Posts tagged: mediation


Much of what we do is about persuading – whether in a mediation, before a Tribunal or negotiating.  The key to successful persuasion is as follows:

Reciprocity: make the other side indebted to you – be a first mover and give something unexpected and, so far as possible personalised: “You have this room, it’s better and I have stocked it with my wife’s cookies”

Scarcity: don’t just emphasise the benefits of your position, what are its unique features and what will they lose if it is not accepted: “I am authorised to give you a special price not available to anyone else.  It is only available today.”

Authority: people are more generous to those in authority – an ethical, no-cost endorsement is valuable currency: Could your receptionist say “You are here to see Mr Ashford – we like him, always the gentleman and clients love him.”

Consistency: a big step often follows a small step – invite a small, voluntary and public step and build from there: “Could you see yourself paying a £1 to settle this … [establishes the direction of flow of money] … Could you see yourself paying £…”

Liking: people like to deal with people who they perceive as similar – pay compliments and co-operate towards mutual goals: from a main contractor to a sub-contractor “That was a very clever argument – how can we use that to get more from the employer”

Consensus: if similar people in the same position have acted in a particular way others are likely to follow – “The rest of the team have accepted a pay freeze, will you do the same”

Non-sensical dispute resolution clause?

It happens all too often.  In Sulamerica CIA Nacional De Seguros SA v Enesa Engenharia SA [2012]  the contract provided, by clause 7, that the contract was “governed exclusively by the laws of Brazil” and that any disputes were “subject to the exclusive jurisdiction of the courts of Brazil”.   Clause 11 provided for mediation and that if mediation was not successful or either party refused to participate then the dispute was to be referred to arbitration.

Clause 12 dealt with the arbitration and provided  that in the event that the parties failed to agree through mediation the dispute be referred to arbitration with a London seat.  The issue arose, unsurprisingly, whether a substantive dispute was to be litigated in the Courts of Brazil or arbitrated in London.   The Court held that the arbitration clause was governed by English law on the basis on a London seat – an unsurprising result in light of CvD.  Furthermore, insofar as the mediation provision was an integral part of the agreement to arbitrate it was governed by the same law.  The arbitration clause was an agreement to arbitrate whenever there was a failure to settle by mediation. Entering into mediation proceedings was not a condition precedent to the existence of a binding arbitration agreement.

Clause 12 obliged all disputes to be referred to arbitration notwithstanding that this deprived clause 7 of much of its utility. Clause 7 remained of some use as it enabled the courts of Brazil to declare the arbitrable nature of a dispute, to compel arbitration, to declare the validity of the award, to enforce the award or to adjudicate on the merits if the parties agreed not to arbitrate.  No other court could adjudicate on the merits.  Viewed in this way, apparently, clause 7 and clause 12 could live alongside each other (whether they did so happily is another matter!).

Cross Border Mediation – Changes to Rules and New Legislation

The EU Mediation Directive, which seeks to promote the use of mediation in cross-border disputes, has been partially implemented in England and Wales in advance of the deadline for total implementation by 21 May 2011 and is a welcome development to encourage and bring uniformity to mediation across Europe.    

The Directive covers five areas:

  1. ensuring the quality of mediation, by encouragement of the development of a voluntary code of conduct and training of mediators (Article 4);
  2. recourse to mediation, by the Courts’ invitation (Article 5);
  3. enforceability of agreements resulting from mediation, with the express consent of the parties to the agreement and provided that the agreement is not contrary to the applicable law of the enforcing state (Article 6);
  4. confidentiality, so that neither the mediator nor the parties can be compelled to give evidence regarding information arising out of or in connection with the mediation (Article 7); and
  5. limitation, so that a party pursuing mediation shall not be adversely effected by the passing of any period of limitation during the mediation process.

The Ministry of Justice considered that the arrangements in England and Wales in respect of mediation already satisfied the requirements of Articles 4 and 5, but that Articles 6, 7 and 8 required further implementation.  Accordingly, the Civil Procedure Rules have been amended.  Part 78 has been amedned to allow enforcement of the content of a written mediation agreement whilst maintaining the confidentiality of the agreement. Consequential amendments were also made to Parts 5, 7, 8, 31 and 32 and Practice Direction 5A. These amendments implemented Article 6 but only partially implemented Article 7. A new Statutory Instrument, the Cross-Border Mediation (EU) Directive Regulations 2011, implementing rules as to the confidentiality of mediation and the suspension of limitation during mediation came into force on 20 May 2011.

The Regulations will only apply to cross-border disputes that start on or after 20 May 2011 and should bring a welcome boost to the use of mediation in cross border disputes.

