The mediation-determination process (or ‘Med-Det’) is a hybrid dispute resolution process that combines the benefits of mediation and arbitration (and, arguably, adjudication), including: procedural flexibility, confidentiality, choice of decision maker, ease of access, finality, and enforceability of outcome.
The primary objective of Med-Det is the informed good faith negotiation and settlement of a dispute by the parties, with the assistance and efficacy of a third-party mediator-cum-decision maker.
The Med-Det process is voluntary and flexible (subject of course to any specific contractual requirements). This means the rules can be, effectively, whatever the parties decide. In our experience, with its likely short timetable combined with relatively detailed exchange of documents, the Med-Det process can be akin to an adjudication process (under the Construction Contracts Act 2002); with the important caveat that the decision maker meets with parties and, depending on attendees, has an opportunity to test the evidence.
Typically, the process will involve:
- agreeing the terms of the Med-Arb agreement (including process, timetable and finality of any decision);
- an exchange of documents (often termed ‘position papers’ or ‘submission case’), including legal submissions, evidence and a bundle of documents; and
- attendance at a mediation by the parties, some or all witnesses, and an agreed third party with a dual role: as mediator; and, if resolution is not achieved, as the decision maker.
Similar to adjudication, the Med-Det process is a lower cost and more efficient option than arbitration or traditional litigation proceedings. Unlike adjudication, the Med-Det process provides some level of evidence testing in front of the decision maker (albeit limited in a mediation context as compared to an arbitral hearing where witnesses provide evidence in chief and are subject to cross examination) which is arguably its greatest attribute. That being said, the presence of a decision maker can result in the loss of some of the benefits of a mediation – the discussion is likely to be more strategic, with the aim of influencing the decision-maker in the event that no resolution is reached; as opposed to an information gathering exercise for both parties used to inform and facilitate settlement discussions conducted on a purely without prejudice basis (incapable of influencing an independent dispute resolution process). The parties could also be less likely to compromise on their respective positions due to the ‘safety net’ of a decision if a resolution is not reached.
To preserve the benefits of the mediation component of this process, it is important for parties to find a balance between the traditional ‘mediation’ procedure and the traditional ‘hearing’ procedure. For example, the parties may agree:
- The decision maker must disregard (and not take any notes on) any clearly signalled without prejudice discussions during the course of the mediation;
- The decision maker must not participate in caucusing to preserve independence and avoid any perception of bias or breach of natural justice due to inability to respond; and
- The mediation process includes a set structure around the presenting and testing of witness evidence.
In addition to possible procedure, some key considerations for parties contemplating Med-Det include:
- Desired outcome – what the parties want to achieve, and whether a decision in the event settlement cannot be achieved based on the information available really is preferable;
- The dispute –whether the nature and quantum (and overall importance) of the dispute warrants the cost and time efficiencies;
- Risk – the degree of risk (strength of position and precedent value of decision) and whether Med-Det is the appropriate forum, or whether a traditional mediation, adjudication or arbitration is better suited;
- Parties – the parties and their legal counsel and what their likely approach to the Med-Det forum (i.e. will they really try to reach resolution, or will they use it as an opportunity to get a decision and control that outcome?).
- The decision maker and their ability to ‘control the room’;
- The ultimate suitability of the dispute to a flexible process like Med-Det; and
- Whether a Med-Det clause could be drafted into a contract and discussed as a dispute resolution at the outset of a project, rather than waiting for the dispute to unfold.
The Med-Det process is a flexible process that can be catered to particular disputes. While the uptake on this process generally remains to be seen, the Med-Det process has the potential to be a pragmatic dispute resolution option, particular for less complex claims.
This article was co-authored by Emily Woods, a solicitor in our Construction and Infrastructure team.
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