One assumes that the parties (both parties) embark upon litigation or arbitration expecting to win – i.e. expecting to succeed with the claim or defence, as the case may be. I make this assumption because I know first hand (having been a partner for many years in a leading international commercial law firm) what the costs of this may be.
Mediation is said to be a Win: Win process where both parties win or, just as significantly, neither party loses. I am going to suggest that mediation offers at least four major advantages over litigation and arbitration – namely:
Most mediations are concluded within a period of a few months, rather than years.
Cost goes hand-in-hand with speed as most lawyers charge on an hourly rate basis. If as a rough rule of thumb 20% of total costs for a litigation case are spent to acquire 80% of the necessary evidence and the remaining 80% of costs are incurred to dredge up the remaining 20% of the evidence (which rarely makes a substantial difference to the outcome!) then you will see that it is not at all fanciful to suggest that costs savings of 80% or more are realistically achievable.
Innovative / left-field solutions:
Assume two parties are in dispute over an orange. The judge or arbitrator can award the orange to one party, or the other, or a proportion to each (or maybe in a corrupt jurisdiction keep the orange himself!).
The judge is confined to looking at the parties’ stated positions. However, more important than their stated positions are their underlying interests. The skilled mediator discovers that one party needs the fruit of the orange to make orange juice and the other party needs the rind to make marmalade. In other words, in this example, the interests of both parties can be catered for from one and the same orange! It is the mediator’s very function to probe the parties’ interests.
Most importantly, preservation of business relationships:
In an article headed: ‘Why General Electric embraces mediation’, their General Counsel stated: “Mediation has enabled GE to save business relationships, time and money. It also prevented the loss of valuable resources being channelled into litigation, and away from core business. Winning cases is not the same as winning in business.”
That is the crucial point. You can win the particular court case but lose the important business relationship, which had perhaps taken years to build and can so easily be sacrificed on the altar of litigation.
So you ‘won’ but you lost!
If dialogue between the parties has dried up and they are about to face each other down in litigation the message must be: Don’t! First give careful consideration to mediation. It has much to offer.
With many years international and domestic experience in mediation, arbitration and litigation Lux Mediation can give guidance on any dispute with a view to a swift and effective resolution.