Commercial mediation is a voluntary and confidential process that allows parties in a dispute to work together with the help of a neutral third party, known as a mediator, to find mutually agreeable solutions. Commercial mediation can offer a cost-effective and efficient alternative to debt collection for resolving disputes. This guide provides an overview of commercial mediation and how UK businesses can effectively utilise this process.
Commercial mediation is a process where a trained mediator assists parties in identifying issues, facilitating communication, and exploring potential solutions. It is commonly used to resolve various types of business disputes, including contract disagreements, partnership disputes, employment conflicts, intellectual property disputes, and more.
Commercial mediation is used when credit control processes have been exhausted and unsuccessful, but before legal process has commenced.
Ideally the mediation will be successful and formal litigation will then be unnecessary.
Businesses interested in mediation should first consult with a mediator to discuss the case and evaluate whether mediation is suitable.
All parties involved must agree to participate in mediation voluntarily. An agreement outlining the process, confidentiality, and other relevant details is signed.
The mediation usually starts with a joint session where each party presents their perspective on the dispute. The mediator facilitates constructive communication.
The mediator meets privately with each party to delve deeper into concerns, interests, and potential solutions. This helps the mediator understand underlying issues.
The mediator guides the parties through negotiations, encouraging them to explore options and find common ground. If an agreement is reached, it is drafted and signed by the parties.
Once an agreement is reached, the mediator summarises the terms, and the parties confirm their understanding. The agreement becomes legally binding upon signing and is effectively forms a new contract between the parties, which supersedes the previous trading agreement for that transaction
Mediation can be used in different stages of a dispute, such as before legal action. It can be effective for complex, multi-party, and personal disputes and is encouraged by courts to help preserve relationships, save time and costs.
Ultimately, the timing of mediation depends on the willingness of the parties to engage in the process and the nature of the dispute.
Before the mediation process begins, clarify your needs, and goals for the mediation. You should be prepared to articulate your objectives clearly to the mediator and the other party.
Collect all relevant documents, contracts, emails, and any other evidence related to the dispute. Organise these materials so that you can easily refer to them during the mediation process.
Select a mediator who has expertise in commercial mediation and understands the specific industry or area of your dispute. Ensure that the mediator is neutral and impartial.
While debt mediation can be a useful and less expensive way to resolve payment disputes, prevention should be your businesses' long term strategy. Taking measures such as implementing an effective credit control process can help to reduce late payments to prevent measures such as debt mediation being necessary.
If you would like more information on how to resolve late payments and navigate the debt collection process, watch our webinar in partnership with dispute resolution law firm, Escalate.
You’ll leave with the confidence to tackle payment disputes, while protecting your client partnerships.