“Discourage litigation. Persuade your neighbors to compromise whenever you can” Abraham Lincoln
Following an EU Directive, the Mediation Act was enacted in Ireland in 2017. It came into force on 1st January 2018 and establishes a statutory framework designed to promote the resolution of disputes through mediation as a viable, efficient and cost-effective alternative to court proceedings. Various published statistics suggest the mediation process enjoys a 65% to 80% success rate.
It has long been recognised that litigation can be slow, expensive and unpredictable. In 2008, following a review of methods of dispute resolution other than through the courts and with a view to harmonising dispute resolution procedures within the European Union, the EU issued a directive on mediation (EU Mediation Directive 2008/52/EC) which applies to both civil and commercial matters.
MEDIATION ACT 2017
As a result of the Mediation Directive, the Mediation Act 2017 was enacted by the Oireachtas and came into force in Ireland on 1st January 2018. The Act establishes a statutory framework designed to ‘facilitate the settlement of disputes by mediation, to specify the principles applicable to mediation [and] to specify arrangements for mediation as an alternative to the institution of civil proceedings’.
FEATURES OF MEDIATION
Mediation is a voluntary process. The parties have to agree to it and in the absence of agreement there can be no mediation. Furthermore, unless and until terms of settlement have been agreed and signed, either party can withdraw from it.
Mediation is also informal and flexible. There are no time limits or rules on how the mediation should be conducted. Each mediation can, and should, be tailored to meet the parties’ needs.
Mediation can also be speedy. Many mediations are concluded in a single day and within a tight time frame. They can therefore be very time and cost effective.
A key feature of mediation is that the entire process is private and confidential. It is conducted on a “without prejudice” basis, meaning that any documentation or information furnished by one party to the other in the course of the mediation cannot be used in subsequent litigation.
THE ROLE OF THE MEDIATOR
It is the parties who appoint the mediator.
The mediator is a facilitator, his/her role being simply to assist the parties to reach an agreement. The mediator does not decide who is right and who is wrong but rather helps the parties to evaluate the strengths and weaknesses of their respective cases, their desired objectives and the potential for settlement. The mediator does not adjudicate the outcome.
In their choice of mediator, the parties should give careful thought to the qualifications, area of expertise and experience of the person best suited to deal with the dispute and the parties and advisers involved.
The mediator is required to remain independent and impartial throughout.
ADVANTAGES OF MEDIATION
The principal advantages of mediation are the following:-
- It can save time and costs for the parties, their advisers and their insurers,
- The parties have greater control over the outcome,
- The parties can introduce any issues into their discussions with a view to finding a consensus and are not limited by the rights and wrongs of the particular dispute,
- The privacy of the process helps guard against reputational damage, and
- Insofar as there may be any continuing relationship between the parties, that relationship is usually not put in jeopardy (contrasting with litigation where the adversarial nature of the proceedings forces the parties to be confrontational and can seriously damage, or indeed make impossible, any future working relationship between them). This is typically a point of considerable importance in a small country like Ireland where, for example in the construction industry, a dispute may involve a range of different parties from different disciplines some of whom may be engaged in other unrelated projects at the same time and can also enable a dispute to be resolved whilst the project continues.
OUTCOME OF THE MEDIATION
The mediation process aims for a consensual settlement so an agreed outcome from the process is not guaranteed. As a result, the mediation agreement between the parties will normally specify a deadline date by which agreement is to be reached. If the mediation does not result in the parties settling their dispute, then they may proceed to have their dispute determined by the court. Whilst a mediation will usually take place within a single day (or stretching into a second day), if the mediator feels that progress is being made, negotiations may continue thereafter such that mediation often creates the basis for a resolution to be subsequently achieved, often within a matter of weeks.
Although commercial mediation is relatively new in Ireland, a report recently prepared by the Irish Commercial Mediation Association (ICMA) stated that statistics available from the Irish Commercial Court indicated that almost 65% of cases referred to mediation last year were successfully settled. ICMA’s survey showed a higher success rate of approximately 70% over the last three years. Those statistics obviously do not include mediations which took place in relation to cases that were not listed in the Commercial Court. Anecdotal evidence suggests that the overall percentage rate may be somewhat higher.
The ICMA report also noted that in other jurisdictions, such as the US and UK, where commercial mediation is significantly more established, the volume of cases being dealt with through mediation is much higher than in Ireland and the success rate is up to 85%.
OBLIGATIONS OF SOLICITORS
Section 14 of the Mediation Act 2017 imposes an obligation on solicitors, before issuing court proceedings, to advise their clients of the benefits of mediation and to consider mediation as a means of resolving their dispute. Parties who refuse to engage in mediation without good reason may be penalised by the courts in any subsequent court proceedings.
In the case of any commercial dispute likely to give rise to court proceedings, the effect of the Mediation Act 2017 is to put mediation on the agenda for consideration at an early stage. While there is of course no guarantee that a mediation will lead to a successful resolution of the dispute or indeed that mediation is appropriate in the particular circumstances of the case, putting mediation on the agenda for consideration at an early stage has to be seen, given the results of the statistics, as a good thing.
For further information please contact Harry Fehily, Managing Partner and accredited CEDR mediator, or Michael Carrigan, Dispute Resolution Consultant and Arbitrator.
This is the first article in our alternative dispute resolution series. The second one, Arbitration Explained, can be viewed here. The third one, Adjudication Explained, can be viewed here.