Why you should consider mediation before litigation
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Legal disputes do not always have to be decided in an expensive, drawn-out court-based legal battle. There has been an increasing demand for what is known as alternative dispute resolution (ADR). This was actually formalised in South Africa decades ago in the form of the Commission for Conciliation, Mediation and Arbitration (CCMA). This institution was forged on a foundation of ADR processes and has provide to be instrumental in resolving, amongst other areas, labour disputes.
What is a dispute?
Belinda Scriba, director of the Dispute Resolution Practice at law firm Cliffe Dekker Hofmeyr, defines a dispute as a point in which there has been a breakdown of trust between parties in which they feel betrayed by one another and neither seems willing or able to budge from their position.
“In order to resolve this dispute, it ends up in the institution of legal proceedings either through the court or through arbitration mechanisms,” says Scriba.
By this stage, she says, parties are so aggrieved that they are willing to spend a lot of time and resources to allow a third party to confirm that their position is the correct position. Unfortunately, in these instances, only one party may walk away with a "satisfactory" result. In many instances not even the "victor" is satisfied with the result – for example, either a commercially sound relationship has broken down irreparably; or the other side is not able to meet the terms of a judgement or award made by the court or the arbitrator.
Scriba says disputes don't necessarily have to end like this. Mediation can be used to either find a middle ground between the parties – saving costs, time and possibly relationships – or, at the very least, limit the issues in dispute between the parties – saving costs and time spent in litigation or arbitration.
Mediation first, always
Belinda Scriba described mediation as one of the lessor known, or at least the lesser used, ADR methods. Ultimately, however, even if only marginally successful, it is the one method that can save time and money. She defined it as a process in which a neutral third party gets involved to help the parties negotiate their way to settling the dispute. It doesn’t involve a third party actually make a decision for the parties. “The mediator’s role is to try and navigate the parties to find a resolution which is outside arbitration/litigation in order to settle the matter, or at least narrow the issues down to only to those that are actually in dispute.”
By being able to narrow down the issues through mediation allows for more expedient court/arbitration proceedings, says Scriba.
Scriba said the time and resources required by court proceedings has led to what legal experts are calling litigation fatigue. “It can take years before issues get resolved in court. Mediation is the perfect forum to potentially avoid this long drawn out process.”
She compared mediation to a ‘renegotiation’ in which all parties leave the process satisfied; that in many instances this is the most commercially sensible outcome, causing the least amount of damage on all fronts.
What kind of mediation is there?
Legally speaking, Scriba said there is private mediation and court annexed/statutory mediation. Private mediation is when the parties themselves agree to enter into a mediation process. “More and more regularly this is being built into agreements to try avoid arbitration and litigation at all costs.”
Court annexed/statutory mediation is the evolution of courts rules and/or the legislature (like the Companies Act, the Labour Relations Act and even the Divorce Act) to encourage more parties try mediation. “In some countries their court rules actually oblige parties to go to mediation.”
Is mediation set in stone?
In the end, Scriba says mediation is not binding, unless a settlement agreement is actually reached. “Even if it is court annexed, everything that happens in the mediation process is completely confidential and the parties cannot be bound by what happens in that process. That is unless there is a formal agreement that had been reached within the process. Even then, save for the terms of settlement, everything else discussed or disclosed in the mediation process remains strictly confidential.”
In 2019 the United Nations opened up for signature the International Settlements Agreements Resulting from Mediation Convention. This Convention has thus far been signed by 55 countries, with hopefully more following suit. “This made mediation more concrete an alternative dispute resolution mechanism for international commercial disputes. Although in Africa, to date, it is only Eswatini who signed that convention.”
In South Africa, she says, we have only relatively recently been introduced to court annexed mediation through Rule 41A and Case Management Rules. “In terms of the Uniform Court Rules, in South Africa mediation is a mechanism that only has to be considered by the parties. If they do not consider it appropriate, they have to give their reasons why,” said Scriba.
She did reiterate that there could be adverse consequences for rejecting mediation – if one party feels like mediation isn’t appropriate while the other feels differently, then there can be an adverse cost order against the party that rejected mediation, even if the litigation was decided in their favour.
Can attorneys get involved in mediation?
Scriba said that most experienced mediators actually encourage the involvement of the parties' attorneys. “Client’s will generally always want to seek an attorney’s advice in cases of conflict. Attorneys can actually help settle disputes and draft the settlement agreements, so that when the parties walk away they have a legal agreement and not just an agreement to agree, which we all know can be tenuous at best.”
There is room for attorneys in mediation and clients are always going to be appreciative of attorneys that find them a quick and cost effective, commercially sensible, resolution to a dispute, as opposed to dragging them through costly and time-consuming arbitration and litigation.”
However, she concluded that there are some disputes that will be near impossible to settle through mediation. “Mediation only works if both parties are in it for the right reasons – to find resolution. If the parties don't manage to reach resolution, however, they can at least whittle down the issues in dispute thereby expediting the evidential aspects of the arbitration or litigation.”
At the moment, she said, arbitration is still the preferred ARD route, but as more and more people feel the fatigue that comes with dispute resolution costs (not only in monetary terms, but also the time involved), people may well start searching for an alternative to resolve their issues, and possibly preserve their relationships.