When to mediate

When Australian Arbitration is considering whether to advise the use of either mediation or conciliation, clients are asked to work through the following questions:

• Do all the parties actually want to save the mutual value stored in the immediate contractual situation — sometimes the parties cannot see past their short-term anger and need an outsider to set out the economic case for settling?

• If they cannot see the short-term advantage in settling, will either or both lose out if future contract opportunities are lost — this may not simply be confined to future contracts between the immediate parties, because others in their profession or trade may become more wary of contracting with them if they are seen to be acting unreasonably?

• Are there one or more strategies that will enable the parties to take some or all of the mutual value if a version of the immediate contract is performed?

• In order to make any of these strategies workable, do the parties retain enough mutual goodwill so that each will be prepared to give what the other wants?

• Does either party hold the “power” to make or break the contract?

• If so, is there anything in the history of their relationship that will help (previous settlements represent a constructive precedent) or hinder (one party was less than honest when inducing the other to enter into the contract)?

The point of a highly informal series of meetings is to break the ice between the parties and to show them how much their mutual self-interest should lead them to settle their differences.

It is a case of building on the trust that they still have and showing them what will be lost if they continue to fight.

Experience shows that it usually takes an outsider to cut through the veneer of anger and damaged pride that often stands in the way of a settlement.