The first resort

Every building services project involves contracts and from time to time disputes arise. If the contract is a UK construction contract, the parties often use statutory adjudication as an interim process before arbitration or litigation. Whereas adjudication has been effective in freeing the flow of withheld money, it is adversarial, frequently involves legal expense and in many cases does not provide a final answer. As mediation almost always offers a viable alternative, it should be your first port of call.

Mediation is defined in Black's Law Dictionary as ‘a private, informal dispute resolution process in which a neutral third party, the mediator, helps disputing parties to reach an agreement.' Its goal is the settlement of disputes through compromise - and over 70% of mediated disputes are resolved. It is little wonder, then, that the courts are not only supportive when parties wish to use this alternative dispute resolution (ADR) procedure, but have actively encouraged parties to mediate.

Mediation can commence when direct negotiations don't seem to be getting anywhere and the parties make an informed choice that they wish to use it. The first important decision will be their choice of mediator, which can be chosen with the help of a third party such as the Centre for Effective Dispute Resolution (CEDR) or the Chartered Institute of Arbitrators (CIArb).

Skills and attributes

As the mediator does not have any authority independent of the parties, he must be able to gain their mutual confidence and respect from the offset. Mediators do not and must not give the parties advice or make decisions for them. However, competent mediators will have relevant dispute resolution experience and be able to use technical and commercial expertise to engage the parties in early 'reality testing', exploring the strengths and weaknesses of their position.

The mediator should possess good communications and negotiating skills and be able to drive and manage the mediation against the timeline agreed with the parties. With the right skills and process, disputes involving multiple issues and sums substantially more than £1m are often resolved in one to two days.

With the right skills and process, disputes involving multiple issues and sums substantially in excess of £1m are often resolved in just one or two days

Mediation is a confidential process and this operates at two different levels. The first is that the parties agree that the mediation is ‘without prejudice' and that nothing is binding upon them unless it is concluded with a signed agreement. Information made available that would not normally be discoverable remains confidential if the mediation is unsuccessful. This enables the parties to be much more open about their real position and to take risks. Information shared with the mediator during private meetings is also confidential, unless the party disclosing it gives permission for it to be passed on.

The mediation process is often the only time someone can assess if a zone for compromise and agreement exists and guide the parties towards it. The mediator should help the parties examine interests and needs; negotiate the settlement agreement and define a relationship which is mutually satisfactory and meets their standards of fairness. His role is not to say what the answer is.

Mediation is often effective in commercial disputes because in working out the settlement terms, the parties can be creative and go beyond the strict terms of any legal contract involved.

Mediation aims to restore or facilitate communication, obtains solutions to problems, considers the needs of the parties and allows them to reach durable and often long-lasting agreements. Of course, sometimes the only thing the parties want is to get the money and run, but if they have a shared interest in continuing to work together then only mediation looks forward in any meaningful sense.

Mediation cannot be a contractual prerequisite to adjudication because that would undermine the objective of the adjudication process; however it can be made a prerequisite to arbitration and litigation. I have been involved in several cases where all parts of a dispute could have been agreed, but mediation failed because the parties couldn't agree who should pay the legal and other costs expended before mediation took place. I say it should be a prerequisite and mediation should be embarked upon early.