What is mediation
Mediation is a type of alternative dispute resolution in which parties voluntarily endeavour to resolve their dispute with the help of a third party, i.e. a mediator. It is a confidential negotiation process that usually takes no more than a few weeks. The discussions between the mediator and the parties separately are also confidential, which significantly increases the chances of success. Mediation is voluntary and non-binding. Any party or the mediator can terminate the mediation if they do not expect it to be successful. If the parties cannot reach a solution, the dispute can still be settled in arbitration or court proceedings. Even if arbitration or court proceedings are pending, the parties can decide to try to solve their dispute through mediation. The arbitration or court proceedings will then be suspended.
What is business mediation?
Business mediation focuses on disputes between and within companies. Business mediation is widely defined and accepted as Mediation in disputes between companies and company divisions and in disputes between other professional parties, including shareholder disputes and contractual conflicts. (See E. Schutte, Mediation in ondernemings(rechtelijke) geschillen – in Dutch). Business mediation must be distinguished from family mediation and labour law mediation. The table below summarises some differences between business and non-business mediation.
| Characteristic | Business mediation | Non-business mediation |
|---|---|---|
| Type of conflict | Professional, contractual, organisational | Personal, familial, social |
| Parties | Legal entities, entrepreneurs, directors (often assisted by advisors) | Individuals, families, citizens, governments |
| Mediator | Professional, legal/business profile | Social, relational, and communicative profile |
| Mediation style | Evaluative / facilitating | Facilitating |
| Goal | Professional solution, damage control | Relationship repair, balanced agreements |
| Emotion | Secondarily, however, emotions will need to be regulated. | Primary focus |
Why business mediation?
Companies choose mediation to resolve business disputes because of the following advantages:
- Confidentiality: Protecting sensitive business information, such as trade secrets and intellectual property, and protecting reputation.
- Speed: Mediation is usually much faster than court proceedings and even faster than arbitration. This is a significant advantage, especially when time-sensitive business activities are at stake.
- Control over the outcome: In mediation, the parties retain control over the outcome of the proceedings. This is different from court proceedings or arbitration, where a third party decides on a claim.
- Preservation of the relationships: If it is vital to maintain a good business relationship with the other party, for example, because there are few other parties with the expertise or because it concerns a long-term contract, mediation is the preferred dispute resolution method. Court proceedings or arbitration are generally not conducive to the relationship.
- Lower costs: Business mediation is generally very cost-effective due to the shorter duration of the proceedings and limited exchange of written documents.
- Customisation and creativity. Customisation is desirable in complex business disputes. In addition, mediation offers the opportunity to propose creative, “out-of-the-box” solutions.
What is a mediation clause?
A mediation clause is a contractual provision inserted into agreements, contracts, or legal documents that stipulates that, in the event of a dispute, the parties involved must attempt mediation before pursuing formal legal action. Mediation clauses can be tailored to meet the specific needs and preferences of the parties, including the choice of mediator, mediation procedures, and location. A mediation clause is often combined with an arbitration clause, known as a multi-tier clause.
The recommended NAI mediation clause reads as follows:
“The parties will first attempt to resolve any dispute that arises or may arise in connection with this agreement or any further agreements that may result from it through mediation in accordance with the Mediation Rules of the Netherlands Arbitration Institute as in force on the date of signing this agreement and will only commence arbitration or legal proceedings if mediation has failed to lead to a solution, without prejudice to the parties’ right to take measures in arbitration or court proceedings to preserve their rights.”
The recommended NAI mediation clause followed by NAI arbitration reads as follows:
“The parties will first attempt to resolve any dispute that arises or may arise from this agreement or from further agreements that may result from it through mediation in accordance with the Mediation Rules of the Netherlands Arbitration Institute as they read on the date of this agreement and will only commence arbitration or legal proceedings if mediation has not led to a solution, without prejudice to the parties’ right to take measures in arbitration or court proceedings to preserve their rights. If mediation does not lead to a comprehensive solution or if the parties jointly decide not to pursue mediation, these disputes or the unresolved parts thereof will be settled in accordance with the Arbitration Rules of the Netherlands Arbitration Institute as in force on the date of signing this agreement.”
Draft a model mediation clause