Secondly I shall offer those who have not had the chance to undertake any training in the techniques involved in mediation (sometimes known as ADR or Alternative Dispute Resolution), a brief indication of what they are.
Thirdly I shall refer to the advantages which mediation can have to offer in a cross border dispute.
Fourthly I shall give some examples of how mediation is operating in the UK.
Finally I shall give some information about related procedures in France in the specialised field of company law and insolvency.
There is an essential difference between arbitration and mediation. Arbitration requires a neutral third party to a dispute (the arbiter) to make a decision which binds the parties. This is essentially the same process as litigation. Because of the power which a judge or arbiter has to decide a dispute many rules of law and procedure are needed to protect the interests of the parties and to ensure a fair hearing and a right of appeal.
In contrast mediation involves a procedure where the neutral third party who conducts the proceedings has no power to decide any matter between the parties. The mediator's function is solely to help the parties reach a settlement. This by its nature a much simpler procedure as the parties are obliged to agree to nothing and can discontinue the proceedings at any time before a binding settlement has been reached.
In most countries, and certainly in the UK, litigation is usually expensive and takes a long time. It is easy to say that mediation is quicker and cheaper. This is true if the parties can be persuaded to use it and pursue it to the end. However those who are involved in the dispute resolution business also know that if parties feel that they have been wronged or that another is making unjustified claims against them, the notion of talking to their opponents or negotiating with them about the problem is often considered to be pointless. They consider that they need to have their rights established or vindicated in the face of opposition.
The purpose of the civil courts is to allow people to have their disputes resolved in a way which they will accept without resort to violence or disorder. The existence of the system of civil justice provides parties with confidence to conduct their affairs in the knowledge that they have a reasonable chance of enforcing their rights. This involves obtaining the power of the state to enforce and defend private rights. A lawyer practising in the civil courts is well aware that if he cannot enforce and defend his client's rights his role is limited. The idea of dispute resolution by means of a formalised negotiation process is for this reason suspected of lacking the very quality for which the client consults his lawyer.
Not only that but the process of litigation allows for the securing of the claim and obtaining interim orders and even (at least in the UK) essential evidence in advance of the proceedings. These are valuable benefits.
Like any negotiation of any dispute mediation can be used most effectively against the background of an effective system of civil justice. Resort to the courts or to arbitration is "the best alternative to a negotiated agreement"(the "BATNA")
An example of the place of mediation is suggested by "The Escalation Game" developed at the Yale School of Organisation and Management in the USA. A classic situation of conflict arises when two or more parties claim rights over an object that only one of them can own. This may give rise to a fight. Fighting is costly to both sides but each party hopes to convince the other to withdraw and walk away. The cost of each part of the fight may be small relative to the value of the object in dispute and by not fighting a party foregoes any chance of obtaining the object. The fight is therefore likely to escalate. The object of the dispute may be a boundary disputed by two neighbours. It may be a commercial market in dispute between two companies which is only large enough for one company to operate profitably such as a franchise in a shopping mall development. The authors of the game observe that fighting is beneficial if it convinces the other side to renounce its claim but can be disastrous if both parties escalate the fight to the stage that the value of the object of the dispute is small relative to the cost to both parties of fighting each other.
This illustration indicates situations of conflict which can easily escalate into fighting. If in any of these situations a party decides to stand back from the fight, identify his real objectives, and work out a strategy for achieving those objectives by negotiation of an agreed solution then he may avoid a fight. This indicates the essential difference between litigation and mediation.
This approach to mediation also explains why mediation sits easily within the framework of a litigation or arbitration process and therefore complementary to it rather than an alternative. It may make good sense for the parties at any time to stop fighting each other and settle their differences by a negotiated solution.
The better a party and his advisers are trained and equipped to conduct effective negotiation the better chance they have of helping themselves and their clients to achieve their real objectives by negotiation without wasting their resources.
But sometimes we have to fight. That reflects human nature. If we do have to fight we should aim to win the fight by means of careful preparation and effective fighting. But it may be that we should not fight with each other in court as often as we do. A better understanding of and training in mediation and negotiation techniques offers a better way to settle differences.
There are special features of our present system for resolving disputes through the civil courts in the UK which I believe provide an increased incentive to look for ways of finding negotiated solutions.
For example my experience as a practising lawyer in Scotland is that litigation as conducted it tends to make it difficult for parties to get together to discuss a case until a short time before a final hearing. Sometimes a legal debate in court on the pleadings can bring about settlement discussions but this is an uncertain and haphazard way of bringing about negotiations. Lawyers regard it as their job to find and use any legal arguments which they think will help their clients whether or not these arguments were ever in the contemplation of the parties to the dispute.
The work involved in collecting evidence, which is itself expensive in lawyers time, often has the effect of driving the parties apart until a late stage in the procedure and postponing settlement discussions until a long time has passed and much expense has been incurred. During this time the parties will usually have found it difficult to come together to discuss the case.
