Timing is critical and will differ for each dispute. Ideally when to mediate should not be fixed by external reference.
(Note: mandatory mediation provisions in a contract are not external but parties often forget that they have agreed to that provision by way of contract).
While each dispute is different in terms of timing, there is one broad statement that covers all scenarios: when the parties are willing to consider a negotiated outcome, they are ready to commence negotiations. They may be some way off resolving the dispute but if they are willing to talk, they are ready to start.
To assist with this question of timing, look for the following indicators that a dispute is ready for mediation:
- the parties are inter-dependent and need to co-operate if their rights or interests are to be met – shareholder and joint venture disputes are a good example;
- the parties can pursue alternatives away from the mediation that could harm another party;
- there are deadlines and time constraints which will negatively impact upon the parties;
- the nature of the dispute means that the alternatives other than a negotiated outcome may be a poor option for the parties;
- the parties can identify who has the mandate to reach an agreement and these people can be involved in the negotiations from an early stage; and
- the issues in dispute are clear and the parties agree on them.
One key consideration all parties need to turn their mind to when addressing this issue of when to mediate is, do they have all the information they reasonably need in their possession in order to negotiate and reach a fair settlement?
If there is an information imbalance the parties will be reluctant to resolve the dispute for fear they have missed something or have been duped.
Published in New Zealand Law Society’s ‘LawTalk 892’ 14 July 2016.