WHAT IS MEDIATION?

Mediation is first and foremost a non-binding procedure. This means that, even though parties have agreed to submit a dispute to mediation, they are not obliged to continue with the mediation process after the first meeting. In this sense, the parties remain always in control of a mediation. The continuation of the process depends on their continuing acceptance of it.

The non-binding nature of mediation means also that a decision cannot be imposed on the parties. In order for any settlement to be concluded, the parties must voluntarily agree to accept it.

Unlike a judge or an arbitrator, therefore, the mediator is not a decision-maker. The role of the mediator is rather to assist the parties in reaching their own decision on a settlement of the dispute.

There are two main ways in which mediators assist parties in reaching their own decision, which correspond to two types or models of mediation practiced throughout the world. Under the first model, facilitative mediation, the mediator endeavors to facilitate communication between the parties and to help each side to understand the other's perspective, position and interests in relation to the dispute. Under the second model, evaluative mediation, the mediator provides a non-binding assessment or evaluation of the dispute, which the parties are then free to accept or reject as the settlement of the dispute. It is up to the parties to decide which of these two models of mediation they wish to follow.

Mediation is a confidential procedure. Confidentiality serves to encourage frankness and openness in the process by assuring the parties that any admissions, proposals or offers for settlement will not have any consequences beyond the mediation process. They cannot, as a general rule, be used in subsequent litigation or arbitration.

HOW DOES MEDIATION DIFFER FROM ARBITRATION?

The differences between mediation and arbitration all stem from the fact that, in a mediation, the parties retain responsibility for and control over the dispute and do not transfer decision-making power to the mediator. In concrete terms, this means two things principally:

In an arbitration, the outcome is determined in accordance with an objective standard, the applicable law. In a mediation, any outcome is determined by the will of the parties. Thus, in deciding upon an outcome, the parties can take into account a broader range of standards, most notably their respective business interests. Thus, it is often said that mediation is an interest-based procedure, whereas arbitration is a rights-based procedure. Taking into account business interests also means that the parties can decide the outcome by reference to their future relationship, rather than the result being determined only by reference to their past conduct.
In an arbitration, a party's task is to convince the arbitral tribunal of its case. It addresses its arguments to the tribunal and not to the other side. In a mediation, since the outcome must be accepted by both parties and is not decided by the mediator, a party's task is to convince, or to negotiate with, the other side. It addresses the other side and not the mediator, even though the mediator may be the conduit for communications from one side to the other.
Naturally, in view of these differences, mediation is a more informal procedure than arbitration.

FOR WHICH DISPUTES IS MEDIATION APPROPRIATE AND WHAT ARE ITS ADVANTAGES?

Mediation is not a suitable procedure for settling disputes in all cases. Where deliberate, bad-faith counterfeiting or piracy is involved, mediation, which requires the cooperation of both sides, is unlikely to be appropriate. Similarly, where a party is certain that it has a clear-cut case, or where the objective of the parties or one of them is to obtain a neutral opinion on a question of genuine difference, to establish a precedent or to be vindicated publicly on an issue in dispute, mediation may not be the appropriate procedure.

On the other hand, mediation is an attractive alternative where any of the following are important priorities of either or both of the parties:

minimizing the cost-exposure entailed in settling the dispute;
the maintenance of control over the dispute-settlement process;
a speedy settlement;
the maintenance of confidentiality concerning the dispute;
or the preservation or development of an underlying business relationship between the parties to the dispute.
The last-mentioned priority, in particular, makes mediation especially suitable where the dispute occurs between parties to a continuing contractual relationship, since, as mentioned above, mediation provides an opportunity for finding a solution by reference also to business interests and not just to the strict legal rights and obligations of the parties.

AT WHICH STAGES OF A DISPUTE CAN MEDIATION BE USED?

Mediation can be used at any stage of a dispute. Thus, it can be chosen as the first step towards seeking a resolution of the dispute after any negotiations conducted by the parties alone have failed. Mediation can also be used at any time during litigation or arbitration where the parties wish to interrupt the litigation or arbitration to explore the possibility of settlement.

Another common use of mediation is more akin to dispute prevention than dispute resolution. Parties may seek the assistance of a mediator in the course of negotiations for an agreement where the negotiations have reached an impasse, but where the parties consider it to be clearly in their economic interests to conclude the agreement (for example, negotiations on the royalty rate to apply on the renewal of a license).

HOW IT WORKS: THE PRINCIPAL STAGES IN A MEDIATION PROCESS

There are few formalities associated with a mediation. The structure that a mediation follows is decided by the parties with the mediator, who together work out, and agree upon, the procedure that is to be followed.

As mentioned above, the somewhat unstructured nature of a mediation can be disconcerting to those who may be entertaining the idea of submitting a dispute to mediation, but who may not be sure what to expect. For such persons, some guidance is set out in the following paragraphs, which outline the main steps in the conduct of  mediation. The procedure outlined should, however, be understood as being for guidance only, since the parties may always decide to modify the procedure and to proceed in a different way.

Getting to the Table: The Agreement to Mediate

The starting point of a mediation is the agreement of the parties to submit a dispute to mediation. Such an agreement may be contained either in a contract governing a business relationship between the parties, such as a license, in which the parties provide that any disputes occurring under the contract will be submitted to mediation; or it may be specially drawn up in relation to a particular dispute after the dispute has occurred.

