A business should consider mediation once the main issues are clear, but before legal costs, management time and damaged relationships make settlement harder. This may be before proceedings begin or during litigation.
The key question is whether mediation could produce a better commercial outcome than continuing the dispute.
Key Takeaways
Mediation can take place before or during court proceedings.
It is often most effective once the key facts are understood but before costs escalate.
It can help preserve or manage ongoing commercial relationships.
Courts may require parties to consider alternative dispute resolution.
Mediation must not delay urgent action, contractual steps or limitation deadlines.
When to Mediate
Mediation may be appropriate when:
Direct negotiations have stalled.
The parties want to preserve or restructure their relationship.
Litigation costs and management time are increasing.
New evidence has changed the commercial or legal position.
A practical solution requires more than a payment, such as revised terms, staged payments or an orderly exit.
Mediation can take place at almost any stage, including before proceedings or after litigation has started.
When Not to Delay Action
Mediation should not prevent urgent court applications or other protective steps. Limitation periods and court deadlines continue to apply.
Businesses should also check contractual dispute-resolution procedures, particularly in cross-border disputes involving jurisdiction, arbitration or enforcement issues.
Before You Proceed, Check…
What does the contract say about dispute resolution?
Are any deadlines approaching?
Do you understand the main evidence and risks?
What will continuing the dispute cost?
Who has authority to settle?
Could non-financial terms help resolve the dispute?
Common Mistakes
Waiting until the case is fully prepared.
Treating mediation as a sign of weakness.
Sending someone without settlement authority.
Focusing only on money.
Ignoring limitation periods or court deadlines.
FAQs
Is mediation compulsory?
Not always, but courts can require parties to engage in ADR.
Can mediation happen before proceedings?
Yes. Many disputes settle before court proceedings begin.
Can we mediate during litigation?
Yes. Mediation can take place at almost any stage.
Is mediation confidential?
It is generally confidential and without prejudice, subject to the mediation agreement and applicable law.
What if mediation fails?
The parties can continue with litigation or arbitration. Mediation may still narrow the issues or improve future negotiations.
Is a settlement binding?
Usually, the agreed terms are recorded in a legally binding settlement agreement.
When to Get Support
Sterling Legal Solutions can help businesses assess whether mediation is suitable, identify the right timing and prepare for the process.
Disclaimer
This article is for general information only and does not constitute legal or professional advice. Specific advice should be obtained before taking action.
Sources
Ministry of Justice — A guide to civil mediation
Civil Procedure Rules — Parts 1, 3 and 44
Practice Direction — Pre-Action Conduct and Protocols
Civil Mediation Council — Civil & Commercial Mediation