Mediation is a voluntary, confidential process of negotiation that is facilitated by an independent and impartial third person, a mediator. It is often an effective method of resolving disputes between principals and agents without the need for litigation. Alternatively, it can be used as a means of settling litigation or an arbitration that has already commenced. In most instances the mediator’s costs are split equally between principal and agent, with the legal costs of the day being absorbed into any settlement (if reached). However, as with all aspects of mediation the approach to costs is flexible and can vary with each individual mediation.
Mediators are specifically trained for their role and their appointment is almost always agreed by both parties. Their role is to help principal and agent reach a solution to their dispute and to arrive at an outcome that both parties are happy to accept. This often involves a substantial compromise from both sides. Mediators avoid taking sides, making judgments, or giving guidance. Their role is to develop effective communication between the parties and to focus on consensus-building.
It is a condition of any mediation that the parties must treat all discussions as being “without prejudice” (that is, what they say cannot be referred to or relied upon later, in court or a tribunal, by the other party, should the dispute not be resolved). The same applies to documents that have been produced specifically for mediation purposes. This rule is aimed at encouraging the parties to be open and honest during the mediation process, without concern that what they say might be used against them.
During the mediation, the mediator will usually meet first with principal and agent together to discuss the process and to give each party a chance to make a statement in front of the other about what their position is on the dispute and what it is they hope to achieve. It is common for the mediator then to move the parties into separate rooms so that the issues and the possible options for settlement can be discussed individually and confidentially. This allows each party to be frank with the mediator and have a realistic look at their case in private, without fear that any perceived weaknesses will be communicated to other party. A mediator will never make firm settlement proposals to one party without the express agreement of the other.
The mediation process relies on the ability of the parties to reach a voluntary agreement, which both can live with and will usually depend on a little bit of give from both sides. It usually enables the parties to consider a wider range of settlement options than is possible in court or arbitral proceedings. Essentially, the parties are free to agree to settle a dispute in any way they choose. The parties maintain complete control over the choice of mediator and the outcome, and it is open to any party to withdraw from the mediation process at any time.
Fox Williams has been involved with many mediations arising out of commercial agency disputes, on behalf of both principals and agents. With the continuing legal uncertainty as to how any compensation payable should be valued following the Judgment of the House of Lords in Lonsdale, it has proved fertile ground for both sides. Recent successes include the securing of six figure payments for two corporate agents from their former principals and the conclusion of a dispute on behalf of a principal that had been running for over a year.
While the appropriateness of mediation will always vary on a case by case basis, given that parties to litigation are under an obligation to consider alternative dispute resolution and costs penalties can potentially be imposed against a party which point blank refuses to mediate, mediation is a pragmatic way of bringing a party’s litigation risk to a close, while allowing for a resolution that it can live with.
Written by Rod Dykins