Commercial mediation is widely used by businesses as an alternative dispute resolution (ADR) method. It provides a platform for parties involved in a commercial dispute to resolve their differences outside the traditional court system.
This approach facilitates open communication, negotiation, and collaboration to reach a mutually acceptable agreement. It’s far less combative and stressful than litigation, not to mention much more affordable.
Most small businesses will become involved in a dispute at some stage, so owners and entrepreneurs must understand commercial mediation. This understanding enables them to resolve commercial disputes quickly whilst preserving business relationships.
How does commercial mediation work?
Commercial mediation is a voluntary and confidential process. An appointed mediator, who acts as a facilitator, guides the parties through discussions and negotiations. Unlike a judge or arbitrator, a mediator doesn’t impose a decision. Instead, it assists the parties in working towards a win-win solution.
The mediation process typically begins with the parties and their legal representatives. Both parties select a mediator with relevant expertise and commercial sector experience. The mediator's role is to remain impartial, listen to each party's perspective, identify common interests, and facilitate productive communication.
The mediator may hold joint sessions where both parties are present and private sessions. These sessions are held to help understand each parties underlying concerns and better interests. Throughout the process, the mediator supports the parties in exploring possible solutions and reaching an agreement.
What are the advantages of commercial mediation?
Commercial mediation has increased in recent years due to its numerous advantages:
- Flexibility
- Confidentiality
- Preserves business relationships
Flexibility – one of the primary benefits is the flexibility it offers. The Parties can tailor the mediation process to suit their specific needs, including:
- The choice of mediator
- Location
- Timing
This flexibility allows for a more efficient and cost-effective resolution than protracted court battles.
Confidentiality – confidentiality agreements protect discussions and information shared during the mediation process. Confidentiality ensures that parties can openly communicate without fear of damaging their positions in future legal proceedings. This confidentiality fosters an environment of trust, promoting a more constructive and cooperative atmosphere for negotiation.
Preserve business relationships – in many cases, disputes arise between parties with ongoing or potential future business dealings. The parties can work together to find a solution by engaging in mediation.
This solution won’t only resolve the current conflict and maintain a positive working relationship going forward. The focus on collaboration and preserving business ties can be precious in industries where maintaining ongoing partnerships is critical.
How long does commercial mediation take?
Depending on the complexity of the dispute, mediation can last for several hours or even weeks. In most cases, an agreement is reached in one to three days.
Is mediation mandatory in respect of commercial disputes?
Mediation isn’t mandatory in commercial disputes unless there’s a contractual arrangement between parties to mediate. However, the court proceeding and court rules are increasingly emphasising mediation. Litigants have an express duty to consider ADR before, during and after commencing proceedings.
Is mediation legally binding?
If the parties reach a resolution, they can enter into a agreement legally binding, often called a Settlement Agreement. This agreement outlines the parties' terms and conditions and serves as a roadmap for implementing approved solutions. Because it’s legally binding, the terms of the Settlement Agreement are enforceable in court.
Free Settle Agreement template
What happens if a business refuses to mediate?
Commercial mediation is a widely recognised and supported process within the legal system in England and Wales. The Civil Procedure Rules (CPR) encourage parties in a commercial dispute to consider mediation as a means of resolving, emphasising the court's expectation that parties will actively engage in ADR before resorting to litigation. Refusing to engage in mediation may result in an adverse cost order if the court deems the refusal unreasonable.
Get legal assistance from LawBite
Commercial mediation service in UK law presents a voluntary and confidential avenue that enables parties embroiled in commercial disputes to seek an alternative path for resolving their conflicts. This process offers a range of benefits, including flexibility, confidentiality, and preserving valuable business relationships avoiding costly litigation processes.
Our experienced commercial lawyers can offer legal advice and help you navigate dispute resolution matters and provide expert guidance on mediation, arbitration, or litigation processes and other alternative dispute resolution (ADR) methods. To find out how we can help you, book a free 15 minute consultation or call us on 020 3808 8314.
