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How does commercial mediation work?

Aug 2, 2022 | Uncategorised

What is commercial mediation?

Going to court isn’t the only way to resolve a commercial dispute. Increasingly, the government is encouraging what’s known as ADR – alternative dispute resolution. This aims to break a deadlock in negotiations and resolve a commercial dispute without taking it to court.

Let’s say that you’ve been involved in informal face-to-face negotiations with another party and are getting nowhere. Now could be the time to consider mediation. You’re not legally obliged to do so, but you may be obliged to consider it as an option. If you don’t, the court might award costs against you.

Commercial mediation is the first step in the dispute resolution process after informal negotiation. It seeks to avoid full-blown legal action, which can rapidly turn into a black hole of time, money and emotional energy.

If, after mediation, you still haven’t reached a mutually agreeable outcome, then you can move on to other forms of ADR – or, indeed, to legal proceedings.

What is a commercial mediator?

A commercial mediator is a qualified and independent third party brought in to help negotiate a settlement.

Unlike a judge, the mediator doesn’t make decisions. Nor do they assess and judge the strengths and weaknesses of the parties’ cases. Rather, they are there to organise, enable and facilitate discussion to help find common ground and reach an agreement between the two parties.

Mediators act in confidence and without prejudice. This means they don’t take sides. It also means that any information given to them during the mediation process can go no further – it can’t form part of a court case if mediation breaks down.

In their facilitating role, the mediator can’t force the terms of agreements. Ultimately, power rests with the disputing parties, with the mediator as a go-between.

What kinds of disputes can commercial mediation settle?

Commercial mediation can settle all manner of disputes from small claims to disputes worth billions – everything from an unpaid invoice to a dispute over intellectual property rights.

Types of dispute covered by commercial mediation include:

  • Breach of contract
  • Payment disputes
  • Professional negligence
  • Property disputes (for instance, those concerning rents or boundaries)
  • Construction disputes
  • Insurance disputes including personal injury claims
  • Partnership disputes
  • Disputes between shareholders and directors
  • Disputes concerning inheritance and probates

As you can see, the scope of commercial mediation is broad – however, it has its limits. Disputes involving divorce or child custody do not fall under its banner and require a family mediator instead.

How do commercial mediations work?

There are two ways the process can get started. Either a dedicated mediation service appoints a mediator, or – as is increasingly common – parties directly appoint one.

Lawyers are often in attendance during the mediation process to help present their client’s case – however, this visible legal representation isn’t an essential part of the process.

Before the meditation process begins, both parties send relevant information about the dispute to the mediator. They make their positions known separately and in confidence. The mediator studies this information and then organises the mediation session.

The process proper kicks off with a plenary mediation session. Here, the parties meet, present their cases, and ask questions.

In attendance will be the commercial mediator, the two parties and sometimes their legal representatives. The commercial mediator’s role is to shape the discussion without taking sides.

If the mediation process is being conducted solely by phone, this initial plenary session is skipped over.

The process now moves on to its second stage, known sometimes as “shuttle mediation”. At this stage, the mediator shuttles back and forth between parties, negotiating and seeking a mutually acceptable outcome.

Again, the mediator listens to the two parties in confidence. This means the parties can be frank with the mediator in the knowledge that the conversation is confidential, and that any weaknesses in their case won’t be revealed to the other party.

If this shuttle diplomacy is successful, a mediation agreement is formulated. This is a joint plan of action, the responsibility for which rests with the parties, not the mediator, whose job is still to facilitate and remain neutral.

Once the settlement is reached, the mediator writes up a binding agreement which is signed by both parties.

How long does a typical commercial mediation take?

Mediators aim to resolve disputes in a single session. This usually lasts one day but can take two.

Mediation sessions can be arranged as quickly as within the space of a week – but this depends on the availability of both parties and the mediator.

What are the advantages of commercial mediation?

There are three main advantages to commercial mediation – success rate, speed, and cost-efficiency.

  • The success rate is high, at around 90%.
  • The process is speedy. As we said, it usually only takes a day and can be quickly organised. This is far preferable to the protracted nature of many court cases.
  • The process is cost-efficient. While commercial mediators charge about the same as solicitors, the fact that the process is short means you’ll end up paying far less.

How much does the process cost? That hinges primarily on the amount of money at stake in the dispute and the complexity of the case.

When is commercial mediation not the best option?

If the case hinges on a technical legal point or contains a criminal element, then it might be best decided by a judge in a court case.

If both parties are convinced that mediation won’t succeed – and will only add legal fees on top of the inevitable court proceedings – it might be best to skip the mediation process.

Don’t let disputes drag your business down. Milners’ expert commercial mediators can help you find a fast, satisfactory conclusion – and at a sensible price. Learn more about our commercial mediation services today.

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