In its simplest terms, mediation is the assistance given to two or more interacting parties by a third party who has no authority to impose an outcome; the third party helps to ‘break the tie’ between the two involved actors by guiding them to a mutually-satisfactory solution to the original problem. The decision to enter into mediation, as opposed to other dispute resolution methods such as litigation in court or arbitration, may be prompted by any of several factors, and not all of them economic. The decision to mediate, and which mediator to use, may offer an array of advantages. There are always good reasons to accept mediation as the method for solving a problem, commercial or otherwise, and it is worth looking at a number of them here:
Must we mediate?
When a dispute arises that isn’t resolved between the parties alone, mediation may not be the first solution in mind, but it also may not even be optional. Though the recent increased discussion of mediation in North America and Europe may suggest it is a contemporary method of resolving disputes, in fact cultures worldwide have relied on the process to maintain peace in their communities for centuries. The Vikings were known to utilise women in the community to resolve disputes in a negotiated fashion as early as the tenth century, and communities in China, Korea, Japan, Malaysia, and Turkey have rich mediation traditions as well. The growth in western mediation since the 1980s originated in North America where courts began to require mediation as a precursor to litigation, an idea which is currently hotly contested in the European Union. Europe and the United Kingdom have yet to require mandatory mediation, but it is easily
If mediation is not legally required in your or your partner’s home jurisdiction, it may be mandated by cultural norms. In those countries where mediation has a long history, parties have experience seeing how disagreements are handled with the help of third parties, and they know that the results are sanctioned by the community. For example, parties in China, Japan and other Asian countries are strongly motivated to utilise a mediator to solve contractual and other disputes because mediation is socially required and accepted at home. With the growth of international trade agreements of all kinds, even if mediation is not mandatory for you, the other party may have a strong cultural motivation to mediate. Participating in mediation may provide your partner/opponent with a comfortable and familiar way to get to a solution, making it more likely to reach a profitable resolution of the differences between you.
Finally, mediation may be required by contract if the parties so desire. Commercial agreements often have choice-of-law clauses which dictate where and how disputes will be handled, but these commonly only chose a particular jurisdiction’s court. If the chosen jurisdiction mandates mediation before litigation, it is good to know in advance. Moreover, a choice-of-law clause may include a voluntary option for mediation if the parties so desire. Knowing that mediation is necessary to solve problems can be a ‘plus’ factor in any deal by adding predictability and also casting the process of resolving potential disputes in a more cooperative framework.
Should we mediate?
Even if mediation is not required by law, custom or contract, there are many good reasons for engaging a non-interested third party to help resolve your dispute. One of the most advertised benefits of mediation is that it is a more cost- and time-effective way of solving problems than going to court. For example, data shows that the average duration of a court case litigated in the EU is 566 days. Obviously when mediation is successful you don’t end up in court, but even when parties mediate before going to court and are not successful in resolving their entire dispute, because mediation helps define issues and resolve some aspects of a problem, the length of the following litigation is cut by as much as 240-330 days. Quicker solutions mean moving ahead on a profitable footing in any business or domestic situation. It’s not only time that may be saved by mediation, obviously: because mediation takes place outside the courts, the parties represent themselves and may set the schedules and ground rules for pursuing an agreement. This results in cost savings that is one of mediation’s biggest advantages. Again, in the EU the estimated cost of an average court case is over €9,179. If mediation precedes a court trial, even though the mediation was not completely successful, the cost of going to trial may be cut anywhere from €1,220 to €3,050.
Beyond cost benefits mediation may offer, there are functional advantages that may make mediation a better process for solving a problem. Because mediation is private, it can be a more discrete way of working out a difficult situation. Where privacy or secrecy are important to the parties, such as in domestic disputes, high profile or sensitive business transactions, or disputes involving important secrets such as intellectual property disputes, mediation lets the parties settle their differences out of the public eye.
If these price-oriented, functional advantages of mediation are not compelling reasons for mediation for every party, one universal advantage to the process is that mediation offers a high probability of getting the parties to the ‘right’ result. First, regardless of the size or nature of the dispute, the parties may select a mediator who is an expert in the field of dispute to help resolve the conflict; not only will he or she be better equipped to understand the issues which separate the parties, but the mediator, by virtue of his or her knowledge and experience, may also have fresh ideas for solutions. Second, any result achieved in mediation is a product of the parties working together. Whereas litigation may often result in ‘all or nothing’ results between conflicting parties with intransigent positions, mediation results are always the creation of the disputants working with the help of the mediator, with the result being a mutually beneficial resolution.
Should we not mediate?
The discussion above makes it seem like mediation is the right choice for everyone but that cannot be the case. Mediation is a voluntary and cooperative process, it has different goals that litigation. Court systems are designed to create fairness and to that end have many rules for how and when disputes are raised, how they are proved and how they are rewarded or punished. A mediator has no power to enforce agreements, no power to to compel witnesses to appear or testify truthfully, and no other power beyond what the parties grant him. In some cases, the parties may not be able to come to such preliminary agreements, and the forceful rules of a courtroom may be necessary. In most other cases, the parties should be able to fashion a mediation process that meets all of their needs and comes to a quicker and better conclusion.