Mediation is a form of negotiation between disputing parties facilitated by a neutral third party (the mediator). Its aim is to provide a flexible, voluntary and confidential settlement by placing the fate of the dispute into the hands of the parties, rather than a court or other tribunal, allowing them to reach a mutually satisfactory conclusion. Unlike a judge or arbitrator, a mediator does not have the power to decide a case but works with the parties to agree terms for settlement. Accordingly, the mediation itself is non-binding but a successful mediation will typically lead to a binding legal agreement.
The EU mediation directive
Directive 2008/52/EC was enacted with the aim of harmonising the law governing mediation across the EU, specifically to “facilitate access to ADR and to promote the amicable settlement of disputes by encouraging the use of mediation and by ensuring a balanced relationship between mediation and judicial proceedings”.
In addition to general provisions promoting mediation within the member states, the directive also provides for the enforcement of agreements resulting from mediation (Article 6), the obligation of confidentiality during mediation proceedings, particularly with regard to the mediator (Article 7) and the relaxation of limitation and prescription periods for disputes which are mediated before judicial proceedings are commenced (Article 8).
There are a number of steps involved in a typical mediation.
- Pre-mediation planning is usually required to clear any issues with the mediator and between the parties before the mediation session itself.
- In order to arrive at mediation, the parties will usually enter into a mediation agreement (if there is no existing mediation clause in a contract which provides for mediation in the event of a dispute).
- A mediator must be selected and the mediation agreement will typically contain provisions for that selection or for the nomination of a mediation service provider (see below) that will govern the subsequent procedure and selection of a mediator.
- The mediation session will typically last a day or two with the opening statements followed by private discussions between the mediator and the parties and the necessary negotiations.
- The outcome of a successful mediation is usually a settlement agreement signed by the parties. This may be concluded at the end of the mediation sessions or via subsequent correspondence after the session. If the mediation does not result in a settlement then the parties are free to walk away and to take recourse to alternative solutions for resolving their dispute. Even an unsuccessful mediation may help to narrow the issues between the parties and streamline later litigation.
The flexibility of mediation means that it can in theory take place at any point before issuing legal proceedings, up until a final decision on the dispute is issued by the courts or an arbitrator. However, in order to maximise the potential time and cost savings, it is preferable for parties to enter into mediation as soon as possible after the parties have exchanged sufficient information and documents to make the negotiations productive and ideally before other legal proceedings have commenced.
It is possible to delay mediation until after other proceedings have commenced and this may be necessary, for example, in a case where interim relief is sought. Another reason for delaying mediation is to allow the parties to understand the case against them, especially if mediation can be delayed until after disclosure during civil litigation, when it will be possible for the parties to see the strength of the evidence against them.
Member state courts generally do not have the power to impose mediation onto the parties.
Pros and cons of mediation
Some of the perceived advantages of mediation are:
Autonomy: the private nature of mediation affords the parties greater control over the process and the outcome. The parties are free to choose the mediator, the applicable rules (e.g. applicable law, location and language of the mediation proceedings) and the terms of any settlement. This flexibility can provide for a more efficient resolution of the dispute in which a wider range of settlement options are available than the remedies available through the courts. For instance, business relationships can be preserved or enhanced via mediation whereas these outcomes may not be possible following litigation.
Neutrality: the mediator is a neutral third party and the mediation itself can be tailored to be neutral to the law, language and cultures of the parties. This makes it possible to adapt the process to assist the parties in working through their dispute whilst avoiding barriers otherwise created by cultural or social differences. The mediator acts as an intermediary and is able to bridge different personalities and negotiating styles and break down communication barriers between the parties.
Confidentiality: one of the key benefits of mediation is the confidential nature of the process. The parties will typically consent explicitly via the mediation agreement to keep the proceedings confidential and this obligation will usually extend to the mediator (see “EU Mediation Directive” below). Even if no explicit provisions for confidentially are set out in the mediation agreement, it is possible that there will be an implied duty of confidentiality given the nature and purpose of mediation. The private nature of the mediation coupled with the obligation of confidentiality provides an environment where the parties can fully explore their case without fear of exposing any weaknesses or setting negative precedents for future litigation.
Voluntary: the process is entirely voluntary meaning that the parties can enter into it, and withdraw from it, at any time. The mediator has no power to continue with proceedings against the will of the parties. The non-binding nature of the negotiations along with the fact that they are private and confidential means that mediation is low risk, because the parties are unlikely to be in a worse legal position following an unsuccessful mediation.
Some of the perceived disadvantages of mediation are:
Increased cost and time: whilst mediation has the potential to make dispute resolution more efficient, it can also lead to increased overall costs if a settlement agreement cannot be reached and no narrowing of the issues is possible.
Exposure of strategy: there can be a fear that discussions during mediation will inadvertently reveal strategic points or avenues for further exploration to the other party if the dispute does not settle. However, in practice, the confidentiality obligation placed on the mediator means that any strategic discussions with the mediator should remain private and not be disclosed to the other party.
Manipulation by uncooperative party: the non-binding voluntary nature of mediation means that it may be open to manipulation by an uncooperative or aggressive party. The extent to which this happens can be controlled by the mediator who can encourage cooperation and ultimately has the power to terminate the proceedings early if it is considered that a party is acting in bad faith.
Will mediation be appropriate for all cases?
No. Both parties must want to try to settle their dispute, and if one party does not or is adopting an overly aggressive position, mediation will likely fail. In some cases, mediation will be unsuitable. For example:
- If publicity is desired then the private nature of mediation makes it inherently unsuitable.
- If the issues in dispute are so critical to the parties that no compromise is possible and they must be removed by litigation, then mediation is unlikely to be successful.
- Similarly, if the parties are seeking a legal precedent to clear the way for later similar commercial activities then mediation will not be an appropriate substitute for a court decision.
- If the case is clear-cut, with high chances of a summary judgement being awarded, then litigation would be preferable to mediation.
The choice of mediator
The parties may agree who should mediate their dispute, or they may engage the services of a mediation service provider. There are various service providers who offer assistance with all aspects of the mediation process from providing a basic frame work of rules to be followed during the session to hosting the session and assisting with the drafting of the settlement agreement, if reached. For example, the WIPO Arbitration and Mediation Center is an already established provider. Also, under Article 35 of the Agreement on a Unified Patent Court, a patent mediation and arbitration centre has been established with seats in Ljubljana and Lisbon (“the Centre”). The Centre will provide facilities for mediation of patent disputes falling within the scope of the Unified Patent Court.