Finding Middle Ground
The past year has seen a significant rise in the uptake of mediation as an alternative means of dispute resolution and this is a trend which is likely to continue. Designed to resolve disputes to the (relative) satisfaction of both parties at an early stage, mediation uses an independent, specially trained third party mediator to facilitate private and confidential settlement discussions between parties. The process, which offers a lower cost solution than full litigation proceedings, has the best possibility of maintaining parties' relationships. A survey conducted by the Centre for Effective Dispute Resolution (CEDR) in 2010 found that 75 per cent of mediated cases are settled on the day of the mediation, with a further 14 per cent settling shortly thereafter. These statistics are certainly borne out in our recent experience.
Even when parties are seemingly irreconcilable and far apart (both in terms of their location and a potential settlement figure) a mutually benefical resolution is possible. A recent example of a successful mediation involved a complex dispute in which a successful outcome was secured for a civil engineering company. Our client hired machinery and labour to an international company for undertaking a complex civil engineering project in Europe. A substantial claim was raised in court proceedings in Manchester for outstanding rental costs and damage to equipment. In response, the international company raised a substantial counterclaim, together with separate court proceedings abroad in its home jurisdiction. Following a two day mediation in the UK, which allowed parties to communicate their positions in full, a satisfactory settlement was reached, leading to the disposal of both court actions.
On the basis of this and other cases, we are in no doubt as to the potential of mediation for effectively resolving even the most complex and high value of disputes.
Mediation has the benefit of being able to offer creative solutions, explanations and apologies, which parties often desire, but which are not readily available through other dispute procedures. Mediation at its best allows both parties to achieve what they consider to be a successful outcome. Only in rare exceptions is that possible in an adversarial process such as court, arbitration or adjudication. Mediation can therefore allow relationships to remain intact and parties may continue to work together to deliver a particular project. Also, a successful outcome may not be measured in an overall resolution, but may comprise resolving part-issues, or identifying the true issues in dispute. Mediation puts the parties themselves in control of the focus of settlement discussions, and the outcome of those discussions. This can be a strength for a dispute between private companies whose commercial directors are tasked with concluding matters. Adjudication and litigation on the other hand, involve recourse to a third party decision maker who assumes responsibility for the decision.
It is recognised that mediation is not an appropriate forum for resolving every dispute. Both sides have to be willing to engage with the process and to be actively seeking a resolution in order for mediation to work. If one or both of the parties approach the process as a traditional negotiation, it is unlikely to work. There is also a question of timing. If parties enter the mediation process prematurely, they may not have gathered sufficient information about their own, or the other side's position, to be able to engage in meaningful discussion about how to resolve the issues. There may also be technical issues or legal principles that require to be ironed out first so that neither party goes into mediation with a fundamental misunderstanding of key issues.
While not a panacea which can automatically resolve all irreconcilable differences between parties, mediation is inarguably a successful process and should be given consideration as a viable alternative to formal adversarial proceedings in the courts which are often expensive and lengthy.