parties have ownership of the outcomes.
Within many of the standard forms of construction contracts in particular, NEC, JCT and FIDIC suite of contracts here in the United Kingdom, there are clause’s which state the process of ADR which has to be undertaken before any movement towards the Courts or Tribunals (litigation) should take place, in many recent litigation cases where the process of ADR had not taken place, the Court will take a dim view of both parties within the dispute. This attitude by the Courts has been acknowledged by the CJC, which it has seen as a hardening of attitudes toward the parties involved, this in many instances is due to the lack of uptake of the mediation and ADR.
Can the Courts insist on mediation before Court proceeding?
In Dunnett v Railtrack (2002) although Railtrack where successful through to the Court of Appeal, this case shows the winning parties may not get their costs if the court considers that they were unreasonably in refusing to consider mediation.
In Shirayama Shokusan Company Ltd v Danovo Ltd (2003), the Court held; “The court had jurisdiction to make an order for mediation, even in the face of the Claimants opposition; and it would exercise its discretion to do so”.
In contrast; Halsey v Milton Keynes General NHS Trust (2004), this is considered by many to be the most significant case law on ADR, and covering the issues of compulsion and unreasonable refusal to mediate.
The Court concluded that, “Compulsion to use ADR would be regarded as an unacceptable constraint” and that, “Cost penalties can be imposed by the courts on parties that have unreasonably refused to consider some form of ADR”. Concluding that there is no certainty in the result of any action taken to court, attitudes of the courts can change depending on the merits of the case.
The CEDR estimates in its Eighth Mediation Audit that
…In the whole of 2018, 12,000 cases were referred to Mediation, compared with 534,000 claims issued in the County Court between January and March 2018 alone…
Even with the above mentioned cases, many consider mediation to be a very powerful tool that encourages parties to examine their dispute in a confidential forum. There are other options of mediation within ADR.
It is believed by many that more should be done by the Court and Parliament to stringently encourage ADR.
It must be noted; not all disputes are suited to ADR and it should be your legal advisors who should advise you of this, many of the larger cases are only suitable for litigation, where there may be a point of law or a particular clause within a contract which may be in dispute, these in many situations can only be resolved by the Courts.
The importance of an impartial Mediator throughout your mediation can not be emphasized enough. Depending on the Mediator and their skills, they are not there to give or form opinions of the dispute or to form a view or give advice on either parties’ legal position, however, they may ask questions to clarify the parties position or challenges. In the main they are there to get both parties to discuss their differences focussing on the commercial implications, if the mediation (ADR) fails the potential costs relating to litigation can be extensive.
Be aware, where the parties are entrenched in a dispute and personalities become involved at a very personal level the Courts will take a very dim view of the disputes and the parties involved.
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