The last section of this Guide contains recommended clauses for both situations, which provide a choice between agreeing to mediation alone or agreeing to mediation followed, in the event that a settlement is not reached through the mediation, by arbitration.

Starting the Mediation

This mediator should set out summary details concerning the dispute, including the names and communication references of the parties and their representatives, a copy of the agreement to mediate and a brief description of the dispute. These details are not intended to perform the legal function of defining arguments and issues and limiting the requesting party's case. They are intended simply to supply with sufficient details to enable it to proceed to set up the mediation process. Thus, we will need to know who is involved and what the subject matter of the dispute is in order to be able to assist the parties in selecting a mediator appropriate for the dispute.

The Appointment of the Mediator

Following receipt of the Request for Mediation, we will contact the parties (or their representatives) to commence discussions on the appointment of the mediator. The mediator must enjoy the confidence of both parties and it is crucial, therefore, that both parties be in full agreement with the appointment of the person proposed as mediator.

Initial Contacts Between the Mediator and the Parties

Following appointment, the mediator will conduct a series of initial discussions with the parties, which typically will take place by telephone. The purpose of these initial contacts will be to set a schedule for the subsequent process. The mediator will indicate what documentation, if any, he or she considers should be provided by the parties prior to their first meeting and set the timetable for the supply of any such documentation and the holding of the first meeting.

The First Meeting Between the Mediator and the Parties

At the first meeting, the mediator will establish with the parties the ground rules that are to be followed in the process.

In particular, the mediator will

discuss with, and obtain the agreement of the parties on, the question whether all meetings between the mediator and the parties will take place with both parties present, or whether the mediator may, at various times, hold separate meetings (caucuses) with each party alone; and
ensure that the parties understand the rules on confidentiality set out in the Mediation Rules.
At the first meeting, the mediator will also discuss with the parties what additional documentation it would be desirable for each to provide and the need for any assistance by way of experts, if these matters have not already been dealt with in the initial contacts between the mediator and the parties.

Subsequent Meetings

Depending on the issues involved in the dispute and their complexity, as well as on the economic importance of the dispute and the distance that separates the parties' respective positions in relation to the dispute, the mediation may involve meetings held on only one day, across several days or over a longer period of time. The stages involved in the meetings held after the first meeting between the mediator and the parties would, where the mediator is playing a facilitative role, normally involve the following steps:

Naturally, not all mediations result in a settlement. However, a settlement should be achieved where each party considers that an option for settlement exists which better serves its interests than any alternative option for settlement by way of litigation, arbitration or other means.

Parties' Private Consultations

Throughout the process of the mediation, naturally each party will wish to undertake, at various stages, private consultations with its advisors and experts for the purposes of discussing various aspects of the mediation or of evaluating options. It goes without saying that such private consultations may occur during the mediation process.

THE MAIN STEPS IN A MEDIATION

The Agreement to Mediate
Commencement: Request for Mediation
Appointment of the Mediator
Initial Contacts Between the Mediator and the Parties
setting up the first meeting
agreeing any preliminary exchange of documents
First and Subsequent Meetings
agreeing the ground rules of the process
gathering information and identifying issues
exploring the interests of the parties
developing options for settlement
evaluating options
Concluding

THE LANGUAGE USED IN THE MEDIATION

The parties decide the language in which the mediation will take place. They may choose a single language or they may choose to use two languages and to have interpretation, although the latter choice will obviously increase the costs of conducting the process.

WHERE DOES A MEDIATION TAKE PLACE?

The parties decide where they would like the mediation to take place. It is not necessary for a mediation conducted under the Mediation Rules to take place in our office.

If the parties do decide to conduct their mediation in our office, 1der will provide them with a meeting room and party retiring rooms free of charge (that is, at no additional cost to the registration fee). If the parties choose to conduct their mediation outside our office, the we will assist them in arranging suitable meeting facilities.

WHAT DOES IT COST?

Two sets of fees must be paid for a mediation.

• the registration fee of the Center, which amounts to 0.50% of the value in dispute, up to a maximum of US$10,000, which is reached where the amount in dispute is US$10,000,000.
• those that are payable to the mediator. As mentioned above, these are negotiated and fixed at the time of the appointment of the mediator. They are usually calculated on a hourly or daily basis at a rate which takes into account the circumstances of the dispute, such as the complexity of the dispute and its economic importance.

WHO PAYS THE COSTS?

The Mediation Rules provide for the costs of the mediation (the registration fee of the Center, the mediator's fees and all other expenses of the mediation) to be borne in equal shares by the parties. The parties are free to agree to change this allocation of costs.

WHY TRY IT?

For those parties for which mediation is a new procedure and which may wonder what benefits mediation offers, two factors can usefully be considered:

Where mediation has been used, it enjoys remarkably high rates of success, given its non-binding nature. Indeed, on one view, mediation never fails, even if a settlement is not reached, because the parties will always come away knowing more about the dispute and, probably, at least having narrowed the issues in question.
A second factor to be taken into account is that the commitment to mediation involves a low risk. The parties remain always in control of the dispute. Each party may terminate the mediation at any stage, if it feels that it is not making any progress, that the procedure is becoming too costly, or that the other party is not acting in good faith. The commitment to mediation is thus controllable at all stages.

I want to try mediation, but I am uncomfortable about asking the other party. What can I do?

You may opt to speak to a senior mediator about strategies for requesting mediation from the other party or Mediation Services can contact the other party on your behalf to express your interest in mediation and explain our process.