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   How to Reach a Settlement Agreement in the Commercial Dispute Mediation Process 

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In the course of business activities, your business may end up in a commercial dispute with another party. If this is the case, you should consider alternative dispute resolution (ADR) before resorting to commercial litigation in court. ADR is often more effecient whilst being less technical and costly than formal legal action. One such ADR method is through mediation, which will ideally result in a settlement agreement between you and the other party. This article will explain how to reach a settlement agreement in the commercial dispute mediation process. 

What is the Commercial Dispute Mediation Process?

Commercial dispute mediation is a voluntary and flexible process where you and the other party choose a mediator to help resolve your disagreement. The mediator is an independent, neutral third party who remains impartial throughout and simply helps to facilitate communication. Through a series of meditations, many of which are private and confidential, they will help you realise the strengths and weaknesses of your argument. As time passes, the mediator will encourage you to negotiate with the other party to attempt to compromise on a settlement that resolves the dispute.

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How Can I Reach a Settlement Agreement in a Commercial Mediation?

Settlement is the final part of a successful commercial mediation. Whilst following the planned mediation process is vital to settling an agreement, there are some specific points to bear in mind, which we discuss below.

Understanding the Importance of the Commercial Mediator

In a mediation, you should take full advantage of the mediator’s role as an independent third party. Importantly, one of the mediator’s key functions is to help you and the other party to reach a settlement agreement. As part of this, they should help you to spot areas where an agreement could be made. Some important qualities that an effective mediator possesses are:

  • understanding mediation processes clearly;
  • reducing emotional tension;
  • helping you to realise hidden interests; 
  • stress testing the perceived strengths of your arguments; and
  • listening actively.

Presenting Your Case

Although a settlement is the final stage of the mediation process, you should not disregard the importance of the beginning. This is because a settlement agreement will rely on you compromising with the other party to reach a mutual outcome. At the same time, you will want the settlement agreement to be as close to your interests as possible. Thus, you must present your case well. 

The key time to do this is at the initial meeting, where you meet the mediator and the other party. Notably, you will make an opening statement where you aim to persuade the other party that you have the strongest position in the commercial dispute. 

Drafting the Settlement Agreement 

Once you and the other party to the commercial dispute settle an agreement in principle, you should also record the details in writing. It would help if you did this as soon as possible to ensure it accurately reflects your discussions. Ideally, this will occur at the mediation venue where all parties are present. If you have a legal representative, they will draft this for you. If not, it can help if you have a draft settlement agreement prepared, which you can adopt once a settlement is agreed. Then, both you and the other party to the dispute should sign the settlement agreement. At this point, the settlement agreement is usually legally binding and can be enforced on the parties. However, if there are court proceedings alongside the mediation, this will not be the case until documents are filed with the court about reaching a settlement agreement. 

If, at the end of your commercial mediation process, there is no settlement agreement, you can choose to continue your negotiations with the other party privately. However, where a court order says that mediation must occur, you must let the court know that you did not reach a settlement. 

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Key Takeaways

Commercial dispute mediation is an alternative dispute resolution (ADR) method where a neutral third party will help you and the other party reach a mutual outcome. Although this agreement is the final stage of the mediation process, you should be aware of how you can maximise the other stages to reach an effective settlement. Some steps you should consider are: 

  • understand how you can benefit from an effective mediator;
  • present your case effectively to establish your interests; and
  • draft a written, enforceable settlement agreement as soon as possible. 

If you need help understanding how to reach a settlement agreement in the commercial dispute mediation process in the UK, LegalVision’s experienced disputes and litigation 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. So call us today on 0808 196 8584 or visit our membership page.

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Clare Farmer

Clare Farmer

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