The essence of mediation is the re-building of a relationship of trust and confidence, by way of transmission of information, between parties in dispute.
The trust and confidence re-built need not restore the parties to their previous, pre-dispute, relationship. Such is not a requirement of mediation, and indeed the necessarily time-limited process itself rarely does so. All that is necessary in the course of mediation is that sufficient trust and confidence is re-built between the parties to allow them to arrive at an agreed compromise of their dispute. A settlement is rarely achieved between parties who have no trust whatsoever in each other, which is commonly the pre-mediation position in most construction disputes.
A mediator is a skilled individual capable of assisting the parties in dispute to arrive at an agreed compromise. The relationship between the mediator and each of the parties is the key to a successful mediation. Such relationship is again one of trust and confidence. A mediator has to build a trusting relationship between himself and each of the parties as quickly as possible within the course of the mediation itself in order to obtain information relevant to the dispute and the relationship between the parties. If a mediator cannot quickly build trust and confidence between himself and each of the parties, he is unlikely to be able to do so, in due course, between the parties themselves.
The information obtained by a mediator is received subject to party confidentiality. It cannot be transmitted by the mediator to the other party without the express permission of the party providing the information. Such a guarantee of party-mediator confidentiality permits the relevant party to speak freely and frankly to the mediator as to the facts of the dispute (from that party’s perspective) and the prospects and potential terms of a proposed settlement (again from that party’s perspective). Such basic information, obtained by the mediator from each party in turn, but always subject to party confidentiality, enables a mediator to obtain an independent perspective on - or “helicopter view” of - the dispute.
A judge, arbitrator or adjudicator equally has an independent perspective, or “helicopter view” of a dispute. In the case of a judge, arbitrator or adjudicator, however, such perspective is provided by the parties in the hearing of the other - by way of evidence or submissions - and is strictly limited by the applicable law and procedural rules. An adversarial process is designed to eliminate irrelevancy (again as defined by the applicable law and procedural rules) and to isolate issues for independent judgment. The result of an adversarial process upon any issue as isolated must necessarily be binary: that is, someone “wins” and someone “loses”. The final result of an adversarial process, being the cumulation of a series of judgments upon the issues as isolated, can only be the grant or denial of a remedy or remedies sought, again, in accordance with the applicable law.
The independent perspective or “helicopter view” obtained by a mediator in private and confidential discussions with each party is equivalent to, but not the same as, the independent perspective of the judge, arbitrator or adjudicator. The mediator’s perspective is not limited by rules of law or procedure, but only by the extent of the information provided by the parties as evaluated by the mediator and each party working together. The parties commonly have a very different perspective from a judge or adjudicator on what matters might be “relevant” or “irrelevant” to their dispute, and the parties’ proposed resolutions to their dispute may involve matters which, by their nature, cannot be subject to a litigation based remedy. It is for these reasons that a mediator, in confidential discussions with each party, will seek information from each ranging well beyond the “basic information” provided to a judge, adjudicator or arbitrator. A mediation process seeks information not only as to the definition of the dispute between the parties, but also, by way of example, the background of each of the parties (including their financial position and prospects), the formulation and terms of the pre - dispute relationship between them, the practicalities and causation of the breakdown of their relationship by reason of the dispute, and their fears and hopes for the future in the event of a settlement of the dispute, alternatively, in the event that the dispute cannot be settled. It is not at all uncommon for the causation of a dispute to be found in matters which a lawyer in an adversarial process would properly consider “irrelevant”, and for a resolution to the dispute to be found by the parties themselves upon the mediator assisting their communications on such matters.
In addition, the function and powers of a mediator are entirely different from those of a judge, arbitrator or adjudicator. The function of a litigation based assessor is to adjudge, award and provide the mechanism for enforcement of such award. The function of a mediator is only to assist the parties to a resolution of their dispute as agreed between themselves. A mediator has no power to award, even less to enforce, any kind of remedy. Early communication by a mediator to each of the parties of this fundamental difference is one key to establishing a relationship of trust and confidence between the mediator and each of the parties themselves.
