What is Mediation?
Mediation is a process which allows parties to settle disputes with the assistance and guidance of neutral third parties specialised in facilitating negotiated settlements.
How does it work?
Mediation is an entirely flexible process that allows parties to remain in control of both cost and outcome. The mediator acts only as a guide – the parties remain responsible for their own decisions and answerable for the terms of any settlement that may be agreed.
Parties can run their mediation in whatever manner they chose. Typically, once a mediator is appointed, the process starts with the exchange of position papers prior to the mediation. These are short statements that summarise the dispute, the parties’ arguments and what the parties hope to achieve from the mediation. The mediation itself usually opens with a joint session, whereby the mediator explains the process and the parties make an opening statement. The mediator then separates the parties into different rooms and spends time with each of them, discussing the dispute, exploring and challenging the required aims, the strengths and weaknesses of a party’s position, and identify where common ground may exist. The mediator will relay offers and counteroffers and, if appropriate, facilitate further face-to-face meetings between the parties.
Mediation ends either with:
a negotiated settlement, in which the parties record the terms of the settlement in a binding settlement agreement; or
a continued impasse, in which case the parties may then seek to resolve the dispute by formal dispute resolution (such as litigation or arbitration).
Benefits of Mediation
There are many benefits to attempting a mediation as a first step to resolving a dispute, for example:
It is a flexible process over which the parties have total control – the decision-making is not left to a judge or a tribunal.
It allows parties to resolve a dispute in a private and confidential forum.
It can save parties considerable time and costs that are often associated with formal dispute resolution.
It enables parties to achieve settlement of their disputes while preserving their existing commercial relationships and market reputation.
It can provide parties with a wider range of solutions than those offered by litigation.
Mediators provide impartial and valuable angles to disputes which parties may not have seen or appreciated.
Even if the mediation is unsuccessful, it often allows the parties to narrow the issues in dispute.
Mediations take place on a “without prejudice” basis and cannot be used as evidence in litigation or arbitration proceedings.
Drawbacks of Mediation
As with all forms of alternative dispute resolution, mediation is not suitable for all scenarios.
As it is a voluntary process, mediation will not work without full participation and commitment from all parties. If parties are unwilling to cooperate, mediation may be a waste of time and money.
The mediation process will cease if one party walks out, which they are free to do at any time.
There is a risk that a party may give away commercial or strategic information that benefits the other party.
It is unsuitable in situations that need specific remedies, such as an injunction.
Settlement agreements, whilst binding, would still need to be enforced before a court or tribunal if a party breaches its terms.
Mediation in the UAE
Mediation is a relatively new concept in the UAE but is gaining popularity as parties look to resolve disputes in a fast, carbon-neutral and cost-effective manner.
Mediation in the UAE is covered by the UAE Mediation Law, which provides for a confidential process under which documents and information presented during the mediation cannot be disclosed without the consent of all parties.
To further encourage local parties to mediate, the UAE Ministry of Justice has recently launched an e-mediation platform, on which parties can manage the entirety of their mediation process, including attending their mediation virtually.
The DIFC Courts encourage mediation as a prerequisite to litigation, but it will not compel parties to do it. However, the DIFC Courts will, if appropriate, invite the parties to consider using mediation and may adjourn a case for a specified period of time to encourage and enable the parties to do so.
When assessing costs, the Courts may consider the extent to which the parties have discussed and/or attempted mediation. Parties that refuse to mediate (without good reason) or behave unreasonably during mediation may be penalised when costs are determined at the end of a case.
The ADGM Courts have a court-annexed mediation service and the ADGM Arbitration Centre has a service that hosts mediation in the metaverse by providing a virtual space for parties to participate in mediation proceedings, mimicking the physical space within the ADGM in which mediations can be conducted.
Mediation is an option that all businesses should consider when faced with a dispute. It provides a flexible and confidential forum in which to resolve disputes, in a cost and time effective manner, and in a way that often preserves commercial relations. The growing range of mediation options available to businesses in the UAE is testament to the increased importance placed by parties on seeking alternative forms of dispute resolution, rather than head straight for litigation or arbitration.
Published by: Nathan Hooper and Colleen McCallum
This material is provided for general information only. It does not constitute legal or other professional advice.