November 18, 2016

Legal Corner: DMCC Mediation Services

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So, what is mediation and how can it help my business in resolving disputes?

According to the Centre for Effective Dispute Resolution: “Mediation is a flexible process conducted confidentially in which a neutral person actively assists parties in working towards a negotiated agreement of a dispute or difference, with the parties in ultimate control of the decision to settle and the terms of resolution."

In fact, we actually all mediate on a daily basis (sometimes more successfully than others!) Mediating with our children to finish their dinner or to start their homework, mediating with our colleagues to establish the best way forward when tackling a particular problem, and so forth. Mediation is, in essence, a negotiation, but unlike in everyday life, at a mediation meeting a third party neutral (the mediator) is present and his or her role is to help the parties to work towards a negotiated settlement. Mediation can be an excellent tool to help resolve disputes in a business environment.

There are four cornerstones of mediation which govern the entire process: It is voluntary. This means that a party can refuse to participate or may leave a mediation meeting at any time. The mediator is neutral and does not take sides. It is absolutely vital that the mediator gains the trust of both parties; if the parties don’t fully trust the mediator, they are likely to feel constrained when speaking to the mediator and the mediation is almost certainly destined to fail. It is confidential. This is very important, as each party must be confident that what they tell the mediator will not be passed on to the other side without their express consent.

The parties are in control of the outcome of the mediation. The mediator is not there to make a ruling or to give a judgment and the decision on whether or not to settle, and the terms of any settlement, is ultimately in the hands of the parties. There are a number of advantages to mediation when compared to formal legal processes. In particular, settlement at a mediation avoids the risks, costs and time of a court or arbitration claim.

Indeed, unlike formal legal proceedings the mediation process is focused on solutions rather than blame or legal liability. This in turn often means that ongoing business relationships are more likely to be able to be preserved once a dispute has been resolved. Mediation is quick (particularly in comparison to litigation or arbitration) and boasts a relatively high success rate. In addition, because a mediator can speak to both parties privately, the mediator can attempt to bridge the gap between them and also test or challenge a party’s (perhaps sometimes, unrealistic) expectations.

Conversely, there is of course no guarantee that a mediation will be successful and if a mediation fails, the parties will have already incurred extra costs and wasted some time. In some instances, the parties are just too far apart or actually have no interest in settling the matter at all. This can mean that a mediation becomes an uphill struggle, albeit not necessarily an impossible one.

The appetite for mediation is certainly growing within the region, which is unsurprising given the various advantages outlined above. Recent Freezone surveys have indicated that a majority of our members would like DMCC’s assistance in resolving disputes. With this in mind (and because of the advantages of mediation as compared to other adjudicative processes), the DMCC Disputes Centre has recently expanded its current workplace mediation offering to also include a commercial mediation service (Silver, Gold and Platinum Mediation).

These three tiers are available to any member company or member of the DMCC Food Trade Group who is involved in a general commercial dispute (for example, an alleged breach of contract).

Topics: Legal Corner

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