by Phoebe Clerides
Mediation is a voluntary, confidential without prejudice method of resolving disputes. It requires the agreement of the parties to mediate, who may be directed to do so by the court. If the parties cannot find a mutually satisfactory solution they can continue court proceedings or arbitration. The mediator is a neutral and impartial party to the process. He aims to win the trust of both sides by being an active listener and show empathy but also ensure authority to disclose. A mediator must use psychological techniques and will focus on the needs and interest of the parties and not on what is right or wrong. There is no need for the mediator to know the intricacies of the relevant legal position but needs to help the parties to find their own solution by reminding them the importance of maintaining their business relationship perhaps and guide them to look at the bigger picture. Authority must be obtained by the parties to sign if an agreement is reached and confirmed to the mediator.
The whole process is confidential and nothing is disclosed or used in any way even if the parties fail to reach agreement. The mediator must keep the information confidential. The benefits of mediation is that the parties control the process and allows them the flexibility to continue to legal proceedings if no agreement is reached, costs are substantially reduced, time is saved, commercial relationships are preserved and the focus is on their interests rather than on legal rights. Confidentiality both in the process and by the mediator is also an important factor in choosing mediation. It is a myth that mediation is not in the interests of lawyers or that mediation is not binding. Mediation is binding if a settlement agreement is reached
There is an increase use of Alternative Dispute Resolution Systems and it has been shown that 70% of cases referred to mediation reach an agreement. The reason for this increase is that full blown disputes are always bad news for a company. They can lead to poor performance, scare investors, divert resources, cause share values to decline and perhaps even paralyse a company as well as ruin long term business relations. It is therefore not surprising that a settlement outside the court is more often seeked nowadays. Weak enforcement, lack of trust in the judiciary system, high costs and delays of trials and loss of reputation can be avoided through ADR systems.
The popularity of mediation is increasing and it is probably the most known form of ADR. In some USA states, mediation has become compulsory. The new EU Directive 2008/52/EC recognizes the importance of mediation, powers the courts, remover time limitations, makes agreements enforceable in courts and protects mediators from being called as witness. There is however no direct effect and each Member State needs to amend or introduce domestic legislation by 2011 in order to comply with the Directive. In the leading case of Halsey vs Milton Keynes General NHS Trust it was held on what circumstances can a party refuse mediation without running the risk of adverse costs order.
There is however a debate as to whether imposing compulsory mediation process a violation of Atr6 of the European Human Rights Act is occurred as well as whether a court can enforce an ADR clause in a contract. Recent case-law shows a positive step towards this. Lord Woolf in recent statements has showed to support mediation and suggested that arbitrators sit as judges and could very well handle mediation as well.
* All material of this article were gathered from the “Baltic Accident” conference of the London Shipping Law Centre in association with RTI Ltd held in Athens, October 2009.