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  • Jul 12, 2014
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The pros and cons of mediation

PUBLISHED : Wednesday, 09 November, 2011, 12:00am
UPDATED : Wednesday, 09 November, 2011, 12:00am

What is mediation?

Mediation is defined as a process 'whereby parties request a third person or persons to assist them in their attempt to reach an amicable settlement of their dispute arising out of or relating to a contractual or legal relationship'.

Simply put, mediation is used to solve disputes between two parties with the help of a third. A neutral outsider - the mediator - will facilitate discussions between the two bickering parties to help them reach an agreement.

The process usually follows three steps:

1 define the issues of conflict

2 explore options available to each party

3 reach an agreement

Why mediation?

At first sight, mediation may seem like a pointless process. After all, why pay for a mediator to essentially do what the conflicting parties can do themselves?

In reality, though, it is often very difficult for parties in dispute to communicate with each other. A mediator's job is to facilitate communication between the parties so they can reach a settlement.

Negotiation

Mediation is different from conventional negotiation in that it involves the presence of a third party - the mediator. The mediator is a trained professional who acts as an impartial facilitator. He or she acts as a channel of communication between the two conflicting parties, while maintaining a neutral and non-interfering stance.

Lawsuit

Although the presence of an impartial facilitator resembles a judge in courts, mediation differs from lawsuits.

First, mediation is not legally binding. Unlike judges, the mediator does not make a judgment. The results of mediation sessions are not imposed on the parties.

Second, unlike in public lawsuits, in mediation, the process is confidential.

Advantages of mediation

Case Study: Dunnett v Railtrack (2002)

In this British case, a Railtrack express train hit and killed three of Susan Dunnett's horses. Dunnett was seeking damages from the company.

Despite rigorous exchanges between the lawyers of Railtrack and Dunnett, no agreement was reached. The dispute was handed over to the courts. In the end, the legal costs amounted to several times the costs of the initial claim. Both parties suffered huge financial losses as a result.

The case identifies two advantages of mediation. The first is the non-financial aspects of a case that are often neglected by a court. For example, her fury and pride caused Dunnett to act against her own interests. Rather than focus on the issue of financial compensation, she became embroiled in an emotional tug-of-war with the railway company's lawyers.

The second is cost-effectiveness. Mediation is often far less costly than litigation.

Disadvantages of mediation

Case Study: Supply Chain & Logistics Technology Ltd v NEC Hong Kong Ltd (2006)

Unfortunately mediation is not officially a legal means.

In this case, a court urged the companies to go to mediation but one side refused and expensive litigation continued.

Although mediation is encouraged by courts, especially after the Civil Justice Reform in 2009, it remains self-initiated. That means parties in conflict must be willing to negotiate in the first place. That is often not the case.

In addition, the results of mediation are not legally binding. Parties can have a change of heart even after a settlement has been reached.

A mediator's effectiveness can influence outcomes. According to Professor Raymond Leung, a founder of the Hong Kong Mediation Centre, a good mediator must be a patient and level-headed individual who can work well under stress.

Conclusion

Because of the very high costs of litigation and the increasing number of disputes, it is more and more important to develop new methods of conflict resolutions.

However, because of its lack of legal power and its reliance on the personal qualities of the mediator, it is very difficult for mediation to be applied at a wider level. Yet the trend in commercial dispute resolution places more stress on mediation. With its vast potential in dispute resolution, mediation will no doubt play a larger role in our lives in coming years.

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