Litigation or mediation?  No contest.


The resolution of disputes between parties by reference to a higher authority acting as a judge has been practised for many hundreds of years.


However, as the practice has grown, the costs and the time involved both during and leading up to the hearing have escalated dramatically despite attempts made in various reforms to reduce these factors.


Such hearings are inevitably adversarial and confrontational. In the vast majority of cases one party wins whilst the other loses. This in turn can cause bad feeling between the parties and is likely to destroy any relationship which they may have previously enjoyed.


Other alternatives such as arbitration and adjudication have been proposed in the past to overcome some of the shortcomings of litigation, but in time these too have tended to suffer the same problems.


Another solution is mediation. Whilst there are various types of mediation being practised, this article is concerned with facilitative mediation. In this form of mediation, the mediator specifically refrains from expressing an opinion or passing judgement on the dispute being aired. The solution to the dispute is well and truly in the hands of the parties concerned and the mediator simply helps the parties to find a solution by encouraging discussion and probing the needs and wishes of the parties.


By promoting discussion and encouraging the parties to resolve the dispute between themselves, the relationship between the parties is preserved. Furthermore, the parties share the mediator’s costs in most cases thus avoiding the winner-loser scenario. However, as the solution to the dispute is in the parties’ hands, they can if they wish, agree an alternative apportionment of the mediator’s costs.


Unlike litigation, mediation is not adversarial and the parties are encouraged to discuss all areas of dispute freely and without rancour. The process is entirely confidential and parties are not permitted to use any information obtained during mediation in any subsequent court hearing if the mediation fails to achieve its objective. Furthermore, a mediator cannot be called to give evidence in that situation.


Throughout the mediation, the parties, aided by the mediator, are actively seeking a mutually acceptable solution to the dispute. Unlike litigation, the parties can agree anything they wish, whereas a court would normally award a financial settlement. In many cases, the parties simply wish for the opportunity to be heard and for an apology to be given. Other forms of settlement may include, for example, free advertising, mutual exchange of goods or removal of the cause of the dispute. The sky is the limit as far as settlements achieved in mediation are concerned, providing the mediator is not asked to condone an illegal act.


A mediator does not need legal training nor indeed does s/he need to be an expert in the field of the dispute. All that is required is training in listening to the parties, gaining their trust and helping them to focus on the issues which are central to the dispute whilst also enabling them to look beyond those issues to other opportunities for settlement.


Mediation is cheaper than litigation, both owing to the speed of the process and the reduction in the use of specialist legal advice. Something in the order of 75% of mediations are settled on the day of mediation, typically involving four to eight hours of the parties’ time for a commercial dispute. A large proportion of the balance are settled shortly after the mediation as the parties are able to gain a better understanding of the strengths and weaknesses of their respective arguments during the discussion process.


Courts are now actively promoting mediation prior to a formal hearing. In Dunnett v Railtrack plc (2002), although Railtrack won the case in court, they were unable to recover their costs from Ms Dunnett as a result of their refusal to mediate. The possibility of being penalised on costs is focussing the minds of many solicitors on mediation.


Furthermore, on 23 April 2008, the European Parliament approved the new Mediation Directive. The purpose of the Directive is to facilitate access to dispute resolution and to promote the amicable settlement of disputes by encouraging the use of mediation.


There are five key aspects to the Directive:

  1. It encourages the training of mediators and the development of and adherence to voluntary codes of conduct and other quality control mechanisms.
  2. Any judge, at any stage of litigation, can invite the parties to mediate if considered appropriate.
  3. Member states are to establish a mechanism to enable agreements from mediation to be rendered enforceable if both parties request it to be so.
  4. Mediation is to take place confidentially and information given or obtained in mediation cannot be used against the party in subsequent judicial proceedings if for any reason the mediation fails.
  5. The Directive also endeavours to ensure that any time involved in mediation is ignored insofar as any limitation period is concerned.


The tide is, therefore, beginning to turn as far as traditional litigation is concerned. No contest as far as the benefits of mediation over litigation are concerned and no contest between the parties in future.


This article has been prepared by Michael Dawson FRICS, MCIOB, ACII, FCILA, Accredited Mediator.


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