Commercial mediation – covering the basics

Category: Dispute Resolution

Commercial mediation is becoming a highly popular method of settling disputes out of court. It’s becoming a fast-growing business in the UK, and has grown in popularity particularly over the last few years.

The concept is easy enough to understand, which is part of the key to its success. It’s a voluntary service where the parties involved in a dispute get together to sort out their differences. An independent mediator is always present to assist in the process. The ultimate goal is to have agreed on a settlement by the end. Commercial mediation’s flexibility and cost effectiveness mean it’s highly popular. In other words, it’s quite unlike Court proceedings.

Rise in popularity

Parties are encouraged to mediate in all manner of disputes. The popularity of commercial mediation is one of the fastest growing in recent years. CEDR, the Centre for Effective Dispute Resolution, recorded a rise of 20% in the two years to July 2018, reporting that £11.5 billion worth of commercial claims were mediated in that period. A more valuable statistic to participants, no doubt, is the success of the mediation process. Some 89% of claims in total will settle following mediation. Following this, 74% reach settlement on the day and the remaining 15% shortly afterwards.

This surge in mediation has stemmed from reforms introduced by the Judiciary over many years. Settlement outside of Court proceedings is strongly encouraged by the Courts. They often complain that too many cases are being brought before Judges that could just as easily have been mediated earlier. Judges are now starting to penalise parties at the end of trial (usually by way of legal costs), who they believe have refused an offer to mediate without good reason.

Businesswoman Stands To Address Meeting Around Board Table

So, how does it work?

Here’s what to expect. By the day itself, a mediator will have been jointly appointed. Many current or ex-legal professionals, such as barristers or Judges, choose to become commercial mediators. However, this is not always the case. From my experience, participants are equally content to choose a mediator with a background in a relevant sector. That might be banking and finance, insurance, transport, agriculture etc. It’s usual for the parties to gather together at the start of the day for the mediator to set the scene. The participants will briefly summarise their position (they will already have exchanged position statements beforehand). There is, however, a trend nowadays to do without this initial meeting, especially in highly fraught or emotional disputes. It’s also not always practical to have the initial meeting. There are often circumstances that mean someone can’t be in attendance in person, so this meeting becomes relatively pointless.

After this, the parties usually break out into separate rooms. The mediator will ferry between them, refereeing the process and, where necessary, providing their own input. It’s especially important that participants feel they are getting the most out of it. They should also conduct the whole process in good faith. Participants will find that they are free to speak their mind about the issues in dispute. Mediations are held on a “without prejudice” basis.

If the mediation is well structured and parties conduct themselves properly, then settlement before day’s end should be possible. It’s always sensible for the parties to formalise their settlement into a binding agreement before they part company. If, for whatever reason, the mediation is unsuccessful, then proceedings will continue. As mentioned earlier, it will likely settle shortly after.

Consider Your Options

That’s pretty much commercial mediation in a nutshell. It’s also worth adding that mediation, although sensible in most cases, is not compulsory, at least not yet. Court proceedings remain the single most popular option for most disputes. It’s also worth bearing in mind that mediation isn’t the only way to settle a dispute outside of Court.

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What next?

When it comes to commercial mediation, Our Commercial Dispute Resolution team is more than happy to chat through your options. By all means, pick up the phone and give us a call on 01752 827014, and we’ll have a chat about how we can help. You can also email us at [email protected]. You can also request a call back by filling in the contact form.