A common trend in commercial contracts is the inclusion of a mediation and/or arbitration clause. As a general point of departure, these clauses require the parties to the contract to refer any dispute arising from the contract to mediation as a first step. Should the mediation process be unsuccessful, these clauses then require that the parties have the dispute arbitrated.
These clauses are in a certain sense a double-edged sword. On the one hand, they promote contractual parties amicably resolving disputes. The positives of this are the avoidance of litigation and legal costs. On the other hand, if mediation proves to be unsuccessful arbitration can be a costly exercise and leaves dissatisfied parties with few avenues to reserve or challenge the decision.
This article will explore what the differences are between mediation and arbitration generally.
Mediation
Over time, there has been a shift towards consensus-based dispute resolution processes and as a result, the use of mediation is more prevalent. This is especially true for commercial matters. By using mediation as a way to resolve disputes the parties thereto are able to be fully involved in and have more control over the process itself and the outcome.
Currently, in South Africa, there is no legislation governing mediation as a method to resolve disputes. As such, there is also no definition of ‘mediation’ readily available in our law. Despite this, there are working definitions of mediation that have been suggested by authors and which are widely accepted. For example, the National Alternative Dispute Resolution Advisory Council in Australia defines mediation as follows:
“Mediation is a process in which the parties to a dispute, with the assistance of a dispute resolution practitioner (the mediator), identify the disputed issues, develop opinions, consider alternatives, and endeavour to reach an agreement. The mediator has no advisory or determinative role in regard to the content of the disputes or the outcome of its resolution but may advise on or determine the process of mediation whereby resolution is attempted. Mediation may be undertaken voluntarily, under a court order, or subject to an existing contractual agreement.”
From this working definition, some of the main features of mediation as a dispute resolution process can be identified. These include:
1. The process is a voluntary, non-binding, non-prescriptive dispute resolution process.
Parties involved in mediation do so completely voluntarily. This method of resolving disputes is ineffective if one or more of the parties involved are not actively involved in seeking an agreement.
This means that should one or more party decide to not be involved in the process, mediation will fail.
2. The mediator is an independent individual who facilitates the process.
The mediator is generally a specialist in the procedures of mediation. Their role is not to be specialists in the content of the dispute at hand. Their expertise in how the mediation process works allows them to actively assist the parties to a dispute to reach an agreement themselves.
A mediator can also be described as a facilitator since their main task is to help the parties through the process so that the parties themselves resolve the dispute. Essentially, the mediator assists the parties in their negotiations.
3. The process is confidential.
This is often seen as one of the greatest advantages of mediating a dispute. Mediation is completely confidential.
Confidentiality in this context is two-fold. Firstly, the mediator is bound to keep the fact that mediation is taking place confidential. This means that the fact that parties are resolving a dispute with mediation cannot be shared.
Secondly, the mediator is bound to keep the happenings of the mediation confidential. What was discussed between parties, offers that were made, and all other communications regarding the dispute must remain confidential.
These key features were also discussed by the High Court in the case of Kalagadi Manganese (Pty) Ltd and Others v Industrial Development Corporation of South Africa Ltd and Others.
From the above, it is clear why mediation has become a popular way to resolve disputes.
A discussion relating to Arbitration will follow in Part II.
Reference list:
- T Hedeen, Coercion & Self-Determination in Court-connected Mediation: All mediations are voluntary, but some are more voluntary than others (1997).
- Kgalagadi Manganese v Industrial Development Corporate of South Africa (2021).
- J brand, F Steadman & C Todd Commercial Mediation: A User’s Guide (2016).
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