Over the past six months, we have experienced a significant rise in the uptake of mediation as an alternative means of dispute resolution.

Mediation is a process whereby an independent, specially trained third party mediator facilitates private and confidential settlement discussions between parties. Mediation is designed to resolve disputes to the (relative) satisfaction of both parties at an early stage, at a lower cost than full litigation proceedings, and with the best possibility of maintaining parties' relationships. A survey conducted by the Centre for Effective Dispute Resolution (CEDR) in 2010 found that 75 per cent of mediated cases are settled on the day of the mediation, with a further 14 per cent settling shortly thereafter. These statistics are certainly borne out in our recent experience.

We have been involved in advising clients in four separate mediations throughout the UK over the last five months, all of which were resolved successfully on the day of the mediation. Three of these cases were highly complex, technical disputes involving multi-million pound claims where parties had been millions of pounds apart prior to attending mediation. The success rate in these recent mediations is especially remarkable considering that, in two of the cases, there were no significant settlement discussions beforehand. On the basis of these and other cases, we are in no doubt as to the potential of mediation for effectively resolving even the most complex and high value of disputes.

Notably, all four of the mediations we have recently advised on involved private sector organisations. In our experience, there appears to be a marked difference between the public and private sectors in attitudes to mediation at present.

Our experience suggests that public sector organisations are currently more reticent about mediation. There are a number of possibilities why this may be the case, and in all likelihood it is probably due to a combination of factors. We would suggest that the following might go some way to explaining the current reticence to mediation in the public sector:

  • Unlike in a private organisation, there is no single commercial director with the ultimate responsibility, and authority, for finding a solution to any given dispute. Public body officials tend not to be endowed with the same power and responsibility as their private sector counterparts and may not have sufficient authority to enter into a mediation process on behalf of their organisation.
  • There is little incentive for individuals in public sector organisations to push for mediation as a means of dispute resolution. If the process is successful, there will be no direct reward, however, there is a risk that if the process does not achieve a successful outcome, public funds will have been incurred running the mediation and no progress will have been made towards a resolution.
  • Mediation puts the parties themselves in control of the focus of settlement discussions, and the outcome of those discussions. This can be a strength for a dispute between private companies whose commercial directors are tasked with concluding matters. Adjudication and litigation on the other hand, involve recourse to a third party decision maker who assumes responsibility for the decision. Having the ultimate decision taken out of their hands may be attractive to individuals within a public body.
  • There is currently no formal recognition at the highest levels of the public sector that mediation is worthwhile. Mediation is a stated policy for some private sector bodies, for example insurance organisations, but it is yet to be acknowledged as a necessary step in the dispute procedure for all public bodies.

At the time of writing, a well–publicised, formal mediation process is under way in relation to the Edinburgh trams project. According to press reports, this process has followed on from a number of adjudications between the parties involved. Adjudication is a single-dispute focussed, adversarial process, that is generally incapable of resolving underlying issues affecting the project concerned, and arriving at a constructive way forward; but mediation has the capacity to do so. It remains to be seen whether the Edinburgh trams mediation will be successful. However, given its high profile and the complexity and range of issues that are likely to be involved, if it should ultimately succeed, that would be likely to herald the arrival of mediation as mainstream in the public sector.

Mediation has the benefit of being able to offer creative solutions, explanations and apologies, these being examples of things that parties often desire (sometimes without clearly knowing it), but which are not readily available through other dispute procedures. Mediation at its best allows both parties to achieve what they consider to be a successful outcome. Only in rare exceptions, is that possible in an adversarial process such as court, arbitration or adjudication. Mediation therefore can allow relationships to remain intact and parties may continue to work together to deliver a particular project for example. Also, a successful outcome may not be measured in an overall resolution, but may comprise resolving part-issues, or identifying the true issues in dispute.

It is recognised that mediation is not an appropriate forum for resolving every dispute. For a start, both sides have to be willing to engage with the process and to be actively seeking a resolution in order for mediation to work. If one or both of the parties approach the process as a traditional negotiation, it is unlikely to work. There is also a question of timing. If parties enter the mediation process prematurely, they may not have gathered sufficient information about their own, or the other side's position, to be able to engage in meaningful discussion about how to resolve the issues. There may also be technical issues or legal principles that require to be ironed out first so that neither party goes into mediation with a fundamental misunderstanding of the key issues.

Mediation is inarguably a successful process. In our view, the public sector is well placed to take the lead in promoting mediation as a viable alternative to formal adversarial proceedings in the Scottish courts, at arbitration or adjudication, which are often expensive and lengthy. For that to become a reality is likely to necessitate a process of education and training for the relevant individuals and a publicised statement of intent and policy in favour of mediation within the public sector organisation. Should even a measure of success be achieved in the ongoing Edinburgh Trams project mediation, then a genuine opportunity will be presented for mediation to achieve greater recognition, such that its benefits, including cost savings, may be realised within the public sector.

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