Commercial Mediation
An Overview
Commercial Mediation
Commercial mediations are intended to end disputes between businesses. These will nearly always be disputes arising out of contracts because these are the basis on which businesses trade. They may be trading partners, or one subcontracted by another to provide services to someone else. Shareholders of a company with a claim against one or more of its directors may use mediation, as may the tenant and landlord of a business lease. The splitting of assets in a dissolving partnership is often resolvable through mediation, as are disputed claims against public bodies or Trusts, such as TOLATA claims. Service contracts with IT companies are another common context.
There are three typical motivators for commercial mediation: the need to avoid commercial risk, the need to preserve the business relationship and the need to avoid opportunity losses. Commercial risks lie in the reputational damage that flows from litigating the dispute to trial, which is a public forum. It will not be in the interests of the participants for sensitive market information to emerge during the calling of evidence. The trading relationship, and its potential future profit for the participants, usually contains more value than the amount at stake in the current dispute. Preserving that relationship is seldom possible if litigation is entered because, at the end of the brutal journey to trial, the loser will carry most of the overall costs burden. Time spent on litigation would otherwise be spent taking opportunities to generate profit. Those opportunities are saved when mediation is chosen over litigation.
Mediation is not appropriate in every case. Sometimes a court judgment is the only way to deter a business competitor or to prevent similar disputes arising with other businesses. The expectations of shareholders and insurers may also be relevant. This is why commercial mediations nearly always demand specialist legal advice and representation prior to and during the process.
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