Imagine you’re in a heated dispute with a business supplier. This particular person knows how to be charming and win people over, and it may have taken you a while to realise that they are in the habit of making grand promises they have no intention of keeping.
In this classic “Your cheque’s in the mail” scenario, you may be concerned that this person will pull the same tricks during mediation – promising you the world yet never living up to their end of the agreement. In this instance, the problem lies not in getting the two parties to agree, but in making an agreed-upon solution enforceable.
This – and several other specific scenarios – are rare instances when commercial mediation may not be the best solution.
When Specific Remedies or Urgent Orders Are Needed
There are indeed some circumstances where mediation is inappropriate, at least at the outset. For example, if urgent orders are needed or an injunction to stop specific behaviour is required, parties should first look towards the court to provide the emergency relief that is needed.
Mediation may have a role further on in the dispute, however, to resolve the underlying issues and to bring about an ultimate resolution. In this instance, mitigation and mediation would both play a role in the ultimate resolution of the dispute, with the court providing emergency relief at the outset, and mediation fleshing out the underlying issues while aiming to finalise the substantive matter.
Where Both Parties Are Not Committed To The Process
A fundamental aspect of mediation is that both parties enter into it willingly and with the honest intention of participating fully. Where one or both parties have made it clear that they will not cooperate or even participate in the mediation process, the process must be abandoned.
Where the mediation was attempted pursuant to a court order, the fact that one or both parties refused to participate can be used as evidence in subsequent litigation, and while it may not assist the court in resolving the matter at hand, it can go towards awarding costs against the party who resisted mediation.
Where Decisions Need To Be Binding And Enforced
As discussed at the outset, there may be circumstances where a decision needs to be in a binding format for it to be of any practical use. This generally occurs where one party is not likely to carry out their side of any agreements made during mediation.
In this instance, resolving this problem can be as simple as drawing up an agreement in terms of the decisions made by the parties during the mediation. Once properly signed by both parties – during the mediation itself, if possible, not at some time afterwards – this agreement becomes a legally binding contract. If one party reneges on their responsibilities under this agreement, the other party can commence legal proceedings for breach of contract.
Similarly, one or both parties could seek to have the agreement filed in court. This would involve commencing litigation in relation to the substantive matter (which is often a good idea anyway, to get the matter on foot if mediation is ultimately unsuccessful) and then handing up the duly executed agreement and asking that it be made an order of the court. Courts are always happy to see matters resolved outside of court and, once the court has endorsed the agreement, it becomes as legally binding as if the court had heard the matter and made the orders after coming to its own conclusion.
Where The Parties Are Capable Of Resolving The Matter Themselves
This may go without saying, but it is vital that parties to a dispute make genuine attempts to resolve the matter by themselves before seeking the involvement of a third party such as a mediator. In some instances, the parties simply need to take some time to gather their thoughts, put emotions aside, and work out the ideal result before an in-person informal meeting between the parties in an attempt to resolve the dispute.
In many ways, mediation is little more than a way for parties to be guided through discussions and negotiations in a fair and respectful way. If both parties are motivated to conclude and are capable of discussing the matter themselves without letting emotion take over or resorting to any underhand tactics, a mediator is unlikely to add anything to the process.
Where Confidentiality Can Cause Problems
One of the principal tenets of mediation is that the entire process is strictly confidential. There are rare circumstances, however, where this could cause a problem.
The confidentiality provision is there to encourage both parties to engage in frank, open, and honest communications to work towards a solution that benefits both parties. This gives both parties the freedom to make disclosures they might otherwise not have made in a court scenario. What happens, then, if the mediation fails and one party now has access to confidential information that they wouldn’t otherwise have had? That party could potentially use that information in court during subsequent litigation for their own purposes.
Of course, the strict confidentiality surrounding the mediation process – in theory – would prevent this from happening. However, an unscrupulous person – upon becoming aware of this confidential information – could still attempt to use it in court by alleging that they found out about it through other means, outside the mediation process.
If this scenario played out in a movie, a jury would become so shocked by the revelation of this new information that they would immediately make a decision, and the case would be closed. Thankfully, a real-life court situation very rarely – if ever – mimics that portrayed by Hollywood. If a party attempted to use confidential information that had been disclosed during mediation in subsequent litigation, the other party would simply need to bring this fact to the court’s attention. Since all good mediations begin with a signed agreement by all parties, including the mediator, setting out the strict requirements for confidentiality, this agreement could be shown to the court. The first party would then be under an obligation to prove that they obtained the information outside of – and before – the mediation, which would likely be very difficult for them to do.
Once the court determined that the information had been improperly gained, that information would not be relied upon by the court in determining the matter. People often underestimate the ability of magistrates and judges to disregard information that is held to be inadmissible. One could argue that, while a judicial officer may be able to disregard relevant information, a jury – made up of everyday people – may not have that ability. Remember, however, that jury trials are relatively rare, and are only ever used in criminal matters, not civil disputes.
Where Third Parties Should Be Involved
In business disputes, it could potentially be the case that parties to a mediation will, when reaching their agreement, make decisions that affect an unsuspecting third party. That third party could be a person or company, or a larger organisation such as the tax office. For example, parties could potentially agree to a mediation session that involves the evasion of tax. While this type of resolution would never be achieved in court, in theory, parties are free to make whatever agreements they see fit between them.
However, two arguments can be made against this perceived disadvantage of commercial mediation. Firstly, it is not necessarily true that parties are free and unrestrained to make contracts and agreements in whatever terms they see fit. Not all contracts are enforceable, and if a contract that included, for example, tax evasion, ended up in court or was otherwise brought to the attention of the Australian Tax Office, it would be both illegal and unenforceable. The existence of the contract does not give parties free rein to break the law or evade tax.
Secondly, the role of the mediator must not be underestimated. Part of the role of a mediator includes the power to end the mediation process at any time and for whatever reason. Mediators arguably have an ethical responsibility to ensure that agreements reached between parties during mediation are not illegal or against public policy. Most – if not all – Australian mediators would agree that they would have no hesitation in putting an end to the mediation process if they felt that an agreement reached would ultimately be unenforceable in court.
Indeed, on the face of it, commercial mediation may not be the best solution in every circumstance. However, the mediation process is never firmly set in stone, and it is often the case that tweaks can be made to tailor the process to suit the circumstances at hand. For example, as we discussed at the outset in the case of a party to a mediation who is used to making promises they have no intention of keeping, the parties can agree in advance that a condition of even attempting mediation is that any agreement made during the session be the subject of a duly executed agreement between the parties, which can then be filed in court. This way, the agreement becomes as enforceable as a court order, and all the advantages of resolving the dispute by mediation rather than through protracted and expensive litigation are still maintained.