The benefits of mediation in a commercial dispute
Lawyers are often stereotyped as being interested in prolonging an expensive Court
action. More often this is untrue.
Lawyers know that Court cases are expensive and that clients are fearful that legal costs
could escalate to an intolerable level. Lawyers interested in preserving long standing
relationships with their clients will often recommend Alternative Dispute Resolution
(“ADR”) options – mediation being one.
Mediation allows parties to remain in control of their own disputes and outcome while
facilitating parties to tell their side of the story to the other party and the mediator.
What exactly is mediation?
Mediation is one form of ADR with others including Early Neutral Evaluation, Expert
Determination and Arbitration.
In essence mediation is an informal conflict resolution process brought before an
independent, neutral third party. Mediation gives the parties the opportunity to discuss
their issues, clear up misunderstandings and find areas of agreement in a way that
would never be possible in a Court case.
Mediation is often voluntary. Typically the mediator has no authority to make a binding
decision unless both parties agree to give the mediator that power which is dealt with in
advance of the mediation commencing.
When parties should consider mediation
In practical terms mediation is likely to be quicker and more cost-effective than the more
formal processes of arbitration or litigation (in Court). Mediation should be considered as
early as possible after a dispute has arisen. It is particularly appropriate where a dispute
involves complex issues and/or multiple parties.
In addition, mediation can be implemented prior to, or in conjunction with, other forms of
dispute resolution such as Arbitration or Court proceedings.
In circumstances where privacy and confidentiality are important, mediation enables
parties to preserve these rights without public disclosure. This often leads to more
satisfactory outcomes for both parties.
Advantages of mediation
There are many advantages, in summary these can be described as:
• You get to decide:
The responsibility and authority for coming to an agreement remain with the
people who have the conflict. The dispute is viewed as a problem to be solved.
The mediator doesn’t make the decisions, and you don’t need to “take your
chances” in the courtroom.
In doing this however, naturally you need to understand your legal rights so that
you can make decisions that are in your own best interests.
• The focus is on needs and interests:
Mediation examines the underlying causes of the problem and looks at what
solutions best suit your unique needs and to satisfy your interests.
• For a continuing relationship:
Colleagues, business partners, and family members have to continue to deal with
each other co-operatively. Going to court can divide people and increase hostility.
Mediation looks to the future. It helps end the problem, not the relationship.
• Mediation deals with feelings:
Each person is encouraged to tell their own story in their own way. Discussing
both legal and personal issues can help you develop a new understanding of
yourself and the other person. You are encouraged to see things from the other
• Higher satisfaction:
Participants in mediation report higher satisfaction rates than people who go to
Court. Because of their active involvement, they have a higher commitment to
upholding the settlement than people who have a judge decide for them.
Mediations end in agreement about 80% of the time and have high rates of
Mediation can be a less intimidating process than going to Court. Since there are
no strict rules of procedure, this flexibility allows the people involved to find the
best path to agreement. Although it is normal for any dispute resolution to be
taxing emotionally, mediation is a process that is much less confronting and is
conducted in a much more comfortable environment than litigation.
• Faster than going to Court:
Years may pass before a case comes to trial, while a mediated agreement may
be obtained in a couple of hours or in sessions over a few weeks.
• Lower cost:
The Court process is expensive, and costs can exceed benefits. It may be more
important to apply that money to solving the problem, to repairing damages, or to
paying someone back. Mediation services are available at low cost for some
types of cases. If you can’t agree, other legal options are still possible. Even a
partial settlement can lessen later litigation fees.
Unlike most Court cases, which are matters of public record, most mediations are
Where mediation is not the solution
With mediation a resolution is not guaranteed. There is the potential that parties may
invest time and money in trying to resolve a dispute out of Court, and still end up having
to go to Court. Ultimately it is a call that should be made in consultation with an
Mediation should not be a solution in circumstances where it is not appropriate. For
example where a Court remedy is necessary such as an injunction or seeking specific
urgent Court orders.
It must also be remembered that the Mediator has no power to impose a binding
decision on the parties. Therefore even after the mediation the matter may be
unresolved and you may still need to go to Court. (This is where the selection of the
Mediator requires careful consideration by all parties).
Fundamentally, mediation rarely produces a satisfactory resolution unless both parties
to a dispute are committed to a resolution.
Mediation is an alternative to the financial, emotional and costs to using the Court
system. It is suitable for people who are willing to communicate with the other party and
attempt to better understand and settle their dispute with the help of a trained third party.
To find out more call us on (03) 9600 0162 or email firstname.lastname@example.org.