Commercial Mediation


Where once commercial disputes were largely the concern of corporate entities, the ever changing economic climate has widened the domain of this area of challenge.  Many of us who have some degree of involvement with commercial agreements, whether it is as borrower, mortgagor or investor, are now dealing in the arena of commercial disputes.  In the past, in order for a commercial dispute to be resolved, the main recourse of both parties to the dispute was to litigate the matter before the courts.  This process, however, is very costly and time consuming and somewhat unpredictable given the complexities involved.  In order to avoid this burdensome process, there is a stronger trend towards Alternative Dispute Resolution (ADR) which is an alternative to litigation in that parties to a dispute may resolve an issue by way of mediation, arbitration or expert adjudication.  This trend in ADR is partly due to the newly implemented sections of the Rules of the Superior Courts and the Circuit Court Rules which permit the court to send parties to a dispute into the process of ADR by way of mediation to ensure the best efforts are made to resolve issues without recourse to the court. 


Given the implementation of these new rules, there is a wider appreciation for entering the ADR process in advance of issuing or indeed throughout the course of proceedings.  This new approach is in part due to the fact that a court may take into account the refusal of one party to enter into mediation in deciding on costs once the outcome of a case has been decided by the court.  :


Mediation as a form of ADR aims to assist disputants in that they must enter a negotiation process that is conducted and lead by an impartial third party.  As a general rule, mediation is a confidential process and is without prejudice to any ongoing or potential proceedings relating to the matter in dispute.  The mediator does not have any role in making a decision of the issue in dispute and therefore control is retained by both parties to the process.  The mediator does act in a constructive manner in leading the discussions and negotiations which are centred on the areas of disagreement.  At any time throughout the mediation process, either party may disengage from the mediated discussion.  As the process is entirely confidential, it allows discussions between the parties which would not be permitted or aired in a courtroom setting.  This allows disputants to air grievances in a controlled setting as governed by the mediator.  It also facilitates possible reconciliation between the parties and avoids a confrontational court setting where there is an outcome which favours one party over the other. 


If an agreement is reached during the mediation process, it is reduced to writing, signed by both parties and it is not until this stage that is becomes legally binding.  Once an agreement has been reached through the mediated process, the written agreement is an enforceable document which has a legally binding effect on the parties to the agreement.  It is at this stage that legal advice in the drafting of the document and the implications of such an agreement into the future is of assistance.  Even in circumstances where agreement is not reached and the dispute is returned to the court, the process can still add benefit to the court process as it may help in streamlining the areas of disagreement between the parties and will assist in the more fluid progression of the litigated case.


Given that mediation as an area of alternative dispute resolution may lead to a possible saving in time, cost, reputation and relationship, it is a strongly favoured approach where a commercial dispute exists and where litigating the matter may lead to a loss in all of the aforementioned.





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