The Technology and Construction Court Guide (Section 7) notes that the court “will provide encouragement” to the parties to use alternative dispute resolution (“ADR”) and will, whenever appropriate, “facilitate the use of such procedure”. The Guide defines ADR as taking the form “of inter-party negotiations or a mediation conducted by a neutral mediator”. The Practice Direction on Pre-Action Conduct and Protocols provides that, pre-litigation, the parties “should consider if negotiation or ADR might enable settlement without commencing proceedings” and places a continuing duty upon parties to consider the possibility of settling at all times, including after proceedings have started. In the event that proceedings are issued, the Practice Direction notes that the court may require evidence from the parties that ADR was considered, and that silence in response to an invitation to participate or a refusal to participate in ADR may be considered unreasonable and could lead to the court ordering the defaulting party to pay additional court costs. Paragraph 3.1.2 of the Pre-Action Protocol for Construction and Engineering Disputes (2nd edition) states that one of its objectives is to ‘make appropriate attempts to resolve the matter without starting proceedings and, in particular, to consider the use of an appropriate form of ADR in order to do so.’ Parties are expected to hold a Pre-Action Meeting as part of the Protocol, which itself can ‘take the form of an ADR process such as mediation.’ (para 9.3)
Construction disputes of a significant size are commonly subject to mediation. Such conduct on behalf of the parties tends to arise not only by reason of potential court sanctions in the event that ADR is not properly addressed, but also by reason of a recognition on the part of each party (or their advisers) that a successful mediation and negotiated settlement can often be the best outcome to the dispute. In this context, “best outcome” can be defined not only in terms of available remedy, but also in terms of cost and the absence of significant delay before resolution. Construction disputes are often multi-party, the origins of the dispute can often be found in the pre-dispute personal relationships between the parties rather than in the context of legal “relevancies”, and an agreed settlement is almost invariably more practical, more flexible and wider-ranging than the strict remedies available within the applicable legal system.
Dr. Tim Sampson has previously pointed out that there is a distinct tension between the professed court approval of ADR and the increasing use of the adjudication process. It is the case that the tactic of “ambush adjudication” and the strict time limits applicable within the adjudication process tend against the relaxed use of mediation as an ADR tool in such disputes. Nevertheless, the proposed solution, namely that an adjudicator or arbitrator could first act as mediator, and thereafter, in default of settlement, revert to his traditional role and the making of a judgment and award, constitutes a misunderstanding of the constituent parts of the mediation process and the fundamental role and skills of a mediator. Parties presented with a neutral mediator who might, in due course, become a neutral judge would have to carefully evaluate with their advisers issues of confidentiality and privilege in relation to the provision of information. The mediator/potential adjudicator would have to do precisely the same in relation to the receipt and re-transmission of information to the other party. The prospect of building an early relationship of trust and confidence between each party and the mediator, and thereafter between the parties themselves with the assistance of a mediator, would be destroyed. Instead of the mediation constituting an informal process concentrated on the outcome of dispute resolution by agreement, it would inevitably descend into a tactical game designed to find and exploit advantage for subsequent use in the adjudication or arbitration, and subsequent influence of the adjudicator’s independent judgment. Aside from these issues, the present problems surrounding the use of mediation within a construction adjudication process do not demand the invention of a new “mediator/adjudicator” role.
Mediation is an inherently flexible process. All that it requires is the agreement of the parties to the mediation process, a suite of rooms (two will do at a push), a mediator, and the attendance of the parties at the mediation itself. A mediation can, if necessary, be organised within 24 hours. Although pre-mediation assistance is always valued, a mediator does not need “Mediation Statements” (often phrased as “Skeleton Arguments”) from each party, nor bundles and bundles of documents, nor costs schedules, nor any of the paper paraphernalia properly required by an adversarial process. The mediator’s skill and concern is the re-building of a relationship of sufficient trust and confidence between the parties to enable the parties themselves to arrive at an agreed compromise of their dispute. Such process, although it may be informed by all sorts of documents that the parties may wish to produce before or in the course of the mediation, relies more on personal inter-action than strict legal proof. In any case, much of this material will already be available in electronic format as submissions to the adjudicator.
In recent King’s College, London research into mediation in construction, it was reported that ‘Where mediation led to a settlement, the respondents reported their belief that the process had led to significant savings, in comparison with the cost of going onwards to a conventional trial. Even where the mediation was unsuccessful, few respondents thought it to have been a waste of time or money; many regarded it as a positive experience.’ (Mediating Construction Disputes: An Evaluation of Existing Practice (King’s College, London, 2010), p2)
Accordingly, whatever formal process may have been adopted by the parties to the dispute - whether litigation, arbitration or adjudication - there is always room for mediation if the parties and their advisers so desire it. Whether they choose to do so will depend upon the facts of the dispute, the tactics of the advisers and the parties’ willingness to submit themselves to the difficult process - often more difficult for the parties themselves than being the passive recipient of a judgment - of seeking an agreed resolution. In construction disputes particularly, notwithstanding the availability and procedural limits of the adjudication process, an agreed resolution by way of mediation still tends to provide the “best outcome” for the parties.
Clive Blackwood / 13th Mar 2018
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