Posted: Monday, 1 March 2010 @ 14:42
Having a business dispute go to court, whether it’s with a member of staff, a supplier or customer, must be every business owners dread. In a tough economic climate there tends to be less tolerance of mistakes and increased stress created by financial pressures. Some would say money worries even encourage some unscrupulous souls to join the compensation culture and look to ‘sue’ those around who that fail to deliver.
Going to Court is a difficult and costly process for any business, but of course it is not the only way to tackle the problem.
Mediation is perhaps the most common forms of ADR. With mediation the process is confidential, “without prejudice”, flexible, and only binding if the parties agree. The mediator is a trained professional facilitator, skilled in identifying the strengths and weaknesses of each party’s case, and in moving the parties towards a settlement.
Going to Court does deliver finality, with the judgement binding on both parties. The same can be true in mediation, where the parties agree at the outset how an agreement will be formed and whether or not they will be bound by it. The crucial difference in mediation however is that there is no judgement. Instead the mediator’s job is to bring the parties to a consensual agreement.
In court cases all relevant documents have to be disclosed and witnesses can be called upon to give written evidence or be summoned to attend court. This is not the case with mediation where the parties (and sometimes their lawyers) meet with the mediator and are given an opportunity to put their side of the case and state what they want by way of resolution.
Perhaps one of the main advantages of the court process is the power of the courts – to grant an injunction to prevent or enforce certain actions, and to order that costs are paid by the party deemed to be ‘in the wrong’.
Mediation is a much less draconian approach. Unlike court proceedings which are in the public domain mediation is strictly confidential. This can make mediation ideal for sensitive commercial disputes with employees or cases with potentially damaging publicity implications.
The mediation negotiations cannot be referred to in any subsequent court action, except in very limited circumstances such as where the parties are arguing over whether there was a binding agreement reached or arguing over the terms of such an agreement. The ‘without prejudice’ nature of mediation means that the parties can come to compromise more easily and can lead to a far more pragmatic, solution centred approach, rather than the blame and counter claim of court cases.
Compared to court action mediation is very flexible and informal, meaning the parties can generally act very quickly and find remedies which suit both parties rather than being held within the strict code of the law. This is a great advantage where the parties wish to continue their ongoing commercial relationship.
The mediator will act as “devil’s advocate” with each party in private, forcing them to recognise the weaknesses of their case, and the strengths of the opposing party, and so make them more amenable to a reasonable settlement. The mediator will bring their expert experience to bear in identifying solutions.
There are some perceived weaknesses to mediation. For example the agreement is only binding if the parties agree. And unlike the judge a mediator has no legal power.
But compared with the expense, inflexibility and often long drawn out process of court proceedings mediation is often favoured and is certainly worth consideration alongside other forms of alternative dispute resolution. It’s worth remembering that where ADR has not been tried, the courts will bring pressure to bear in the proceedings, and will often suspend the proceedings for the parties to attempt ADR.
Read more: alternative forms of dispute resolution.
Blog by Nigel Musgrove
Nigel has been providing dispute resolution advice as a solicitor for over 35 years. As well as advising SMEs and business owners on disputes he also offers a specialist licensing law service. View profile
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