Insurance · 9 April 2018

Alternative dispute resolution: The two outcomes of mediation

Mediation is a form of alternative dispute resolution (ADR).

Concluding his three-part alternative dispute resolution series, Grid Law founder David Walker looks at the two possible outcomes of a mediation.

Whenever I start legal action on behalf of a client, I am always fully prepared to go to court. I will not let a client start something that we are not willing to see all the way through to the end.

However, in my experience, the more prepared you are to go to court and argue your case in front of a judge, the less likely it will happen. This is because there are so many opportunities and tactics you can use to reach a settlement before you get to court. One extremely effective tactic is mediation, a form of alternative dispute resolution (ADR).

In the first article in this series, I explained how ADR can be used to help settle disputes out of court. Last week, I explained what happens at a typical mediation meeting.

There are two possible outcomes to mediation either you reach a settlement of your dispute, or you do not. In this article, I want to take a closer at what you should do in both scenarios.

Let’s start with the positive you reach a settlement of your dispute.

This is the outcome that everyone is trying to achieve. When you finally settle your dispute, especially if it is been ongoing for a long time, there is a huge sense of relief. The pressure is off but you can’t relax and celebrate just yet.

The first thing you have to do is document the settlement. You need to do this straight away because mediation is not legally binding.

Mediation is not like the courts which have the power to give an enforceable judgement. The only way to make a mediation settlement legally binding is to record it in a contract, a settlement agreement. Then, if one party doesnt fulfil their part of the bargain, the other can sue for breach of contract.

Entering into settlement agreement straight away also prevents either party from changing their mind about the terms of the settlement and whilst it’s being documented, any misunderstandings can be clarified immediately.

As with all contracts, when preparing the settlement agreement, the terms need to be clear and specific.

Most settlements will involve one party making a payment to the other. So, in the contract you need to say how much has to be paid and when. If the payment is to be made in instalments, the dates should be clear.

You should also include the consequences of any payment being made late. For example, do you charge interest? If so, how much? If payment is being made in instalments, do the remaining payments become immediately due so you can sue for the full balance outstanding?

Depending on the circumstances of the dispute, there may be other settlement terms too. For example, is there stock or equipment to be returned? If there is, is it to be made available for collection or is it to be delivered back to the owner? If so, at whose cost and when? Is the condition of the stock or equipment being guaranteed? What happens if it has been damaged during storage?

As you can see, both parties should be absolutely clear about what is expected of them so that this dispute is settled once and for all. The last thing anyone wants is to think they have reached a settlement only for a new dispute to arise because the terms of settlement havent been fully thought through.

If the mediation has settled a dispute where court proceedings are ongoing, the court needs to be informed. The legal action can then be discontinued or put on hold until all the terms of the settlement have been fulfilled.

If the mediation hasn’t been successful, don’t worry. It is not the end of the world.

Discussions and negotiations regarding a possible settlement can still continue and you may wish to try a further mediation closer to trial.


 
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ABOUT THE EXPERT

David Walker is the founder of Grid Law, a firm which first targeted the motorsport industry, advising on sponsorship deals, new contracts and building of personal brands. He has now expanded his remit to include entrepreneurs, aiding with contract law, dispute resolution and protecting and defending intellectual property rights.

Insurance