It is universally recognised that mediation offers certain inherent advantages to disputants, for instance:

Time and cost benefits for parties

A mediation is less time consuming than a regular litigation. Determination of a dispute by the  court may take years, as it goes through  multiple tiers of the judicial process. Further, the costs associated with mediation would be far less by comparison.

Parties are invested in the process

As a consensual process, a mediation depends on the parties’ ability and willingness to move from their initially asserted positions, in a spirit of ‘give and take’. Parties are encouraged to be more empathetic and open to understanding the counter point.

Parties control the process

The efficacy of mediation is often directly proportional to the control the parties have over an eventual resolution. This means that the parties have the flexibility to evolve hitherto unexplored and innovative solutions, with the aid of the mediator.

Confidentiality of proceedings

Court hearings are generally public, while mediation is a confidential process. The endeavour is to encourage parties to participate in open discussions without compromising their stated positions and seek mutually acceptable solutions.

Higher probability of compliance

Since a successful mediation results in a mutually agreeable solution which is reduced into writing and signed by parties, compliance is generally high. At the same time, a recalcitrant party can be legally compelled to comply with the settlement through execution in court, where necessary.

Importance of mediation in Covid-19 scenario and beyond

In the present Covid-19 situation, business and industry all across the world has been forced to reckon with unprecedented (hopefully short term) challenges such as low demand and consumption, piling up of inventories, logistic and supply chain disruptions, maintenance of credit facilities, delayed performance of contracts and lengthening of payment cycles, to state a few. In such circumstances, businesses are dependent, and will increasingly depend, upon the continuous and unobstructed performance of commercial contracts involving supply of goods and services, which may need to be re-calibrated to reflect current realities. This will necessitate a greater acknowledgement (and indeed acceptance) of the mutual interdependence of markets and  recognition of practical issues affecting performance of contracts, that transcend national and territorial lines.

It is also likely that many businesses will find themselves on both sides of the spectrum i.e. they will be aggrieved or disadvantaged by non-performance of contracts by counter parties in some cases, while also incurring the risk of contractual defaults in certain other cases. In this scenario, the advantages of a mediated settlement where contracting parties recognise and take into account both the fine letter of the law/contract as well as the practical challenges of complying with the same, cannot be over-emphasised.

Additionally, businesses will have to remain relevant and competitive in these rapidly changing times by overcoming such operational challenges and strengthening existing commercial relationships, rather than snapping or fraying them. Given the realistic risks of established commercial relationships going sour in case of a litigation, disputants may find it more prudent to settle their disputes through the aegis of a mediator, in case alternative avenues of mutual resolution fail.

Recent trends also indicate that companies are increasingly moving towards achieving more fiscal discipline and efficiency, the emphasis being on prioritising “essential” costs such as  employee salaries, health and sanitation measures, resumption of supply chains etc. over relatively “non-essential” costs  including, for instance, litigation and advertising. The high and recurring costs associated with litigation will discourage disputants who may likely find alternative dispute mechanisms like mediation more attractive in these stressed times.

The current disruption in functioning of courts in India is another key element in this debate which has compounded  the already existing long timelines in judicial adjudication of disputes. Given the inherent uncertainties around court decisions which typically traverse through several rounds of challenges to attain finality, parties may, in the post Covid -19 disrupted scenario, prefer to explore a negotiated settlement through mediation (or other alternative dispute mechanisms) where they are more likely to resolve their disputes amicably and quickly. All of these factors may assume greater significance where complex disputes arise between nationals/entities of more than one country or in respect of trans-border performance of contracts involving the applicability or construction of laws or trade practices of multiple jurisdictions.

The author believes that in the coming days, mediation will become a preferred option for businesses to evolve quicker, more efficient and long lasting solutions enabling them to “get on with life” beyond Covid-19. This will, hopefully, reduce the burden on our Court systems.