Mediation is often confused with arbitration. They have similarities, including that both are overseen by third-party neutrals that do not have financial stakes in the outcomes. The key difference is that while arbitration results in the neutral evaluating the outcome (which typically is binding, but by agreement can be non-binding), while in mediation the third-party neutral uses facilitative strategies to assist the parties in attempting to reach their own resolution. Why use mediation? Principally, because it works. Not always, but for commercial “money” disputes at a high percentage.
One of the reasons why it works is that the mediation process provides a platform for the parties to engage in discussions in a confidential setting for purposes of achieving a result that, with the assistance of the mediator, the parties craft for themselves. This keeps control over the outcome, and the costs of achieving it, within the parties’ control rather than in the control of a judge or jury. The parties and their counsel know more about their case issues and positions than any judge or jury could ever hope to achieve within the timeframe of a legal proceeding and are accordingly much better positioned to evaluate and determine the dispute’s resolution.
For construction disputes, mediations are often contractually required. Even so, or even when not, there are a variety of strategic evaluations that play into the mediation decision, including at what stage of dispute or proceedings to conduct the mediation; but more importantly whom to use as your mediator. Do you want a construction expert? A retired judge? Other? All those options provide various pros and cons; the keys to which include who, when and what process suggests the best means, or at least perceived chances, of resolving your dispute at the earliest opportunity before expenses or mindsets override the opportunity for resolution.
Certainly, mediation is not a panacea for resolving every dispute; but it is a tool for every manager’s business resolution toolbox.