Should Parties Mediate a Dispute?

Mediation is a phrase which has gained popularity over the last 20 years inside and outside the courtrooms and arbitral tribunals.

Often, it is the case that clients ask the question – should I mediate? This question comes from experience dealing with consumers, small business owners, and also multinational corporations involved in cross-border disputes.

There is a universal theme to mediation, no matter the size or complexity of the dispute. It is something which everybody has perhaps experienced in their lives at some point or another.

What is Mediation?

Outside of the courts, Mediation may take many forms including informal discussions about the disputed series of facts. It could be a semi-formal arrangement where parties appoint a third-party independent Mediator to assist in resolving a dispute.

Typically, within a court process, Mediation will involve an independent court or arbitration-appointed mediator. Their role is to guide the parties through a series of checkpoints so to speak where each party will have the opportunity to present their version of disputed facts.

The mediator will then attempt to bring the parties together and meet in the middle, so to speak, so that a mutual resolution can be gained.

In mediation, often, everyone is equally offended. In other words, typically there is not a winner takes all scenario. Often compromises and discussions about meeting in the middle taking place where concessions from both parties are given.

Mediation could be summarized as a structured or semi-structured-negotiation process where an independent third party assists in the resolution of a dispute between parties.

When is Mediation Appropriate?

Mediation could be appropriate to simply settle a contested set of facts between parties.

Mediation may be used to limit the court’s involvement, which would involve expensive fees from both parties.

Often overlooked, Mediation can be used as a way to preserve the personal relationships between the parties. For example, parties may have a disputed series of facts, and by attending mediation can resolve their differences and preserve the status quo so to speak.

Often the presence of an independent voice in the room with experience in resolving disputes can make all the difference.

Should Parties Mediate?

One of the key things to consider when provided with the opportunity to mediate is control.

In mediation, you have the power to decide what you say, what you do, how you act, and to what extent you will compromise your position while seeking to, of course, leverage the opportunity to your advantage.

What does control mean in mediation?

If you’re unable to settle the dispute yourself and the matter is referred to a court hearing the decision will be taken out of your hands and decided by a Judge or Arbitrator.

Therefore, you have control at this point.

You will have the opportunity to influence the outcome.

Hindsight is 20:20.

At the end of a court hearing in which you may have won, but incurred a pyrrhic victory due to extensive legal costs, you may have wished to settle in mediation for a slightly lower monetary amount than an award from a Judge, but come away on top.

The element of control at this point should be considered very carefully and not overlooked.

Can Courts Mandate Mediation

The short answer is, yes they can.

In fact, it is often the case in nearly every formal court process that there is a requirement to attend an initial series of procedural and directions hearings, which will ensure that a mediation or settlement discussion is held between the parties.

For long and complex hearings, there may be several mandated mediation sessions appointed by a Judge.

Can Mediation be Requested

A party may move the court through an application or motion to schedule an additional mediation discussion between the parties.

This action, generally speaking, will not prejudice either party, but rather move the matter into a framework of settlement. As such, this order is often granted by the courts.

As a general rule, a court may make an order for mediation if it is appropriate in such circumstances.

Should I prepare for Mediation?

This is a question, which is repeatedly asked by parties, unfamiliar with the mediation process.

Typically, Counsel would prepare a chronology of events, a deep understanding of the agreed and disputed factual scenarios, the cause of action, the costs involved, what the likelihood is for settlement, and the prospects of success at the hearing.

Finally, the discussion on settlement and quantum should be deeply understood in terms of best and worst case scenarios and further what the bandwidth is for settlement, i.e. the monetary range a party would settle within.

If prepared, then parties will be in a position to get the very most out of mediation. Most of all parties should be prepared to have an open mind and consider alternatives to a final hearing.

Good Faith / Without Prejudice

Of course, parties should be respectful and act in good faith always, especially in mediation.

It is better to stick with the high level facts and summaries of a disputed fact, scenario rather than delving into the granular detail.

In mediation, we are not attempting to boil the ocean. We are attempting to slide through the stormy winds by cutting across the breeze, rather than attacking it headlong.

Having said that there is a general rule that mediation is held on a without prejudice basis. This means effectively that what is said in mediation cannot be used outside of the mediation and especially in a court process.

Is a Settlement in Mediation Binding?

As a general proposition, any settlement that is reached in mediation will be accompanied by a deed of release or settlement agreement. Courts may then make orders giving effect to this agreement reached by the parties.

An agreement reached may be in totality for all of the proceedings, to be resolved finally and discontinued, and immediately binding.

Typically, the phrase full and final settlement will accompany any agreement, giving effect to the intention of the parties to settle the dispute.

If there are financial sums agreed upon, then this will usually be stipulated in the agreement.

There will also be stipulations on confidentiality and non-disparagement clauses.

Finally, there would typically be a clause barring future proceedings on the same subject matter. This is very much an enforceable agreement, where a party could use the agreement to block the opposing party from relitigating the same dispute in court.

Key Takeaways

Parties should be prepared and thoroughly instructed by your Counsel about what to say, and what not to say. It is recommended to attend mediation with an open mind with a willingness to compromise. Mediation agreements will bar future proceedings.

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