The wealthy litigant will to use the high cost of litigation to oppress his less wealthy opponent. A mediation may have a limited chance to avoid such a situation as the alternative is to run the case.
It seems to me that this may often be the most difficult part of the whole procedure. High success rates often result from well conducted mediations. Mediation organisations claim success rates as high as 75 to 80 per cent.
Experience in the USA and UK tends to suggest that unless and until the courts introduce into their procedures a requirement to attempt mediation, use of the procedure remains limited. Once the courts recognise the process of mediation in this way, then it becomes an accepted part of the dispute resolution system.
The texts which I have found most helpful in the study of negotiation are "Getting to Yes" written by Roger Fisher and William Ury both of Harvard University, and "Getting Past No" by William Ury.
The main ideas which the book "Getting to Yes" contains are :-
- Separate the people from the problem. Establishing good relationships between the parties helps to produce an agreed settlement. But never confuse the attempt to establish good relationships with being soft on the issues.
- Focus on interests not positions. Do not bargain over positions but rather consider the underlying interests of the parties and especially your opponent.
- Invent options for mutual gain. Can the problem be approached so as to improve the positions of both parties to the negotiation in order to produce a win-win result? This possibility is excluded from the decision of a judge in a court process or of an arbiter.
- Insist on objective criteria. Comparisons or solutions which are accepted as being fair or generally accepted are more likely to produce an agreed result.
- Know what is your alternative and your opponents alternative to a negotiated solution. This will tell you your own and his "bottom line".
- Do not react to a situation. Stop and think and put yourself outside the situation looking in at yourself and the other party. Consider your real objective and how you are best likely to negotiate that result.
- Disarm the other side by listening carefully, creating a good climate for negotiating and looking for ways to solve your problem by approaching it from the perspective of the other side.
- Do not reject the other side's position but try to rearrange the negotiation in a way that suits you and which makes the negotiation a problem solving negotiation instead of positional bargaining. Good questioning techniques can be effective.
- Make it easy for the other side to say yes by being sensitive to his or her needs. Consider for example the need of your opponent to save face or for recognition or for independence.
- Make it hard for the other side to say no. Warn of the consequences of failure to agree with you. Explain what your alternatives are and on occasion use them without provoking your opponent.
The mediator has no power to decide any part of the dispute between the parties. His role is restricted to helping the parties to negotiate and agree a settlement. This means that he is not bound by the lawyer's notion of natural justice.
However unless he acts in a fair and impartial way and earns and retains the trust of the parties he is unlikely to succeed in his task. He is not bound to apply the law in his treatment of the parties nor is he bound to draw the attention of any party to any legal issue. However he must be aware that the dispute is being or will be dealt with by the court if the parties fail to reach agreement. For this reason the effect of the law will often be an essential consideration in his approach to dealing with the parties.
The sanction for the parties against the mediator is not recourse to the courts of law but that the parties withdraw from the mediation with their dispute not resolved.
This means that the mediator must create the most favourable circumstances for the mediation to succeed. He must do his homework by making himself aware of the key features of the dispute in advance. He must try to create an atmosphere between the parties and between the parties and him, which is the most conducive to success. This means trying to encourage a friendly and positive atmosphere at the outset and maintaining it. He must use techniques to elicit information from the parties which are effective and fair. He must find out not only the positions of the parties but their underlying interests. He must then explore with them options for their mutual gain to discover other perspectives or related issues that could benefit both parties and lead to a win-win situation for all concerned. If reference to objective criteria will assist the parties to accept matters which are in issue or will reduce the matters in dispute he must raise them with the parties.
When a deadlock occurs in the mediation, which may happen at an early stage, the mediator is free to, and will wish to seek resolution of the deadlock by discussing the issues in private meetings with each party in turn in the absence of the other. A meeting of this kind is sometimes referred to (at least in USA) as a caucus. At any such meeting the mediator must agree with the party concerned the extent to which the information disclosed to him may be disclosed to the other party. Of course if a party who has disclosed a confidence to him has asked him not to disclose it to the other, he must not do so if he is to retain credibility and therefore effectiveness.
If agreement is reached to settle the dispute he must help if he is asked to record the agreement in a way which is binding on the parties and enforceable. This process is itself an essential and often difficult part of the process.
The entire proceedings are conducted (as any negotiation of a dispute) on a basis which we would call without prejudice, that is to say they cannot be founded on in future. If agreement is not reached a question may arise as to whether anything disclosed to the mediator may be used later in court proceedings against the party who has either disclosed information or made offers in an attempt to settle.
It is an essential precondition of entering a mediation that the parties and the mediator will agree in advance in writing that they will treat the proceedings as confidential and that the parties will not call the mediator as a witness in any future contentious proceedings. Most courts would probably enforce such a condition in a contract. In Scotland there is a general rule that offers made in a failed attempt to settle a dispute are confidential as a matter of law and therefore are not admissible evidence. Similar rules apply in other countries. Further there is no need for a mediator to keep any written record of mediation proceedings and he should not do so.
