In a recent radio interview, Lord Neuberger, former President of the Supreme Court, expressed the view that there could potentially be an avalanche of litigation flowing from the current situation involving Covid-19, because of the contractual breaches and non-performance of contractual obligations that occur due to the disruption caused by the virus. Lord Neuberger suggested that one way to try and avoid a deluge of cases being filed in court would be for parties to consider mediation before issuing a claim.
There is clearly no way to avoid entirely the disruptive effect of Covid-19; whether this disruption will result in a flood of cases however remains to be seen. Nonetheless, the current state of affairs is ripe ground for disputes; as struggling business look to recoup losses suffered, the need for dispute resolution becomes more pressing. Mediation has always been an option open to parties – indeed it is something that is encouraged by the courts – and it should be considered by potential litigants. Mediation is often explored only after a claim has been issued. In this update, mediation will be examined in more detail and consideration will be given to some of the advantages and disadvantages of embarking on the mediation process.
What is mediation?
Mediation is a confidential procedure in which a third party, who is completely independent of all of those involved in the litigation (or potential litigation), assists the parties in trying to reach a settlement. The mediator does not act as a judge – his/her role is to seek to resolve the differences between the parties by settlement. Mediation is a voluntary process in which the parties choose to partake, unless there is clause in the relevant contractual documents which requires them to mediate.
The mediator is neutral and will usually start the day by speaking to each of the parties separately. There will often then be an “open session” involving all parties in which each side is given the opportunity to make an opening statement. After the open session has finished, the parties will each have private and confidential meetings with the mediator. If the mediator thinks it would assist, a further joint meeting may be held.
Any settlement reached at the end of the mediation or, sometimes, in the days/weeks that follow it, is binding on the parties by virtue of the settlement agreement’s terms.
Advantages of mediation
- Generally speaking, mediation is less expensive than issuing a claim at court. Depending on the value of the claim, mediator’s fees tend to be less than the fee that a claimant would have to pay to the court for issuing a claim. The costs are normally split equally between the different sides.
- If the mediation goes well, it can produce a speedy resolution of the dispute and save on all other litigation costs.
- Mediation may also assist in preserving any on-going relationships between the parties, as it is less aggressive than initiating a Court claim.
- Due to the fact that the mediation is private, it can be very attractive should the dispute give rise to any sensitive or confidential issues. It is also a less formal forum than a courtroom in which to air and try to resolve issues.
- In this current climate, mediations can be held via conferencing call facilities.
Disadvantages of mediation
- Mediation requires co-operation and a genuine “buy in” to the process on all sides – everyone needs to work towards finding a resolution. Sometimes tempers can flair on the day and parties may find that the amount of waiting involved as the mediator moves from one side to the other can test their patience.
- Similarly some parties may want “their day in court.” If so, mediation might not be suitable. There might also be some cases in which “going public” brings a discernible advantage, in which case, the confidentiality of the mediation process may not be desirable.
- The lack of formal rules for the process can also sometimes result in an impasse between the parties, unless an adept mediator is used.
- A substantial disadvantage of mediation is that, if it does not result in resolution of the claim, the costs of the mediation are spent and the case may end up in Court anyway. Furthermore, the mediation costs might not ultimately be recoverable even if you go on to win the claim at trial (on which see our previous update) because they are usually split between the parties in the mediation agreement and the court will not make a different order.
Subject to the type and value of the claim, mediation can be a very effective and economic settlement tool. Edwin Coe has extensive experience of mediation and is very well placed to make recommendations of effective mediators, to provide assistance with the process and to advise on how best to present the case on the day.
Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.
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