Mediation is a form of alternative dispute resolution (ADR) that involves a neutral third party, known as a mediator. The mediator is responsible for helping the relevant parties come to an agreement regarding specific issues or conflicts. Contrary to other types of ADR, such as arbitration, mediators do not have the authority to impose a resolution on the parties. In essence, while a mediator may facilitate communication and negotiations between the parties, he or she does not make binding rulings in the matter. The mediator’s goal is to help the parties come to a mutually-agreed upon solution on their own.
In the context of business and corporate law, mediation may be used to resolve disputes that may arise within business relationships. This may refer to conflicts between companies, between company shareholders or employees, or between a company and a third party such as a client or vendor.
For example, imagine that Company A and Company B have entered into a contract for the supply of goods. During the course of their work together, Company B fails to provide the goods on time to Company A. As a result, Company A suffers a substantial financial loss and aims to seek damages from Company B. However, according to their contract, the parties agreed that all potential conflicts would be solved through mediation instead of litigation. The mediator will work collaboratively with Company A and Company B to help them find a solution to their dispute outside of a formal courtroom.
There are a number of key advantages to using mediation to settle disputes within businesses and corporations, including:
Despite its many benefits, mediation has several drawbacks. Some of the potential downsides of mediation are:
In summary, mediation can be an effective means of resolving conflicts and disputes while maintaining confidentiality, preserving relationships, and saving time. Nevertheless, mediation is not a one-size-fits-all solution. Depending on the circumstances of the situation at hand, mediation may not be efficient or effective. If you would like to find out if mediation is right for you, reach out to one of our top-tier attorneys today for a consultation.