Mark Small, MII Commercial Sector Rep

Commercial disputes will no doubt occur and reoccur and recent figures reveal that almost 80% of commercial disputes in the UK are settled using mediation. Its use is also likely to increase in the rest of the Europe as a result of the European Mediation Directive;

(6) Mediation can provide a cost-effective and quick extrajudicial resolution of disputes in civil and commercial matters through processes tailored to the needs of the parties. Agreements resulting from mediation are more likely to be complied with voluntarily and are more likely to preserve an amicable and sustainable relationship between the parties. These benefits become even more pronounced in situations displaying cross-border elements. (EU Directive 2008/52/EC (the Directive). Preamble (6))

Throughout Ireland commercial parties are becoming more aware of the benefits mediation can offer:

• parties can engage without being seen to lose face as mediation is a planned part of the dispute resolution process,
• mediators can use what’s known as “shuttle mediation” where the parties will be in separate rooms and the mediator will go back and forth between them,
• the mediator can be entrusted with the “true” position of each party as to where it will settlle and accordingly will know how to help bridge the gap and will know how wide the gap truly is as opposed to the parties’ public statements,
• a mediator does not judge the issues but facilitates agreements which can be committed to in a binding form, the process is consensual – either party can walk away,
• the process is forward-looking and can maintain the business relationship between the parties more effectively than litigation/arbitration, which are both retrospective and antagonistic forms of dispute resolution,
• what is said in mediation is confidential and without prejudice (up to the point where agreement is reached),
• the parties are able to agree on solutions that would be beyond the scope of a judge or an arbitrator, for example, finding a “win/win” solution by introducing commercial issues not the subject of an existing dispute.

Irish Judicial opinion at the highest level is overwhelmingly positive about the use of Mediation in commercial disputes: Ms. Justice Fidelma Macken (Supreme Court) :

FAQs

Will the use of Mediation be a strategical error in complex cases if the matter ends up in court?
The usual worry of pursing mediation is the idea that one party would play tactically and use the mediation process to gather information and intentionally fail to settle. The rationale behind this would be to use that information as evidence in court in order to make a weak case appear stronger or a strong case to become more likely to succeed. However, it cannot be stressed enough to that mediation is both confidential and without prejudice.

How can a Mediator have the expertise to assist in complex commercial matters?
Neutrality is paramount and achieving this may take adopting both a facilitative approach as well as an evaluative one, of which a balance could promote trust and confidence in the mediator. It may be best to select a lawyer with expertise in the relevant field to mediate a commercial dispute, one who is also accredited as a mediator. Since accreditation is provided for by a credible body experienced in holding mediations (the MII), there is less chance of mediations being unsuccessful.

At what point does the Mediation agreement become legally binding?
Once the agreement is drafted and signed by both parties and their lawyers, it becomes legally binding. However, as mediation is voluntary, it remains voluntary up to the point of agreement. Therefore heading to court remains an open option should either party decide not to sign the mediation agreement even if the terms have been reached.