Mediation

Definition

Mediation is a form of alternative dispute resolution in which an impartial mediator facilitates negotiation but does not impose a decision; control of the outcome remains with the parties. It is typically faster, cheaper, and more confidential than litigation or arbitration, and it preserves the commercial relationship. Many contracts make mediation a mandatory first step in an escalation ladder before court or arbitration.

Example

Before going to court the parties must, under their dispute resolution clause, attempt mediation through a registered mediator.

Why this is a business risk

Skipping a contractually required mediation step before litigating can result in proceedings being stayed or costs being awarded against you, even if you ultimately win. Businesses that go straight to court without attempting mediation may also miss a faster and cheaper resolution. Conversely, agreeing to mediation without time limits can delay enforcement of a clear right.

How to manage it

• Check the dispute resolution clause before starting any formal proceeding to confirm whether mediation is a mandatory first step.
• Set a time limit for mediation in the clause so it does not drag on indefinitely while the underlying dispute worsens.
• Choose a registered mediator from a recognised body (such as the MfN register in the Netherlands) to ensure quality and confidentiality.
• Document your mediation attempts and outcome (or failure) carefully: this may be required before court proceedings are admitted.