London remains key arbitration centre

A report published by The City UK demonstrates that arbitration is alive and well in London. A comparison of data from 2007 and 2009 shows that ICC arbitrations with a seat in London increased by 26% whereas LCIA arbitrations increased by a massive 85% and LMAA by a no less credible 66%.  London will need to retain its attractiveness especially with newer centres such as Dubai coming to the fore and other seasoned seats, such as Singapore, picking up work from the expanding Chinese and Indian markets.

At a more domestic level the CIArb appointments increased by 62%.

CEDr mediations were fairly flat and the Panel of Independent Mediators reported a modest rise but ‘other’ mediations reported a massive rise of over 200%.  This probably reflects maturity in the case of CEDr and finite capacity at PIM allowing new institutions to enter the market.

Mediation Tip: Gain Credibility & Respect

A couple of recent mediations have highlighted a (poor) tactic.  At some stage financial offers usually need to be made – typically by a Defendant (if there are proceedings).

Defendants will often have submitted a mediation position statement / brief and spoken during the opening session of how hopeless the case is.  To reinforce that view they will want to make a low offer (far below the likely settlement spectrum). 

Doing so is, I suggest, a poor tactic.  The aim of the negotiation process should be to have a credible position and gain respect.  Offering very low and coming up quickly is not credible nor does it gain respect – indeed the opposite can be the case.

Defendants should make a serious offer on a reasoned and dispassionate basis and then move slowly from there.  Starting too low can be a mistake.  The chance of overbidding (i.e. offering to pay at your first offer more than the Claimant would accept) is very rare.

Be bold – it will work!

Mediation Tip: Sometimes the other party is just more powerful than you

The most any method of negotiation can do is to meet two objectives: first, to protect you against making an agreement you should reject and second, to help you make the most of the assets you do have so that any agreement you reach will satisfy your interests as well as possible.

To protect yourself, develop and know your WATNA / BATNA: Worst / Best Alternative to a Negotiated Agreement: for the reason you negotiate is to produce something better than the results you can obtain without negotiating. The result you can obtain without negotiating is between your WATNA and your BATNA.

The better your ATNAs, the greater your power so it’s essential to know your ATNAs and take time to make sure it’s as strong as it could be. The same will hold true for the other party. There are three steps to developing your ATNA:

  • Invent a list of actions you might take if no agreement is reached
  • Improve some of the more promising ideas and convert them into practical alternatives
  • Select, tentatively, the one alternative that seems best or reasonable worst case and value it as best you can

London School of Mediation – Graduates of Course 60

Congratualtions to all those who graduated from Course 60: Andy, Angie, Chris, Helen, John, Jason, Julie, Lynne, Phil and Steve (I hope I have got you all).  Your were (and remain) a great bunch – keep in touch. Many thanks to Jonathan, Judith, and Tim for such a brilliant course and to the assessors Sir Peter, John and Steve. You all made it such a ball! To Lawrence and Nick, I am sure your time will come in September – Keep at it.

Mediation Tip: Insist on Using Objective Criteria

Principled negotiations are not battles of will. There is no winner and you don’t need to push your position until the other backs down. The goal is to “produce wise agreements amicably and efficiently”.

The use of objective criteria helps removes the emotion from the discussion and allows both parties to use reason and logic. You may have to develop objective criteria and there are a number of ways that can be done, from “traditional practices”, to “market value” to “what a court would decide”. Objective criteria need to be independent of each side’s will.”

Once objective criteria have been developed, they need to be discussed with the other side:

  • Frame each issue as a joint search for objective criteria.
  • Use reason and be open to reason.
  • Never yield to pressure, only to principle.

The impending trial and mediation

Settlement is often left too late.  Lawyers can always justify waiting just that little bit longer to see if something comes out in disclosure or wait to see what the witnesses or experts will say.  This can lead to examples of cases literally settling at the door of the court and often the delay does not enable a cheaper settlement.  I had an experience earlier this year of a party refusing to mediate pre-action and then paying, in effect, 100% of the amount claimed with my client foregoing only some of the interest.  Substantially better terms would have been available months earlier but my opponent, having left it so late, had no costs protection and faced the prospect of paying for the trial costs when we were acting on a CFA had no negotiating position.

 In a salutory warning to the profession Coulson J said in Elliott Group v GECC [2010] that: “I am not sure that it could ever be a good ground for an adjournment of a fixed date for trial to say that the proposed adjournment would allow the parties an opportunity to settle the case … once started, court proceedings have to be brought to a conclusion … Every day is a new opportunity for the parties involved in civil litigation to resolve their differences …”  

The clear message is to settle and settle early.

Mediation Tip: Sometimes the other party just won’t play

In a principled negotiation, you don’t want to play games with the other party and you don’t want them playing games with you.

  • Concentrate on the merits: talk about interests, options and criteria
  • Focus on what the other party may do: try and identify the other party’s interests and the principles underlying their position
  • Focus on what a third party can do: bring in a third party to assist if steps 1 and 2 aren’t successful

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