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What Does the Mediation Process for My Commercial Dispute Involve?

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Running a business involves more than just the usual day-to-day activities. Unfortunately, your business can have disagreements with other companies you work with. When commercial disputes arise, you may need to take legal advice. It is also essential to reach an agreement as soon as possible to avoid court proceedings. One way to do this is through mediation, which is a dispute resolution process. This article will explore what is involved in effectively handling commercial disputes through the commercial mediation process.

What is Mediation? 

Mediation is a method for resolving disputes, including commercial disagreements between your business and another commercial company. It is one of several alternative dispute resolution (ADR) methods you can attempt before court proceedings. It is an entirely voluntary process in which parties to a dispute may agree to participate. 

However, your contract might specify that parties must undergo mediation before they can begin litigation. In this case, attending mediation would be compulsory.

The process of mediation is a highly flexible and globally recognised method for resolving disputes. In a commercial dispute, an independent third party (the mediator) will facilitate discussion between you and the other party. They encourage you to listen to the other parties’ views and to resolve the dispute. 

What Does the Mediation Process Involve?

Mediation is a flexible process that aims to assist parties in reaching a mutually beneficial agreement. Once you and the other party choose a mediator, the three of you will agree on how the mediation process will work.

The following sections will explore the mediation process in detail.

First Meeting

At the beginning of the mediation process, you, the other party and your mediator will typically have an initial meeting. During this meeting, the mediator will explain critical elements of the mediation process, such as that:

  • it is voluntary;
  • it is confidential;
  • they are neutral to the dispute; and 
  • it is your and the other party’s role to find a solution.

In this meeting, you and the other party will present your opening statements. The mediator will then discuss any areas that require clarification. They will also highlight parts of the issue that you can agree on.

Private Meetings

After your initial meeting with the mediator and the other party, you will have private meetings with the mediator. The other party will do the same. Private meetings allow you to raise concerns with the mediator and let them know what you think is strong about your argument. You can also raise commercial concerns that you might not feel comfortable sharing with the other side. Ultimately, it is a chance to explain your point of view with the mediator honestly.

In these meetings, the mediator may:

  • stress how important it is to keep a good working relationship with the other party once the dispute is over; and
  • remind you how expensive commercial litigation is should you end up on this path.

Formal Negotiations

Once the mediator feels they have had enough meetings with both parties to explore their views on the dispute, they will encourage you to start formal negotiations for a settlement. They will help you to think about where you may compromise on certain issues and how the best move forward. The mediator will be the go-between for you and the other party, letting each other know the other party’s offers and counter offers.

Settlement Agreement

Ideally, as a result of your formal negotiation, the final stage of the mediation process will be the settlement of the commercial dispute. If so, it is vital that you and the other party draft, or ask a lawyer to draft, the settlement agreement as soon as possible. This secures the settlement and means you accurately record your agreement with the other party. 

By entering a settlement agreement, you can avoid the dispute escalating to litigation which is costly, lengthy and potentially damaging to your reputation.

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Key Takeaways

Mediation is an alternative dispute resolution (ADR) method to resolve your commercial dispute. You and the other party will choose a mediator to facilitate your discussions to reach a settlement on the commercial dispute. Mediation is a flexible process, so there are no formal rules to follow. However, typically, mediation will begin with an initial meeting between both parties and the mediator. Then, each party will have a series of private meetings with the mediator. The mediator will then encourage both parties to negotiate to settle. Ideally, the final part of the meeting process will involve entering a settlement agreement with the other side. 

If you need help understanding the mediation process, our 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.

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Clare Farmer

Clare Farmer

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