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What is Mediation and is it Compulsory?

Mediation is back in the spotlight following last month’s Court of Appeal decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416, which extends the courts powers (in disputes worth over £10,000) to order parties to engage in mediation, or other alternative dispute resolution methods, before they are allowed to continue with their court claim, where it is deemed ‘appropriate’, even where one party objects. 



What is Mediation? 

Mediation has been increasing in popularity for years. It is a very helpful tool that you or your business can use to resolve a dispute at any time either before, or during, contested court proceedings.    

Whether an issue has arisen with an important contractor, and you need to solve it whilst preserving that relationship, or you have been pulled into an acrimonious dispute over a recent business sale, or acquisition, mediating is an opportunity for you and your legal team to meet with your opponent and their legal team, to negotiate a settlement deal with the help of a mediator.  

The parties agree upon a suitably qualified independent mediator and a convenient time and venue to hold the mediation.  You might want a mediator with expertise in partnership law, financial services, or someone with a background in the construction industry.  We have worked with a wide variety of mediators for years and if we cannot recommend someone from personal experience, we can obtain recommendations from trusted third-party professionals.  

We will pull together the best team to support you through the mediation process and that could include involving a specialist barrister and / or a forensic accountant to make sure the deal is fair.  We have the contacts and experience to create and implement a robust strategy to get you the best possible deal on the day.  

Mediation has many potential benefits.  Before launching into them it is important to bear in mind that it is not appropriate in every case and there are a few red flags and potential pitfalls that we can ensure you avoid.

 

Why Mediate?

1. High Success Rate

According to figures published in the Tenth Mediation Audit from the Centre for Effective Dispute Resolution (‘CEDR’) an impressive 72% of mediations in 2022 settled on the day of mediation with a further 20% settling shortly thereafter.  

2. Make Your Business Thrive

Most people want to avoid the aggravation associated with litigation.  If you can solve your dispute sooner rather than later, you can free up employee and management time to do what you do best and get on with making a success of your business.

   

3. Protect Your Business & Reputation

Mediation is confidential and protects you and your business from reputational damage, which public court proceedings might otherwise attract.  This can be useful where there are, for example, accusations of dishonesty, fraud, or misappropriation of funds.  Even when these accusations are found to be false at trial, getting to a trial to clear your name can take years, by which point the damage may have already been done. 

     

4. Minimise Stress

Mediations tend to have a collaborative problem-solving focus and a much more relaxed atmosphere than a trial.   You will be at a comfortable neutral venue, with separate conference rooms for each party, so you can avoid engaging with each other and take breaks if necessary.  The mediator acts as a go between relaying messages and offers back and forth, and we can conduct joint sessions with the other side’s solicitors while you relax in another room.


You and your employees can avoid the hugely stressful experience of being cross examined at a trial by opposing counsel and the months, or even years, of providing instructions and witness statements to solicitors leading up to this.  


5. Save Costs 

Even if you choose a no expense spared approach and need to involve specialist counsel and /or expert witnesses in the mediation, the costs of mediation pales in comparison to the costs of preparing a case for trial. You could save thousands of pounds by mediating early.


6. Improve Possible Outcomes 

The solutions available at mediation are limited only by what the parties are prepared to agree to.  This can be much wider in scope than the range of outcomes that exist within court proceedings.

 

7. Anything to Lose?

Statements made by parties at Mediation in a genuine attempt to settle the dispute cannot be referred to in any future court proceedings.  This is known as ‘Without Prejudice Privilege’ and it provides both parties with the freedom to discuss issues in a way that promotes the chances of a settlement.  With the right guidance from us, Without Prejudice Privilege will be maintained and not inadvertently waived.

 

8. Move on / Clean Break 

Once a deal is reached, we will ensure it is recorded within a legally binding settlement agreement, which put simply means the deal is final and the underlying dispute cannot be referred to court in the future.  If you are worried about whether your opponent will honour the deal, the benefits listed here of a settlement being achieved work both ways.  Once the deal is done, there is a good chance that your opponent will want to move on too.

 

9. No Obligation 

You can leave a mediation at any time.  If your opponent is not engaging properly, or their offers are not acceptable, there is no obligation to continue with the process.  We might recommend you leave the mediation if this is in your best interests.  Even where the mediation is aborted, this does not necessarily mean it was a failure.  Involvement in the mediation process tends to alter the respective parties’ mindsets and as the figures from CEDR show, a further 20% of cases settle shortly after the mediation. 


10. Avoid Trial Risk

Litigation is inherently uncertain. Achieving a settlement deal brings both sides certainty.  It avoids the risk of either party losing at trial and having to pay the successful party’s legal fees on top of their own.  Your exposure to this risk can be eliminated by mediating.


The Future 

Whether the recent decision in Churchill v Merthyr Tydfil County Borough Council will supercharge the number of mediations in the future remains to be seen.  


In our experience, most sensible commercial clients properly advised will already have attempted mediation if it is ‘appropriate’ to do so before the court has any say in the matter.   Nevertheless, it will be interesting to see how the courts interpret the word ‘appropriate’ in the future as this area of law continues to develop. 


If you need help to resolve a commercial dispute fairly, quickly and cost-effectively, get in touch with our commercial dispute resolution team by emailing anna.barnes@salehs.co.uk and carly.borne@salehs.co.uk  or calling 0161 434 9991. 

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