Commercial Mediation: A Brief Overview

Conflict is an inevitable consequence of human interaction and is common in the commercial world. How to most effectively deal with conflict and resulting disputes is a debate that has resulted in the emergence of a number of options and processes. Many disputes are referred to the courts or to arbitration to be adjudicated.  Although in some instances such adversarial processes are appropriate, they can also be costly, time consuming, inflexible and destructive to the relationship between the parties. Mediation is an alternative dispute resolution process that has been developed and should be considered when a difference or dispute emerges.

What is mediation?

The UK’s Centre for Effective Dispute Resolution defines mediation as “…a flexible process conducted confidentially in which a neutral person actively assists parties in working towards a negotiated agreement of a dispute or difference, with the parties in ultimate control of the decision to settle and the terms of the resolution.”[1]

Essentially, mediation is:

  • A flexible process: The disputing parties can (with or without the assistance of the mediator) decide on the venue, date and time of the mediation, who should attend the mediation, what issues will be discussed and what outcomes will be considered.[2]
  • Conducted confidentially and in private: What is discussed during a mediation process remains private and confidential as between the disputing parties and they are able to communicate confidentially with the mediator.[3]
  • Without prejudice: Parties to a mediation process do not give up their rights to resort to or continue a litigation process. In addition, no offer, concession or information disclosed in the course of mediation can be used as evidence in any pending or subsequent legal proceedings.[4]
  • Conducted by a neutral and impartial mediator: The mediator is the process facilitator (not a judge, advisor or representative) and does not make any decision about the merits of the dispute. The mediator controls the process, but the parties themselves determine the content and the outcome of the dispute. The mediator actively assists the parties in working towards a negotiated agreement.[5]

Although mediation is an effective dispute resolution process it can also be used to define problems or disputes, prevent disputes, manage conflict, negotiate contracts or formulate policy. A dispute or a difference can bring parties to mediation. The dispute does not have to be formalised and a dispute may have no legal basis at all (e.g. it may be a way to improving relationships in a workplace).[6]

What are the benefits of mediation?

The benefits of mediation are evident from its essential characteristics. It is flexible, confidential and effective. Mediation has relatively high rates of settlement, promotes a high level of compliance with the terms of settlement agreements, saves costs and time and helps parties realise the optimal terms of settlement.[7]

Mediation encourages the parties to focus on constructive solutions and the future. It allows parties to explore creative opportunities for solutions and to address their underlying needs and interests. Mediation assists in building trust and communication between the parties and can protect ongoing relationships.[8]

 Types of mediation and practical commercial applications

Mediation has been successfully used to settle disputes and differences in the commercial world, between employers and employees, in families and in communities. The context in which mediation takes place will affect the process that is used. However, the essential characteristics of mediation remain the same.

In the commercial world, mediation is becoming recognised as a very advantageous dispute resolution process. Some examples of where mediation can be effectively used to resolve disputes and differences of a commercial nature are:

Assisting parties:

  • to resolve general commercial disputes with suppliers, customers, clients, partners or competitors;
  • to reach settlement where they have been involved in protracted litigation and are experiencing ‘litigation fatigue’;
  • to resolve disputes and disagreements in family businesses;
  • to clarify, improve, evolve, restructure, end or dissolve a business or business relationship, affiliation or partnership;
  • who have hit a ‘stumbling block’ in the process of a business transaction or negotiation, to move forward;
  • to resolve interpersonal conflict or performance related issues between employees, executives, business partners, shareholders or directors;
  • to resolve employee grievances; or
  • to resolve inheritance related disputes.

 

Brigitte Macdonald

Brigitte has a BA and LLB and was admitted as an attorney in 2006 after completing her articles at Bowman Gilfillan.  By 2008, Brigitte had ascended to the position of senior associate within Bowman Gilfillan’s employment law department. She left Bowman Gilfillan in 2010 to pursue her interest in alternative dispute resolution and a consulting career in employment law. Brigitte is a Centre for Effective Dispute Resolution (CEDR UK) accredited commercial mediator.

 

References:

Brand, J, Steadman, F & Todd, C Commercial Mediation – A User’s Guide (Juta & Co. Ltd 2012)

CEDR The CEDR Mediator Handbook Effective Resolution of Commercial Disputes 4th Edition (CEDR October 2004)


[1] CEDR The CEDR Mediator Handbook Effective Resolution of Commercial Disputes 4th Edition (CEDR October 2004) p26

[2] CEDR The CEDR Mediator Handbook Effective Resolution of Commercial Disputes 4th Edition (CEDR October 2004) p26

[3] Brand, J, Steadman, F & Todd, C Commercial Mediation – A User’s Guide (Juta & Co. Ltd 2012) p24

[4] Brand, J, Steadman, F & Todd, C Commercial Mediation – A User’s Guide (Juta & Co. Ltd 2012) p25

[5] Brand, J, Steadman, F & Todd, C Commercial Mediation – A User’s Guide (Juta & Co. Ltd 2012) p25-26

[6] Brand, J, Steadman, F & Todd, C Commercial Mediation – A User’s Guide (Juta & Co. Ltd 2012) p20

[7] Brand, J, Steadman, F & Todd, C Commercial Mediation – A User’s Guide (Juta & Co. Ltd 2012) p27

[8] Brand, J, Steadman, F & Todd, C Commercial Mediation – A User’s Guide (Juta & Co. Ltd 2012) p27-30

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