Advantages and Disadvantages of Using Mediation for a Commercial Dispute

Disagreements with other companies are common when you run a business. If you find yourself in a commercial dispute, resolving it in as little time as possible and without court proceedings for a legal dispute is essential. However, if this does not happen, you must consider a method to resolve your business dispute. Alternative Dispute Resolution (ADR) is one option, with mediation being an available ADR method. This article will explain the advantages and disadvantages of using mediation for future commercial disputes so you can weigh up whether it suits your situation.

What is Mediation?

Mediation is an alternative dispute resolution (ADR) method for resolving commercial disputes used worldwide. You and the other party will appoint an independent and impartial mediator who will facilitate the discussion to help you come up with a solution. As a result, mediation may be an effective preliminary step before resolving your dispute in court.

When businesses in a commercial dispute choose mediation, they do so voluntarily. However, despite mediation as a voluntary method to settle a dispute, you must still consider it. If you do not consider mediation and the dispute then goes to court, the judge may penalise you for not doing so. This can mean they refuse to award costs to you. The court could also ask you to pay some of all the costs for the business you are in dispute with. 

What Are the Advantages of Using Mediation for My Commercial Dispute?

There are advantages to using mediation for a commercial dispute. The top one is that mediation usually results in an agreement. We will explore some other advantages below.

A key reason you may choose mediation for our commercial dispute is that it is a private proceeding and remains confidential. This means that you, the other party or the mediator cannot reveal information disclosed during the mediation procedure.

Another advantage of using mediation to resolve your commercial dispute is that it is a way to bring you and the other party together. As a mediator facilitates this, it can allow you to discuss calmly and focus your mind on the issue in dispute. This avoids future bad feelings and may help save your commercial relationship. This is supported by the mediator’s neutrality and, therefore, not having a view on any of the heated issues. Also, the mediator may help you settle faster as they can see each other’s opinions and help you understand them. 

As a commercial mediator does not decide on commercial disputes, unlike a judge, your business will not feel pressure to find a resolution. Also, if you see that mediation is not working or is not the right method for the dispute, you can change your mind at any point, as it is voluntary. This can help you maintain control of your business actions moving forward from the dispute. 

What Are the Disadvantages of Using Mediation for My Commercial Dispute?

Despite mediation for commercial disputes being advantageous, it also has its disadvantages. Below, we detail some of the disadvantages of mediation for a commercial dispute. 

Whilst parties to mediation typically reach an agreement, it does not always happen. This may occur when you or the other party has no interest in settling the dispute, which is a disadvantage of mediation. 

A further disadvantage of mediation is that it is only sometimes suitable if something has gone drastically wrong in the commercial dispute. For example, if you or the other party require significant emergency action, you may need to approach a court. For example, you may need an injunction if you need to prevent the other business from doing something.

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Also, when you choose mediation, you must be mindful that the mediator has no power over you or the other party. So, if you believe it is essential that the other party discloses something to you, they cannot make them do as a judge can. 

Key Takeaways

When you fall into a commercial dispute with another business, you may choose mediation to try to resolve it. Mediation is a voluntary process where a neutral mediator facilitates discussions between you and the other party. This should lead to you both resolving the dispute. There are advantages and disadvantages of mediation. This article explains some of these. 

For example, mediation is advantageous as it is confidential and usually results in a dispute resolution. However, mediation is not best suited if you have a pressing issue requiring speedy resolution, such as an injunction. Suppose you need help understanding the advantages and disadvantages of using mediation for your commercial dispute.

For more information, LegalVision’s experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.