Mediated dispute resolution gets statutory backing

Commercial Contracts

The Government published the long awaited Mediation Bill 2017 in February of this year. For the first time, if the Bill is passed, there will be a statutory obligation that parties engaged in litigation are advised by their legal representatives to consider mediation as an alternative to Court proceedings. This legislative measure should bring about not only a welcomed increase in the number of cases that are settled, but also settlement at an earlier stage with significant legal cost savings.

In recent years we have seen the benefits of engaging in mediation, in terms of reduced legal costs, faster resolution of disputes and a reduction in the stress and acrimony that often accompanies litigation. The use of mediation to settle disputes has been steadily increasing in Ireland over the last 10 years.

The effect of the new Act will be to present the possibility of early mediation centre stage in the proceedings.

What is mediation?

Mediation is a voluntary process where the parties to a dispute, with the assistance of an independent, neutral person (Mediator), attempt to resolve the dispute in a confidential, collaborative and consensual manner without going to Court. If the result of the mediation is acceptable to both sides it becomes legally binding. The associated costs are a fraction of the legal costs that would be incurred in litigation.

What does The Mediation Bill 2017 provide for?

  1. The Bill provides for a requirement that solicitors (and barristers) provide their clients with information about the advantages and benefits of mediation and advise their clients to consider mediation as an alternative to Court proceedings. This means for the first time there is a statutory obligation to consider mediation. Legal advisors must then sign a statutory declaration stating that they have advised their clients to consider mediation. A failure to do this can result in the adjournment of the proceedings for such period as the Court considers reasonable to allow the solicitor to comply with his or her obligations.
  2. Choosing to mediate will be voluntary. This means that both sides must agree to engage in the mediation.
  3. During the mediation itself, both sides can be accompanied by another person (including a solicitor) who is not a party to the mediation.
  4. The Mediator must provide the parties with an ‘agreement to mediate’ which the parties must sign prior to the mediation.  This ‘agreement to mediate’ sets out the formalities of the mediation including the manner in which it will be conducted, manner in which fees and costs will be paid, place and time of the mediation, confidentiality and termination. The signing of this Agreement will also stop the clock in terms of any limitation period under the Statute of Limitations until thirty days after a mediation settlement is signed or the mediation is terminated, whichever occurs first. This can be seen as an incentive to engage in mediation as the parties to the mediation will not be prejudiced by any lapse of time should the mediation prove unsuccessful and if after they choose to initiate Court proceedings.
  5. A party can also seek independent legal advice at any stage during the mediation and withdraw from the mediation at any time.  The mediation will be without prejudice to each person’s rights and if the dispute is not resolved through the mediation, the parties still have the option of going to Court. Both the mediator and the parties are, however, required to make every reasonable effort to conclude the mediation in an expeditious manner in order to minimise the costs involved.
  6. The Bill also imposes a general confidentiality obligation on the mediator and the parties to a mediation.
  7. Under the Bill, a Court can also invite the parties to the proceedings to consider mediation as a means of attempting to resolve the dispute and where it considers it just and reasonable can award costs against any party who unreasonably refused to attend mediation.
  8. The parties involved in the mediation will determine if the mediation settlement is to be enforceable between them. Where a mediation settlement is reached, it will operate as a contract between the parties to the settlement except where it is expressly stated to have no legal force. However, the Bill does provide that a Court may enforce the terms of the mediation settlement subject to certain safeguards i.e. the settlement does not adequately protect the rights and entitlements of the parties or where a party to the mediation settlement has been unduly influenced by another party. Similarly where a mediation settlement relates to a child, the Court will have regard to the best interests of the child as the primary consideration.
  9. The Bill provides for the future establishment of The Mediation Council of Ireland, to oversee the development of mediation. This Body would promote mediation services and take on the task of preparing codes of practice and establish a register of mediators.

How do I know if my dispute should be mediated?

The Bill provides that the legislation will not apply to certain types of proceedings including; arbitrations, employment disputes, matters under tax and customs legislation, proceedings under the Child Care Acts or the Domestic Violence Acts. Other exclusions include judicial review proceedings and proceedings against the State in respect of alleged infringements of fundamental rights and freedoms. This means a claim seeking vindication of a constitutional right would not be suitable for mediation and will need to go to court.

The Bill will now make mediation a part of the litigation process.  It is a positive development in conflict management and promotes mediation as a real and effective alternative to litigation. The result is that it should reduce costs and speed up the resolution of commercial disputes for companies.

For more information on mediation contact Marc Fitzgibbon, Partner in our Commercial Litigation and Dispute Resolution Group.