MEDIATIONS
Introduction
Mediation is a process of
structured negotiation, which is carried out with the assistance of a
neutral third party, the Mediator. It has all the advantages of
conventional negotiation but the involvement of the Mediator makes the
negotiation much more effective. It should be seen as the preferred
dispute resolution route in most disputes where conventional negotiation
has failed, or is making slow progress.
Mediation is now being used
extensively for commercial cases (including cases involving Government
Departments), frequently for multi-party and high value disputes.
Something of the order to 70 - 80% of commercial mediations result in a
settlement either at the time of the mediation or within a short time
thereafter.
Because the aim of mediation is to
produce a commercially negotiated agreement, it has the capacity to
result in a much more flexible solution to the dispute then is possible
by more formal dispute resolution processes. For example, Court
proceedings, and arbitration and adjudication, only have jurisdiction to
pronounce on the parties legal entitlements, and are largely confined to
making monetary awards by reference to that entitlement. Mediation, by
contrast, permits solutions that address the parties’ wider commercial
interests and can take into account matters such as the parties working
together in the future.
Confidential
The entire Mediation process, and
all that is said, done or produced during it, is confidential. It is
conducted on a without prejudice basis. It follows that the parties
can, in an attempt to settle their disputes, make concessions and
disclose matters, confident that if an agreement is not reached those
concessions or disclosures will not be used against them in any
subsequent Court, arbitration or other legal proceedings.
The Mediator
The Mediator’s role is to
facilitate the negotiations, challenge assumptions and to “reality
test”. The Mediator does not decide anything, and will not usually
express views on the strengths or weaknesses of any party’s position.
The Mediator will however discuss those positions with the parties, to
ensure they are being as objective as possible about their own and the
other parties’ legal and commercial stances. This may include
encouraging the parties to look at the best and worst alternatives to a
negotiated settlement being their likely positions should the mediation
not succeed.
The Mediator has a unique position
because the parties can speak to him or her in complete confidence in
private. The Mediator will therefore have the opportunity to build a
picture of the dispute, and the underlying factors behind it, which is
more complete then any of the other individual participants. The
Mediator can often see the potential for solutions, which the parties
themselves may not appreciate.
The Mediator will try to get the
parties to focus on looking to the future and their commercial needs and
objectives, rather than analysing past events and trying to establish
their legal rights. In short, the interests of the parties will
dominate the process (but against the background of legal rights).
That is to be contrasted with the courts, where the only thing that
matters is legal rights and entitlement.
The Mediator will concentrate on
the problems and how to solve them, not the people and any vested
interests that they may have. It is absolutely essential that the
Mediator has mediation training, and for a big dispute, he or she must
have had considerable mediation experience as well; it is not essential
that the Mediator has knowledge of the subject matter of the dispute
(although it can help). If an appropriate Mediator cannot be agreed,
then the resources of a mediation service provider (such as CEDR, In
place of Strife and ADRGroup) can give assistance in helping the parties
to find a Mediator who is acceptable to both parties.
Use of Mediation
The use of mediation has increased
significantly since the introduction in the English courts of the Civil
Procedure Rules (“CPR”) in 1999. The CPR states “Active case
management includes … encouraging the parties to use an ADR procedure if
the court considers that appropriate”. CPR Part 26 includes
specific provisions about using ADR.
A number of Courts, particularly
the Commercial Court, now frequently make ADR Orders by staying the
proceedings for a period to permit mediation. The Court of Appeal has
also imposed a cost sanction on a party that had refused to mediate (Dunnett
v. Railtrack Plc, February 2002) and made it clear that mediation
should be considered in most cases rather than just moving into court
proceedings (Cowl v. Plymouth City Council, December 2001). In
May 2004, the Court of Appeal handed down its very important decision in
Halsey –v- Milton Keynes General NHS Trust and Steel –v- Joy
and Halliday. The Court said that mediation should be at the
forefront of Judge’s minds when they are actively managing cases and
that parties should be actively encouraged to consider mediation.
However, it was also decided in Halsey that the court had no
power to compel reluctant parties into mediation but that a party who
unreasonably refuses mediation is at risk of a costs sanction at the end
of the trial. (For more information about Halsey, see the
article:
“What is
Halsey –v- Milton Keynes
General NHS Trust about?).
Format
Mediation is essentially a
flexible process with no fixed procedures, but the format tends to be
along the following lines. There will be a written mediation agreement
creating obligations of confidentiality on the participants and stating
that the mediation is “without prejudice”.
At an opening joint meeting, each
party briefly sets out its position (often only about 10 minutes is used
by each party). This is followed by a series of private confidential
meetings between the Mediator and each of the teams present at the
mediation. Such private meetings are confidential between that party and
the Mediator. The Mediator will only reveal points from private meetings
if he has express permission to do so.
This will then usually lead to
further joint meetings between some or all members of each of the
teams. The dispute will often be broken down into different
components, with particular participants from both sides spending time
looking at those issues in isolation from the whole. A successful
Mediator will use his unique insight into the dispute to help the
parties explore all the available avenues for reaching an acceptable
solution.
If a settlement is reached, its
terms will be written down and signed by the parties.
Timing
Most commercial mediations last
only one day, with very few running for more than three days. A
considerable number take place well within a month of being initiated
and this period can be shortened to days where necessary.
Participants
The team attending the mediation
should be kept as small as possible but must include somebody (“the lead
negotiator”), preferably a senior executive or official within the
organisation, with full authority to settle on the day without needing
to revert to others not present at the mediation. Ideally, the lead
negotiator should not have been closely involved in the events relating
to the dispute.
Where it is really not possible
for the lead negotiator to have full authority to settle, the person
attending must be of sufficient seniority that their recommendation on
settlement is likely to be followed by whatever person or body makes the
final decision. It is very useful in that situation for the decision
maker to be available by telephone. The fact that the decision cannot
be at the mediation should be made clear to the other parties in good
time before the mediation.
Most mediation teams include a
lawyer for each party but a large legal representation on the team is
rarely necessary.
Preparation
Each party usually prepares a
brief written summary of its position (not just its legal case) for the
Mediator and the other party, with the key supporting documents. These
are exchanged between the parties, and sent to the Mediator, before the
mediation. The parties must enter into a written mediation agreement
once the details of the mediation (e.g. place, time, name of Mediator)
have been agreed. A confidential briefing paper is sometimes also
prepared for the Mediator’s eyes only. The content of any such
confidential briefing is not disclosed to the other side without express
approval.
Approach
Most mediations go through a stage
where it seems unlikely that there will be any useful outcome and yet
the majority settle; so optimism and determination to solve the problem
are essential. The importance of perseverance and a continual
willingness to approach matters from different perspectives cannot be
understated.
Suitability of the Dispute
The proper commercial
question to ask when considering attempting mediation is perhaps: is
there any good reason why this particular dispute is unsuitable
(although the Court of Appeal in Halsey took a different position
on the law as to the answer to that question)?
Mediation is suitable for most
disputes, even where there are points of law, such as the meaning of a
contract standing in the way of a settlement by unaided two party
negotiation. Mediation for one or two days is cheap compared with Court
proceedings.
Usually, there is nothing to be
lost by trying Mediation (unless there are good reasons for not trying
it) and everything to gain.
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