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Commercial mediation

08 Oct 2014

Gerrit van RhynMediation offers a crucial opportunity for the early and effective resolution of disputes, and it is a process capable of achieving remarkable results.

Imagine you arrive home to find your teenage daughter and son fighting over the last orange in the fruit bowl. How do you settle this dispute? By asking them a few questions, you realize that your son only wants to eat the ‘inside’ of the orange. Your daughter, on the other hand, only needs the peel to bake an orange cake for granny. With very little effort you have two happy teenagers!

According to the UK’s Centre for Effective Dispute Resolution (CEDR) the definition for mediation is:
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.

This definition captures the key elements of mediation: a flexible and confidential process facilitated by a neutral third party in terms which emphasise the active assistance usually provided by a mediator. At the same time the definition asserts the crucial point of difference with adjudication: the process is a consensus-based one in which the parties remain in ultimate control of the decision whether or not to settle and on which terms.

In contrast, litigation processes (whether in court or through arbitration) have significant limitations:

  • They are often slow and expensive. Although proponents of arbitration sometimes argue that it is quicker and less expensive than litigation in court, this is often not the case in practice.
  • Outcomes may be unpredictable. Sometimes the likely outcome of litigation, with or without a series of appeals, can be predicted with reasonable certainty. In many cases, however, the outcome is unpredictable. Not only do the values and standards applied by adjudicators differ, but disputes frequently involve complex factual and legal issues. While most lawyers overstate the strength of a client’s case, the trial process may also produce unanticipated surprises.
  • Decision-makers are usually limited to determining disputes placed before them, on terms limited by the pleadings or dispute referrals, and by general principles of law. There is little or no prospect that creative solutions supported by all parties may be generated. Outcomes may typically be characterized as win-lose. Even in difficult cases an adjudicator is usually required to decide a dispute in favour of one party at the expense of the other. A dispute must generally be determined by reference to rights rather than the interests of the parties.
  • A significant delay in outcomes may frustrate a party’s sense of justice, and may be costly.
  • Litigation is backward looking, focusing on what went wrong, or what was or was not done in the past. It seldom looks to the future, or focuses on future relationships between parties.
  • The litigation process may cause significant harm to relationships between parties, or exacerbate existing problems in relationships. This harm may be aggravated by delay and by the cost (both disbursements and opportunity cost), which may effectively reverse or off-set any possible gains that may be ‘won’ as an outcome of the litigation process.
  • The cost and delay that typically occurs in litigation processes may effectively deprive a party (usually the less powerful party) of access to justice.
  • Litigation through the courts imposes a significant financial and administrative burden on the state.
  • Litigation through the courts is public, and may be the subject of public discussion and debate. While this may be desirable in the case of disputes over important matters of public interest, it is seldom welcomed by private parties, and is usually unnecessary where there is no genuine public interest in the outcome.

In the United Kingdom, North America, Australia and other major trading partners of South Africa, mediation has a 15- to 20-year track record in the civil justice system. In other African countries its use is rapidly expanding. In South Africa, the value of mediation in resolving commercial disputes has been recognized only recently, resulting in the implementation of mediation rules by the Minister of Justice and Correctional Service in magistrate courts. The effective date is 1 December 2014. The courts will now be able to refer certain cases for mediation before putting it through formal court proceedings.

Mediation is not a soft option nor is it a cure for all ills. But every person involved in dispute resolution needs to know what mediation is, how and when it may be used, and what role it plays in the civil justice system. There can be no excuse for parties or their legal representatives who fail to consider and explore the opportunities presented by mediation.

Mediation is a process that serves the interests of many disputants, and it is a process that is capable, in the right circumstances, of achieving remarkable results.

(This article contains some contents from Commercial Mediation – a user’s guide by J Brand, F Steadman and C Todd)

For further information, contact Gerrit van Rhyn on tel 021 915 6666 or e-mail
Gerrit is a registered CD/ACDS commercial mediator

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