Mediation is a form of dispute resolution whereby the parties
attempt to negotiate a settlement of their dispute with the
assistance of an independent person called a mediator. The mediator
will often have a background in law. Mediation can either be
employed as an alternative to litigation or as a means of reaching
commercial resolution of a dispute once legal proceedings have been
Mediations are extremely effective with one source indicating
mediations have resulted in up to 85% of litigated disputes
The mediator facilitates communication between the parties by
discussing their respective positions and assisting them to reach a
reasonable compromise. A mediator can be particularly effective
when there is a high degree of animosity between the parties
because they can negotiate through the independent mediator rather
than directly with one another.
What are the benefits of mediation?
The quality and types of outcomes reached at a mediation are
usually more satisfactory for the parties than the outcome achieved
when proceedings run to a final hearing. This is because at
mediation the parties are not confined to addressing legal matters
in the same way that a Court is.
Mediation gives the parties the opportunity to address the
non-legal issues that underpin the dispute and to come up with
creative solutions which can salvage commercial relationships that
have been jeapordised by the dispute or find more cost effective
outcomes than the Court may provide.
Usually the parties to a mediation agree that everything said at
the mediation is completely confidential. This allows the parties
to speak candidly and openly without fear that what they say at the
mediation is used as evidence against them in any legal
proceedings. This also prevents sensitive or embarrassing
allegations being aired in a public hearing.
Litigation can be inherently risky (even Judges make mistakes)
but once a dispute has been successfully mediated it provides
certainty as to the outcome and frees up each party to resume
focusing on their business.
How does mediation work?
A typical mediation starts with each party (or their legal
representatives) giving a short outline of their position in the
dispute. Once the parties have expressed their positions, the
mediator will usually invite them to move into separate rooms. From
there on, the mediator will travel between rooms to speak to each
party separately, encouraging settlement proposals from each side.
Often the mediator will attempt to facilitate negotiations by
questioning the strength the parties' legal arguments or the
reasonableness of their negotiating positions. The mediator may
suggest settlement terms that appear reasonable and which satisfy
the needs of all parties.
The whole process can take many hours and it is not uncommon for
mediations to continue to run late into the night.
Do I have to settle?
The mediator has no powers to compel the parties to reach a
settlement or to agree on any terms. The final outcome remains
entirely within the parties' control, so if the parties cannot
agree on an outcome, the dispute will remain unresolved.
Is mediation compulsory?
Mediation is usually a voluntary process, but in some
circumstances a party may apply to the Court to refer the
proceedings to mediation even where the other party does not
Mediation can even occur before litigation commences. From
August 2011, parties commencing proceedings in the Federal Court
must take "genuine steps" to resolve the dispute which
may encourage parties to consider attempting to mediate their
before it escalates into Court proceedings.
Whilst it may not always be appropriate to attempt to mediate at
such an early stage (particularly if you do not understand
allegations or the evidence of the other party) there are
tremendous cost savings to be had if the parties are willing to
adopt a commercial approach to resolving their disputes from the
outset. The appropriateness and timing of mediation should be
considered on a case by case basis.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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