Legal Talk

Using mediation for disputes in commercial or business transactions

Jamie Costello is an expert in business and legal writing, based in the UK. He collaborates with business and the legal sector in the space of dispute resolution. He recommends that business owners become familiar with the different dispute resolutions available to them when they are faced with a dispute and which particular process should be pursued.

He says that if for example you are a customer who has received poor service, or if you are a business facing a dispute from one of your clients, it's worth looking at what dispute resolution mechanisms are available and what would get you the best and quickest result. The three dispute options are mediation, arbitration and litigation.

Mediation is an informal and confidential way for parties to resolve their disputes, with the assistance of a neutral third party mediator. Choosing a neutral mediator is extremely important as this avoids bias from coming into place. The mediator doesn't decide who is right or wrong but instead is trained to help parties to discuss their differences and helps the individual parties to find a resolution on their own.

If there is no resolution from the mediation session, then you can seek recourse through arbitration or litigation. In many instances, an issue can be resolved during the mediation process, as many companies will want to maintain a good reputation. By failing to agree to a deal or compromise, the defendants could in fact damage their own business reputation and lose customers as a result of this.

One of the possible outcomes for a successful mediation is that the business concerned agrees is to a full refund and a sincere apology for the poor service. If you've gone through mediation and have failed to come to a resolution, then arbitration is often the next step.

Arbitration is a process that is exercised outside of the court in order to settle a dispute. Typically, arbitration is a voluntary process but in some instances this may be contained in a contract, thus making it a legal requirement. The arbitrator acts as the judge and is essentially the decision maker in this ruling. Once both parties agree to be bound by the arbitrator's decision, this becomes a binding arbitration. An arbitration award can be made an order of court and will have the full effect of a court order.

Litigation is when one takes a dispute to court to be adjudicated by a judge or magistrate, who decides the outcome. Off-course this means there is only one winner. Given the high number of cases going through the judicial system, the pace at which litigation proceeds can appear slow and frustrating. It's not unusual for a matter which is defended to only proceed to trial many years later. Mediation has many benefits.

It allows for a win-win situation to be achieved. As the mediation process is always confidential, it can help protect your brand and allow you control around the outcome. In litigation, apart from the fact that the process takes long, once the matter is in the public domain, everyone will have access to sensitive information pertaining to your business.

The overarching benefit of mediation is that the parties can jointly work towards an outcome they have control over rather than leave that decision to a judge or arbitrator, thereby allowing for that "win- win" result, which litigation invariable fails to do.

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