Mediation
Mediation is a form of Alternate Dispute Resolution ("ADR"), often used as a method to settle a dispute before the issue of proceedings, and commonly used to settle a dispute during proceedings. Mediation is designed to be flexible, and the mediator's decision is not binding, they are there to act as a facilitator to minimise the distance between the parties. The appointment of the mediator is subject to the agreement of the parties, so one side cannot simply appoint a mediator without express consent from the other party.
One of the more attractive elements of mediation is its confidentiality, as the mediation is held on a 'without prejudice' basis, meaning that any statements, proposals or documents arising from or used within the mediation, cannot be used as evidence in any subsequent proceedings.
Expert Determination
Expert determination is a means by which the parties to a contract jointly instruct a third-party expert to decide an issue between them1
Expert determination is one of the least used methods of ADR. However, when used effectively, it can be one of the cheapest, most effective and quickest methods of dispute resolution.
There is no requirement for a formal hearing, and like mediation, it is also confidential, so that any dispute is not public, unlike litigation.
However, if an expert determination goes wrong, there is no statutory back up. The process is governed by what is agreed in the Contract between the Parties, so it is important that a suitable expert determination clause is used, and a suitable expert appointed.
Another pitfall of expert determination is that there are limited grounds for appeal. There are three main grounds:
(1) The decision made by the expert is outside of their jurisdiction and therefore the parties did not agree to be bound by it;
(2) The decision has been tainted by fraud or dishonesty; and or
(3) Bias influenced the expert's decision.
Essential or Desirable
Methods of ADR are an effective way to settle any dispute in a cost-effective manner, but unfortunately, they are often underutilised by parties.
As ADR is generally quicker and more cost-effective than litigation, ADR can preserve the commercial relationship between the parties, which can allow a project to continue without the relationship between the parties being damaged, or worse, the works being suspended. However, as mediation and expert determination (subject to the expert determination clause in the Contract) are not binding, parties may face issues if any decisions or agreements are not complied with, or the expert's decision can be challenged.
It is uncommon, but not unheard of, that parties may abandon the mediation itself, which would leave no other choice but to resort to litigation. However, it is far more common for a matter to settle at mediation or in the days following.
Whilst a mediator is appointed for the "day" of the mediation, it is entirely usual for them to contact the parties to an unsuccessful mediation in the days immediately following to keep the momentum attained going, and to see whether there are still ways in which the differences can be narrowed and or settled.
However, as set out, mediation and expert determination are consensual. Once one party has decided to remove themselves from that process, then it may be necessary to resort to either formal litigation or arbitration proceedings.
Footnote
1. See Clive Freedman and James Farrell, Kendall on Expert Determination, 5th edition (Sweet & Maxwell: London, 2015).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.