By, Jonathan Lux of Lux – Mediation
mediation@lux-mediation.com
In London, which is the most popular venue for the resolution of international commercial disputes, it is arguably unnecessary to include a mediation clause in your contract because lawyers have a professional duty to advise on the best form of dispute resolution process (and that will often mean mediation); the Courts have power to impose adverse costs sanctions where one party has unreasonably refused mediation; and, most recently, the Courts now have power to order the parties to mediate.
All that said it is still wise to include a mediation clause in your contract for the simple reason that, more often than not, parties tend to do what is stipulated in their contracts.
The case for including a mediation clause:
1. Cost – effectiveness: mediation is generally significantly less expensive than litigation or arbitration. By resolving disputes early and amicably, parties can save on legal fees and other related costs.
2. Time efficiency: Mediation can typically be scheduled far sooner than court hearings or arbitration proceedings, allowing parties to resolve their disputes more quickly.
3. Control over outcomes: Mediation allows parties to retain control over the resolution process. They can tailor solutions to their specific needs rather than have a decision imposed by a judge or arbitrator.
4. Preservation of relationships: Mediation focuses on collaboration and communication, which can help maintain business relationships post-dispute. This is particularly important in ongoing business relationships.
5. Flexibility: mediation can be structured to suit the specific context of the dispute, offering a flexible process that can adapt to the needs of the parties involved.
6. Confidentiality: mediation is typically a private process, meaning that discussions and outcomes can remain confidential, protecting both parties’ reputations and interests.
7. Higher settlement rates: Mediation has historically high rates of resolution, with the overwhelming majority of disputes being settled during the mediation session.
What form of mediation Clause?
When drafting a mediation clause to include in a contract it is important to ensure that it is clear, comprehensive and tailored to the specific needs of the parties involved. Below is a possible structure and some key elements for an effective mediation clause:
Sample Mediation clause “Mediation Clause “
1. Initiation of Mediation: Any dispute, controversy or claim arising out of or relating to this Agreement, including its interpretation, breach, termination or validity, shall first be submitted to mediation.
2. Request for Mediation The party wishing to initiate mediation shall provide written notice to the other party, specifying the nature of the dispute and the relief sought. The parties shall have (insert a specified time, e.g, 30 days) from the date of notice to agree upon a mediator.
3. Selection of Mediator. The mediator shall be chosen by mutual agreement of the parties. If the parties cannot agree on a mediator within the specified time period, either party may apply to (insert relevant mediation service or qualified authority) to appoint a mediator.
4. Mediation Process. The mediation shall take place in (insert location) and shall be conducted in accordance with the (insert applicable mediation rules). The parties shall agree on a date for the mediation session within (insert specified time, e.g, 15 days) of the appointment of the mediator.
5. Confidentiality The mediation process shall be confidential. All statements made during the mediation, and all documents prepared for or presented in mediation, shall not be admissible in any subsequent legal proceedings, except as a allowed by applicable law.
6. Good Faith Participation. Each party agrees to participate in the mediation process in good faith and with the intention of resolving the dispute amicably.
7. Termination of Mediation If the dispute is not resolved within (insert a specified timeframe, e.g, 60 days) from the date of the first mediation session, either party may proceed with any legal action permitted by law or this Agreement.
8. Costs of Mediation The parties shall share equally the costs of the mediator and the mediation facility. Each party shall bear its own legal fees and any other costs associated with the mediation.
Key elements for consideration: –
1. Clarity: use clear and unambiguous language to ensure all parties understand their obligations regarding the mediation process.
2. Specificity: mention specific timelines for initiating and conducting mediation to prevent unnecessary delays or, even worse, stalemate.
3. Selection of the Mediator: outline a clear process for selecting the mediator, ensuring fairness and impartiality. Consider defining qualifications or areas of expertise for the mediator if appropriate.
4. Rules and Procedures: reference established mediation rules or procedures to provide a framework for the process.
5. Confidentiality: emphasise the confidentiality of mediation to encourage communication between the parties and protect sensitive information.
6. Good faith requirement: encourage parties to enter the mediation with an intention to negotiate in good faith, which can facilitate a more productive dialogue.
7. Termination Clause: define when mediation will be deemed unsuccessful and the next steps (i.e. litigation or arbitration), providing clarity for the parties.
