Settling commercial disputes and disagreements at any time can be daunting, but during any economic crisis such as the Coronavirus (COVID-19) pandemic, tensions can and do rise between businesses eager to protect their respective interests and those of their shareholders and employees. Supply chain issues have arisen leading to the need to renegotiate trading terms, threats to terminate contracts and demands for payment. All present a risk of a dispute escalating and competing positions becoming entrenched.
How to settle commercial disputes and disagreements during Coronavirus (COVID-19)
Money is tight and you don’t want to embark on court action. What is the way out of this potential impasse if communication channels breakdown? Mediation can hold the key.
How does mediation apply to commercial disputes and disagreements?
- Mediation is a forum for settlement of disputes in which an entirely independent specially trained third party (the mediator) meets the parties who are in dispute to facilitate a settlement of their dispute.
- Mediation is often used in commercial disputes as an alternative to expensive court proceedings. It is particularly useful when the parties wish to preserve a relationship which court proceedings might irretrievably damage.
- Statistics show that disputes which are the subject of mediation have a strong chance of settlement.
Benefits of mediation of commercial disputes and disagreements?
- Mediation enables the parties to propose and agree settlement terms which are much broader than those available to a Court, including the variation of an existing commercial agreement or establishment of a new one.
- Mediation is undoubtedly quicker and cheaper than other forums for settlement of disputes such as court litigation or arbitration.
- Even if a settlement is not reached then it frequently has the effect of narrowing the issues in dispute, or the parties getting a better understanding of the other party’s position and the merits of each side’s arguments. In so doing whilst a settlement may not be agreed at the mediation, it brings the parties closer. Often a settlement can be agreed in the following days or weeks.
- The cost of mediation is less than contested court action. There is no court fee to pay!
How does mediation work during the Coronavirus pandemic?
- Technology enables mediations to be conducted remotely in a confidential manner over various platforms, telephones, video conferencing such as Zoom/Skype for Business. Zoom has the facility for a virtual meeting room for all parties as well as secure separate breakout rooms for private meetings away from other parties to the mediation.
- At the start of the mediation the mediator will reinforce the confidential nature of the mediation.
- The mediator may often start with a meeting of all parties and invite each to deliver a statement. That is often an opportunity for each party to express how they feel, and in doing so enable the parties to look forward to a settlement rather than spend too long dwelling on the past.
- During the day the mediator will meet each of the parties privately in their secure breakout rooms and discuss the dispute, aspects of it, challenge stances being taken and seek proposals for settlement to put to the other party/parties.
- If the parties agree terms of settlement, then the parties and, their lawyers (if involved) will draft a settlement agreement prior to the parties agreeing and signing it.
Is mediation binding?
Mediation is only binding when and if a written settlement agreement is signed by all parties to the mediation. It then becomes a contract between the parties. The mediation is akin to choosing a new car in a garage. You are not committed to it until you have found the one you like, or seen the settlement terms with which you can agree, and signed on the dotted line.
How much does mediation cost?
The cost of mediation is modest compared with the costs of litigation or arbitration. They will include the costs of the mediator to prepare for the mediation, understand the issues, liaise with the parties and conduct the mediation. Generally, the costs of the mediation will be shared by the parties involved in the dispute.
What does the outcome of a successful mediation feel like?
Parties to mediation have often expressed a sense of relief that a dispute is over. An experienced mediator would describe a successful mediation as the parties finding a solution with which they can each live and move on.
Our page “Coronavirus (COVID-19) – Legal advice and guidance” is continually being updated with advice and guidance as and when updates come in from Government or other regulatory bodies.