What is mediation?

Mediation is a form of dispute resolution whereby the parties attempt to negotiate a settlement of their dispute with the assistance of an independent person called a mediator. The mediator will often have a background in law.  Mediation can either be employed as an alternative to litigation or as a means of reaching commercial resolution of a dispute once legal proceedings have been commenced.

Mediations are extremely effective with one source indicating mediations have resulted in up to 85% of litigated disputes settling.

The mediator facilitates communication between the parties by discussing their respective positions and assisting them to reach a reasonable compromise.  A mediator can be particularly effective when there is a high degree of animosity between the parties because they can negotiate through the independent mediator rather than directly with one another.

What are the benefits of mediation?

The quality and types of outcomes reached at a mediation are usually more satisfactory for the parties than the outcome achieved when proceedings run to a final hearing. This is because at mediation the parties are not confined to addressing legal matters in the same way that a Court is.

Mediation gives the parties the opportunity to address the non-legal issues that underpin the dispute and to come up with creative solutions which can salvage commercial relationships that have been jeapordised by the dispute or find more cost effective outcomes than the Court may provide.

Usually the parties to a mediation agree that everything said at the mediation is completely confidential. This allows the parties to speak candidly and openly without fear that what they say at the mediation is used as evidence against them in any legal proceedings. This also prevents sensitive or embarrassing allegations being aired in a public hearing.

Litigation can be inherently risky (even Judges make mistakes) but once a dispute has been successfully mediated it provides certainty as to the outcome and frees up each party to resume focusing on their business.

How does mediation work?

A typical mediation starts with each party (or their legal representatives) giving a short outline of their position in the dispute.  Once the parties have expressed their positions, the mediator will usually invite them to move into separate rooms.  From there on, the mediator will travel between rooms to speak to each party separately, encouraging settlement proposals from each side.  Often the mediator will attempt to facilitate negotiations by questioning the strength the parties’ legal arguments or the reasonableness of their negotiating positions.  The mediator may suggest settlement terms that appear reasonable and which satisfy the needs of all parties.

The whole process can take many hours and it is not uncommon for mediations to continue to run late into the night.

Do I have to settle?

The mediator has no powers to compel the parties to reach a settlement or to agree on any terms.  The final outcome remains entirely within the parties’ control, so if the parties cannot agree on an outcome, the dispute will remain unresolved.

Is mediation compulsory?

Mediation is usually a voluntary process, but in some circumstances a party may apply to the Court to refer the proceedings to mediation even where the other party does not consent.

Mediation can even occur before litigation commences.  From August 2011, parties commencing proceedings in the Federal Court must take “genuine steps” to resolve the dispute which may encourage parties to consider attempting to mediate their before it escalates into Court proceedings.

Whilst it may not always be appropriate to attempt to mediate at such an early stage (particularly if you do not understand allegations or the evidence of the other party) there are tremendous cost savings to be had if the parties are willing to adopt a commercial approach to resolving their disputes from the outset. The appropriateness and timing of mediation should be considered on a case by case basis.

For more information contact Daniel Fleming on d.fleming@pigott.com.au.
This article is intended to provide general information in summary form on a legal topic, current at the time of publication.  The contents do not constitute legal advice and should not be relied on as such. Formal legal advice should be sought in specific circumstances.