Partner Article

Mediation ? Deal or No Deal?

With Watson Burton LLP Law FirmBusinesses involved in legal disputes are being encouraged, more so than ever, to attempt to settle their dispute early using Alternative Dispute Resolution “ADR”.Mediation is the most common and successful form of ADR. The process involves appointing an independent third party who acts as a facilitator between the parties. The whole process is voluntary and the mediator is there to suggest solutions but cannot impose those solutions on the parties. Mediations are held on a “without prejudice” basis, which is intended to ensure that anything said or done during the course of the mediation is not used in any subsequent trial. Unlike formal court proceedings, a mediator should not evaluate either party’s position. He or she is there to facilitate a commercial resolution which everyone can live with.The mediation itself usually begins with opening submissions from each party followed by a series of private meetings between the mediator and each party separately. It is often the case that agreement is reached following a series of discussions, offers and counter offers between the parties. Any agreement should be put into writing and signed by the parties. If no agreement is reached, the parties may still proceed to trial.Anyone involved in disputes ought to consider if mediation is an appropriate option. This will depend on the circumstances of the case. Parties will be pleasantly surprised at the relatively low hourly rates many mediators charge, but this can depend upon their particular discipline. Many if not most mediations (even multi million pound disputes) can be completed within one or two days. If successful, mediation can save a significant amount of money that otherwise would have been spent on a costly trial. Business owners will obviously need to consider whether the costs of mediation are proportionate to the sum in dispute. The courts have been keen to encourage mediation by imposing cost sanctions at the end of the trial on businesses that have unreasonably refused to mediate. In the case of Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, the Court of Appeal set out several factors, which it considered relevant to the issue of whether a party had unreasonably refused to mediate. Those factors include: the nature of the dispute, the merits of the case, whether the costs of the mediation would have been disproportionately high and whether the mediation had a reasonable prospect of success.In addition, the rules that govern litigation have been amended to further encourage the use of forms of ADR such as mediation. For example, the ‘Practice Direction – Protocols’ now states that “the courts take the view that litigation should be the last resort”.Businesses involved in disputes must consider using mediation at an early stage. Apart from being a very effective method of dispute resolution, the courts are now ready to penalise those parties at trial whom they judge to have unreasonably refused to mediate. A modern commercial lawyer and a well advised client should now keep mediation as part of their toolkit to achieve satisfactory and cost-effective resolution of business issues.If you have any queries relating to this article, please contact David Hankin at Watson Burton LLP (david.hankin@watsonburton.com or 0191 244 4316).

This was posted in Bdaily's Members' News section by Ruth Mitchell .