8. Cost Sharing: clearly outline how the costs associated with mediation will be managed to avoid disputes relating to financial responsibilities later on. Conclusion An effective mediation clause should balance practicality with clarity, ensuring that it addresses potential disputes in a structured manner while fostering cooperation between parties. Tailoring the clause to the specific relationship and needs of the parties can lead to more successful outcomes in case of a dispute.
mediation@lux-mediation.com
In London, which is the most popular venue for the resolution of international commercial disputes, it is arguably unnecessary to include a mediation clause in your contract because lawyers have a professional duty to advise on the best form of dispute resolution process (and that will often mean mediation); the Courts have power to impose adverse costs sanctions where one party has unreasonably refused mediation; and, most recently, the Courts now have power to order the parties to mediate.
All that said it is still wise to include a mediation clause in your contract for the simple reason that, more often than not, parties tend to do what is stipulated in their contracts.
The case for including a mediation clause:
1. Cost – effectiveness: mediation is generally significantly less expensive than litigation or arbitration. By resolving disputes early and amicably, parties can save on legal fees and other related costs.
2. Time efficiency: Mediation can typically be scheduled far sooner than court hearings or arbitration proceedings, allowing parties to resolve their disputes more quickly.
3. Control over outcomes: Mediation allows parties to retain control over the resolution process. They can tailor solutions to their specific needs rather than have a decision imposed by a judge or arbitrator.
4. Preservation of relationships: Mediation focuses on collaboration and communication, which can help maintain business relationships post-dispute. This is particularly important in ongoing business relationships.
5. Flexibility: mediation can be structured to suit the specific context of the dispute, offering a flexible process that can adapt to the needs of the parties involved.
6. Confidentiality: mediation is typically a private process, meaning that discussions and outcomes can remain confidential, protecting both parties’ reputations and interests.
7. Higher settlement rates: Mediation has historically high rates of resolution, with the overwhelming majority of disputes being settled during the mediation session.
What form of mediation Clause?
When drafting a mediation clause to include in a contract it is important to ensure that it is clear, comprehensive and tailored to the specific needs of the parties involved. Below is a possible structure and some key elements for an effective mediation clause:
Sample Mediation clause “Mediation Clause “
1. Initiation of Mediation: Any dispute, controversy or claim arising out of or relating to this Agreement, including its interpretation, breach, termination or validity, shall first be submitted to mediation.
2. Request for Mediation The party wishing to initiate mediation shall provide written notice to the other party, specifying the nature of the dispute and the relief sought. The parties shall have (insert a specified time, e.g, 30 days) from the date of notice to agree upon a mediator.
3. Selection of Mediator. The mediator shall be chosen by mutual agreement of the parties. If the parties cannot agree on a mediator within the specified time period, either party may apply to (insert relevant mediation service or qualified authority) to appoint a mediator.
4. Mediation Process. The mediation shall take place in (insert location) and shall be conducted in accordance with the (insert applicable mediation rules). The parties shall agree on a date for the mediation session within (insert specified time, e.g, 15 days) of the appointment of the mediator.
5. Confidentiality The mediation process shall be confidential. All statements made during the mediation, and all documents prepared for or presented in mediation, shall not be admissible in any subsequent legal proceedings, except as a allowed by applicable law.
6. Good Faith Participation. Each party agrees to participate in the mediation process in good faith and with the intention of resolving the dispute amicably.
7. Termination of Mediation If the dispute is not resolved within (insert a specified timeframe, e.g, 60 days) from the date of the first mediation session, either party may proceed with any legal action permitted by law or this Agreement.
8. Costs of Mediation The parties shall share equally the costs of the mediator and the mediation facility. Each party shall bear its own legal fees and any other costs associated with the mediation.
Key elements for consideration: –
1. Clarity: use clear and unambiguous language to ensure all parties understand their obligations regarding the mediation process.
2. Specificity: mention specific timelines for initiating and conducting mediation to prevent unnecessary delays or, even worse, stalemate.
3. Selection of the Mediator: outline a clear process for selecting the mediator, ensuring fairness and impartiality. Consider defining qualifications or areas of expertise for the mediator if appropriate.
4. Rules and Procedures: reference established mediation rules or procedures to provide a framework for the process.
5. Confidentiality: emphasise the confidentiality of mediation to encourage communication between the parties and protect sensitive information.
6. Good faith requirement: encourage parties to enter the mediation with an intention to negotiate in good faith, which can facilitate a more productive dialogue.
7. Termination Clause: define when mediation will be deemed unsuccessful and the next steps (i.e. litigation or arbitration), providing clarity for the parties.
8. Cost Sharing: clearly outline how the costs associated with mediation will be managed to avoid disputes relating to financial responsibilities later on. Conclusion An effective mediation clause should balance practicality with clarity, ensuring that it addresses potential disputes in a structured manner while fostering cooperation between parties. Tailoring the clause to the specific relationship and needs of the parties can lead to more successful outcomes in case of a dispute.