27th October 2020
Commercial Mediation: Dispute Resolution Without The Tears
Disagreements are common in business. Relationships and agreements can be tested when a dispute occurs, and people look to protect their own interests. Being in the middle of it can feel like you’re under enemy fire, with all the stress that implies, especially when your money or reputation is at stake. But commercial mediation can provide a fairly quick and easy way to resolve disputes, rather than going in with all guns blazing.
How Business Disputes Occur
A frequent cause of commercial disputes is a breach of a contract, where one side fails to meet its obligations. This could be as simple as not paying an invoice, or more fundamental and go to the heart of the parties’ agreement. It is sometime tempting to rush to issue court proceedings, to try to recoup the money lost or force the other party to do what they agreed to do.
While court proceedings are sometimes necessary to protect your interests and position, they should be seen as a last resort. Proceedings can take longer than other routes to resolve a dispute, and there is no guarantee of recovering all your legal costs, particularly for smaller claims.
What Is Mediation?
An alternative to court proceedings is mediation. It is often a quicker and less formal way for the parties to try to resolve their differences. It helps to maintain an open dialogue between parties and make it easier to preserve or even enhance a future business relationship.
Mediation involves an impartial and unconnected third party – usually a lawyer, surveyor, accountant or engineer (perhaps depending on the nature of the dispute) – meeting the parties to try to bring them to an agreed resolution of the dispute. A mediator’s goal is not to decide who is right and who is wrong. Rather they aim to help find a settlement on terms that both parties can live with. The parties should enter the process in good faith. Although mediation does not always lead to an agreement, if the parties do reach an agreement at a mediation it is legally binding.
Research by the Centre for Effective Dispute Resolution (a mediation body) shows that 89% of cases entering mediation are resolved during or shortly after the mediation. Even if the parties fail to agree and the case proceeds to a trial, there is still a benefit: they have learned the perspective of the other party. So mediation could be seen as a low-risk method of testing the strengths and weaknesses of a case before incurring the higher cost of issuing proceedings or going to trial.
In the second part of this post, we will discuss when you should consider using commercial mediation and the reasons to attend a mediation.
For more information on commercial disputes, click here.