When is Mediation Useful, and Will It Always Work for My Commercial Dispute?

When you disagree with another party when running your business, you may fall into a commercial dispute. Experiencing a business dispute can be a difficult time for your company, and you will be keen to resolve it quickly and as best you can. It is usually advisable to avoid court litigation, as it can be costly and time-intensive. An effective alternative dispute resolution (ADR) method can be the mediation process. This article will explain when mediation is helpful and whether it will always work for commercial disputes. 

What is Mediation? 

Mediation is a flexible, confidential and independent ADR that can be applied to commercial disputes. When parties to a dispute choose mediation, they will select a mediator to carry out the process. This will be a neutral third party facilitating a settlement through a series of meetings and negotiations. 

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When is Mediation Useful for a Commercial Dispute?

Mediation is one of many ways to potentially resolve a commercial dispute. However, whether it is helpful to you depends on the nature of your dispute. To determine if mediation would be appropriate, you should consider factors such as:

• what the dispute is about;
• whether the other party to the dispute considers commercial mediation a possible; and 
• what you want the outcome of the dispute to be.

Mediation would likely be useful where you and the other party are still willing to resolve the dispute mutually and maintain your business relationship, but previous informal negotiations were unsuccessful. Similarly, it could be helpful if your dispute is becoming adversarial, as the independent mediator may be able to reduce tension between parties. 

Beyond your working relationship with the other party, mediation may be useful if you want to reduce expenses and time-related costs. For example, where the dispute is of minor monetary value, you may find mediation a useful alternative to court litigation. This is because the cost of the latter makes it not worth pursuing. Mediation is also a better alternative if the dispute is about a joint venture between you and the other party, such as a project with a deadline.

Will Mediation Always Work for My Commercial Dispute?

Unfortunately, commercial mediation is not guaranteed to succeed. The mediation process should ideally result in a settlement where you both draw up a settlement agreement, but sometimes ends without it. This can occur even though, throughout the mediation process, you and the other party found some parts of the disagreement that you could both agree or compromise on. 

Where mediation does not work for a commercial dispute, it can mean the parties begin court litigation or try another ADR process. Therefore, it is crucial to stress that if you choose mediation for your commercial dispute, you have provisions in the agreement to emphasise this. It is also advisable to stress that mediation occurs ‘without prejudice’. This means that neither party to the dispute can refer to the mediation should the dispute reach the courts. 

Key Takeaways

Mediation is a form of ADR to resolve a commercial dispute. Mediation’s usefulness depends on the character of your dispute, including factors such as:

• what your dispute is about;
• whether you want to maintain a working relationship with the other party;
• the success of previous informal discussions; and
• time and monetary constraints. 

However, you should note that mediation does not always succeed. If a settlement is not reached, you may move on to another form of ADR or court litigation. 
If you need help understanding when mediation would be helpful to your commercial dispute in the UK, LegalVision’s experienced disputes lawyers 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.