How mediation works in seven steps
In part two of our series on mediation, Christopher Reeves explains what construction professionals can expect from the process when they bring in a mediator to resolve a dispute.
As noted when we looked at how construction firms should prepare for mediation last month, the process is nothing like adjudication or court. Mediation is flexible in terms of process. But there are ground rules that the parties usually agree to. These are:
Privacy: Documents in mediation are confidential. The mediator will see documents that the parties might not have shared. This also goes for anything said to the mediator in private sessions. Any settlement can remain private. If the settlement contains a term that it is confidential the parties are obliged to honour that.
Free to talk: Negotiating leads to concessions from the position you might take in more formal proceedings. To allow freedom to negotiate, mediations are therefore conducted on a “without prejudice” basis. You can say what you like.
The settlement sticks: A signed settlement will be binding on the parties. This gives certainty. Even if the settlement agreement contains a confidentiality clause it can still be enforced in court.
Now to the actual process. The Constructing Excellence South West Construction Mediation Guide and Protocol, which is available online, breaks the process down into seven stages:
1. Referral and selection of the mediator
The Constructing Excellence guide provides a model letter which invites the other party to mediation. The parties also need to agree on the mediator, but if it proves a problem, the guide suggests ways to resolve this.
2. Agreement to mediate
This stage involves the initial steps to appoint the mediator. The guide supplies a model contract for the appointment of a mediator which needs to be signed before the next stage.
3. Briefing the mediator
The toolkit then provides the mediation agreement: the actual terms on which the mediation is conducted. As the process is flexible, it can be agreed to suit the nature of the dispute. For example, the parties can decide if they are going to meet their own costs of the mediation.
By the end of this stage, the parties and the mediator will have signed the agreement and the mediator will have been provided with an outline of the dispute.
4. Setting the procedure
By the end of this stage, the mediator will have agreed with the parties the best approach, taking into consideration: the amount of money involved; any time constraints, for example, a live project that is deadlocked may require an urgent meeting; and any third parties that should be invited to join the process, for example, the architect or a subcontractor.
5. Exchange of information
Each party will prepare a note which briefs the mediator on the key points of the dispute. This should be kept brief. Remember, mediation is not court proceedings or adjudication. There is no requirement to exchange formal statements of case. A “position statement” can be prepared, but it does not need to be a formal document drafted in the legal style of a claim.
It can be frustrating when one party holds information that only comes out at the mediation meeting, so the mediator may suggest information is released early if it likely to assist.
6. The mediation meeting
Having put the groundwork in place, the next stage is the mediation meeting. This will be discussed in more detail in next month’s article, but the point of meetings is to help the parties discuss key points of the dispute and see if settlement is possible.
The mediator will have a feel for how the meetings should be organised: in private, with just the mediator present; open, with all parties in the room; or bespoke, for example, with only the parties or their lawyers.
The mediator may well “test” the parties on technical and legal issues. A good mediator will help the parties assess risk and come up with creative settlement ideas. A settlement might involve a scheme of remedial works and payment released, which is unlikely to be achieved in adjudication or court proceedings.
7. The outcome
The settlement will be in writing and signed by the parties. It’s then time to shake hands and get back to the business. The terms of the settlement will bring certainty rather than the uncertainty and risk that comes from a judgement or adjudicator’s decision.
The relationship between the parties may have been preserved and quite possibly improved. Importantly, the project has moved on.
Christopher Reeves is a construction lawyer and founder of Mediation for Construction