This has in no sense been an attempt to offer a mini instruction course for mediators. There are many excellent courses presently available where these skills are instructed over a period of days rather than in a few minutes. It has been an attempt to explain the main purpose and principles involved. I hope that it has been enough to demonstrate that the process is fundamentally different in approach and in practice from litigation and arbitration.
Mediation has the potential not only to resolve a dispute between parties but also to achieve a better result than litigation or arbitration because it is created and agreed by the parties themselves. It therefore can encompass all kinds of solutions which may be important to the parties but which are beyond the powers of a judge or arbiter to decide. The results available by negotiation or mediation may not have been in the parties' contemplation at the start of the dispute or they may be beyond the powers of any court or arbiter to decide. For example the parties may agree the details of future contracts or business arrangements as part of the settlement of a historical dispute.
First there is the question of what system of law will apply.
Second there is the question of where should you raise court proceedings.
These questions are of course the subject of a very large amount of international legal jurisprudence and argument.
Next there is the question of whether and in what circumstances judgements or arbitral awards issued in one country can be enforced in a different country.
There are problems of language and translation of court papers as well as the evidence of witnesses. There is expense associated with instructing two or more sets of lawyers in more than one country and finding lawyers who are able to handle the international dimension. There is also expense associated with investigating detailed questions of fact and interviewing witnesses in a foreign country and often in a foreign language and ultimately of taking witnesses to court in a foreign country to give evidence, which often has to be translated.
International arbitration is often regarded as helping to solve some of these problems. It may provide an international tribunal and more flexible procedure than national court proceedings. It also offers an enforcement regime under the 1958 New York Convention on Enforcement of Foreign Arbitration Awards, which is far more comprehensive and effective than most systems of enforcement of foreign judgements.
However it is often even more expensive than litigation because of the need to pay for the arbitrators and also for the cost of administering the arbitration proceedings. It is also in the same way as international litigation prone to many legal disputes because of conflict of laws and procedure. It tends to take a long time because of all of these factors.
In my own practice I have accumulated experience of dealing with international disputes both in litigation and arbitration. What has become clear is that a lawyer who attempts to deal with a modest sized dispute across national boundaries is unlikely to be doing his clients a favour. The cost and uncertainty of the proceedings make it an unattractive prospect for all the reasons explained already.
This means that the risks involved for example in exporting and importing are increased by the fact that legal obligations are far more difficult to enforce internationally than they would be at home where they are already difficult enough. This is of course not satisfactory from the financial aspect. It is even less satisfactory from the aspect of maintaining reasonable relationships between international businessmen where a business dispute has arisen. It increases the incentive to the person who is in possession of the funds in a transaction to pursue claims, which have no foundation, or to resist good claims without any real defence.
In suitable cases, mediation offers advantages over arbitration in a cross border dispute. Questions of applicable law and of jurisdiction and of enforceability do not arise until after a solution to the dispute has been found and the agreement is to be recorded.
The dispute is much more likely to be resolved reasonably quickly and cheaply than it otherwise would be and there is a far higher chance that a reasonable relationship between the parties will be preserved.
A solution might be assisted by including in the settlement agreement obligations relating to future contracts as well as past dealings. These are results well worth striving for on behalf of clients. The downside risk is small and the potential benefits are great.
In a Practice Note issued on 10 December 1993 by Mr Justice Cresswell in the High Court in London, the court expressed its wish to encourage parties to use alternative dispute resolution such as mediation and conciliation as a possible additional means of resolving particular issues or disputes. The clerk of the Commercial Court will keep a list of individuals and bodies that offer mediation, conciliation and other ADR services. The note continues "while the court will remain the appropriate forum for deciding most disputes in its list, legal advisers should ensure that parties are fully informed as to the most cost effective means of resolving the particular dispute."
This has developed further. The system of administration of civil justice in England is at present undergoing a fundamental reform. These result from work done by a committee chaired by Lord Woolf, and are popularly known as the Woolf reforms.
I have attached to this paper a copy of Part 1. of the new Civil Procedure Rules in England. These rules came into force on 26th April 1999. I refer you to the overriding objective for enabling the court to deal with cases justly (1.1.).
I also refer you to Rule 1.4. (2)(e). The court must further the overriding objective by actively managing cases. Active management includes-
(e) encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate, and facilitating the use of such procedure.
The principal organisation in England which has championed mediation is the Centre for Dispute Resolution.
I attach to this paper some documents which indicate examples of the work which is being done.
A second organisation in England working in the same field is called ADR Group, based in Bristol. They have experience of making a presentation in Denmark on the subject about two years ago. I have with me an excellent publication of ADR Group called "Making the Most of Mediation". I have included in the materials an extract from this publication which will give a flavour of what is involved.
Walter Semple