The day of the mediator

In many if not most cases, adjudication provides the natural alternative to traditional methods of dispute resolution. And yet, it does have limitations. It is a rough and ready method of arriving at a decision, and that decision is binding only on an interim basis. And frequently, the party invoking the process has to go to court anyway to get the decision enforced. One of its biggest limitations is its unsuitability for complex multiparty disputes.

I was involved in just such a case last year. In many ways, this was the classic construction dispute. My firm's client was a contractor engaged to build a large project to a design developed by the employer's own design team. The job cost about £7m more than the contract sum. Four years after completion, the contractor was still millions of pounds out of pocket, brought about, in its opinion, by an unreasonable reluctance on the part of the project quantity surveyor to certify money due.

As might be expected, the dispute spread to involve the leading subcontractors. In the meantime, the employer had given notice to the two principal members of the design team of its intention to take them to court to recover the amount it had paid in excess of the original price.

Not a promising case for alternative dispute resolution one might think. Certainly, adjudication could not have provided a multiparty solution. Had the Construction Act applied, which it did not, the dispute, which involved five main parties and their insurers, would most likely have developed into a messy series of unconnected adjudications involving potentially inconsistent decisions. I doubt the matter would have ended there, either.

When mediation was suggested, both I and my client were sceptical about whether it would work. Naturally, we were also suspicious about why it was being proposed. Although a supporter of the Churchillian preference for "jaw jaw" over "war war", my starting point has always been to question whether it is really necessary to involve a third party in what is essentially a commercial negotiation between the parties. Furthermore, on at least two occasions in the past when I have suggested mediation to clients, their reaction has been to question whether I had lost my appetite for the fight.

When I suggested mediation to clients, they questioned whether I’d lost my appetite for a fight

Returning to the case in hand, all parties agreed to mediate and a one-day hearing was fixed. By about 7pm that day the ink was drying on no fewer than four separate agreements, each reflecting the settlement that had been reached resolving all the disputes between the parties. The process had been 100% successful.

What was the secret? A number of factors. First, at pre-mediation, a series of meetings were fixed at which all matters of pure quantum were to be reviewed by the quantity surveyors acting for the parties. The upshot of those meetings was that, once the position on liability could be resolved, the figures would pretty much fall into place. I cannot stress enough the value of effective work carried out in preparation for the mediation.

Another factor was the skill and energy of the mediator, and in particular, his ability to gain the trust of the parties. From a procedural point of view, what struck me was how important it was to allow the parties themselves, rather than their representatives, to play a central role. The informal "jackets off" approach contributed to creating the sort of environment where that was possible.

Mediation, like adjudication, has obvious limitations, the main one being that the parties do not get a decision as such. I would certainly not recommend it in every case. But I am certain that its value is generally much underrated.