Mediation as an alternative to litigation
How does mediation differ from arbitration and litigation, and what are the benefits?
Most people are familiar with the general concept of litigation (court cases), whether they have personally experienced the process or simply seen it on television or other media. Litigation essentially involves going to court in order to resolve a dispute. If the matter is defended or opposed, litigation can become costly and it can take a long time to be finalised.
Arbitration and mediation are both forms of alternative dispute resolution, but they are not the same. Similar to litigation and/or the court process, arbitration involves a neutral third person chosen by the parties to makes a final and binding decision (subject to any successful appeal) regarding the dispute between the parties. Arbitration is, however, usually quicker, more informal and more cost effective than court litigation. Arbitration is often of a less voluntary nature than mediation, and many agreements contain an arbitration clause which compels the parties to the agreement to resolve any disputes between them by means of arbitration.
Mediation can be even quicker and more cost effective than arbitration (and litigation). This process also involves a neutral third person chosen by the parties, but unlike arbitration (and litigation) the mediator does not make any decision regarding the dispute between the parties. The mediator instead assists the parties in a confidential manner (as explained more fully below) to identify the true issues or dispute(s) between them, explore areas of compromise, and hopefully find a mutually beneficial solution. Mediation is completely voluntary, in that a party can withdraw from the process at any time prior to the signing of a written settlement agreement, even where there is a prior agreement between parties or court rule requiring them to attempt to resolve their dispute(s) via mediation; it is nonetheless in a party’s best interest to genuinely participate in any mediation process, as he/she has nothing to lose by using the time productively. One of the main benefits of mediation is that relationships (whether of a business or personal nature) are often better preserved than becoming embroiled in a confrontational process of litigation or arbitration.
A brief overview of the mediation process and the type of matters that can be mediated
Mediation can take place at any time before judgement, even before the commencement of litigation. Once the parties to a dispute agree to mediation, they will proceed to jointly select and appoint a mediator. If the parties are unable to reach an agreement in the last-mentioned regard, a suitable third party (like the Chairman of the Legal Practice Council) can select a mediator after being requested to do so by the parties. A mediator does not necessarily have to be a legal practitioner, but a lot of mediators are attorneys or advocates with experience in the legal field which is the subject matter of the parties’ dispute.
The mediator will subsequently arrange a place and time for the mediation, and he or she may also require the parties to sign a pre-mediation agreement. The latter agreement covers topics such as whether the parties would like their respective legal representatives to be present during the mediation, as well as the mediator’s fees. The parties are usually jointly liable for the fees of the mediator, and he or she may require payment of a deposit. There are different styles of mediation, but some mediators will typically start the mediation with a joint meeting during which the parties will be given a brief opportunity to explain their respective views of the dispute.
The mediation session will then be split up into so-called side meetings, which entails each party (together with his or her attorney, where applicable) siting in separate rooms and with the mediator going back and forth between the parties. The parties can then confidentially disclose further information to the mediator, as the mediator is only allowed to disclose such information to the other party as is specifically allowed by the disclosing party. If a settlement is reached, it will be reduced to writing and signed by the parties before having the settlement agreement made an order of court. If the parties are unable to settle the dispute, they can continue with litigation or arbitration, if they wish. Any fact which is not contained in a signed settlement agreement remains completely confidential and cannot be disclosed to anyone else, including any court.
Almost any type of dispute can be referred to mediation, but certain types of matters will typically not be suitable for mediation. In matters where no real dispute exists, such as simple debt collections where the debtors do not give any excuse for non-payment and/or do not make any payment arrangements, the creditor will likely have no choice but to approach the court. Certain matters can only be finalised via the courts, for instance having a copy of a will declared as the deceased’s last will, or obtaining an order of divorce after the parties have reached a settlement (which can be reached by means of mediation). Mediation will also not be an option where the one party refuses to refer the matter to mediation.
The increasing importance of mediation
Uniform Rule 41A of the Uniform Rules of the High Courts of South Africa, which came into effect on 9 March 2020, essentially compels parties to consider mediation. When serving a High Court summons, application, notice of intention to defend or opposition, as the case may be, the relevant party has to disclose whether he or she is willing to refer the matter to mediation. If a party refuses to refer a matter to mediation without any good reason, the court may grant an adverse costs order against such party at the time of or after granting the judgment that deals with the main dispute between the parties. Although couched in different terms, the Magistrate’s Court Rules also provide for mediation. The Covid-19 pandemic resulted in a partial closure of our country’s courts (at least during lockdown levels 4 and 5), with only urgent matters and/or those already set down for hearing being heard. The aforesaid closure may cause backlogs at the courts for months to come. Now is therefore the perfect time to consider mediation.
For further information on this topic or assistance by our LSSA-accredited mediator, send an email to tiaan@vaughanulyate.co.za or contact Tiaan de Jager on 079 891 9904 or 021 914 1686.
Disclaimer: This article only aims to give general information and does not constitute legal advice. No liability is accepted for any error or omission, nor for any loss or damage arising from reliance on any information contained herein. Always contact your attorney for specific and detailed advice.