Mediation is usually a voluntary process. Parties agree that they will meet together at a time chosen by them with an agreed neutral mediator facilitating the discussion. That agreement to mediate shows willingness on both sides to settle differences.

A consultation has recently been launched on a proposed Mediation (Scotland) Bill. The proposal does not suggest mandatory mediation but instead proposes that when a case first comes to court, a duty mediator should be appointed who will meet with the parties. The point of that initial meeting is to float the idea of mediation. In theory at least this will increase the awareness of mediation and (potentially) the use of it to resolve disputes.

A criticism of this approach is that it removes an element of choice from the process. Arguably, choice is critical to setting the right mood for commercial negotiation. Choice includes whether to mediate at all, the appropriate mediator for the dispute and when to hold the mediation.

Why mediate?

Mediation is an extremely flexible process where the mediator acts as a facilitator to negotiations between parties. The actual format of mediation is usually decided on the day but can involve group wide sessions, break-out sessions with each party separately and the mediator shuttling backwards and forwards between each party. The process can be adapted on that day to overcome difficult legal and factual points, relationships and personalities or lack of engagement.

Parties usually set out their position in advance in position papers. These can highlight the perceived strengths of a case but should also show willingness to compromise. The whole process should not be used as an opportunity to rehash legal arguments or make legal submissions. If either party adopts that approach, the mediation is likely to be a waste of time. The point is to see is a commercial compromise can be reached.

The role of the mediator is not to be a judge on the dispute but to facilitate the negotiating process. They can act as a "voice of reason" and test the positions of the parties but should stop short of agreeing or disagreeing with that position.

One major advantage is that it can lead to a creative, forward looking solution. This is something that a court cannot do. A court will decide on the factual merits, relevant law and applicable legal remedies. In intellectual property disputes a court action usually results in an award of damages, an injunction/interdict preventing continuing infringement and an award of costs which will, in part, compensate the successful party for the costs of the court action. The court can also order the judgement to be published.

At mediation, parties can explore if and how they could work together in the future as part of any settlement. For example, they could agree on the terms of a new trading relationship, explore coexistence or licence agreements to allow continuing use of a brand, patent or design on agreed terms. These more creative solutions can result in a forward looking, happier and more lucrative arrangement for the parties.

The whole process is confidential and a party cannot rely on any concessions made during the mediation in later court proceedings. Parties must sign a non-disclosure agreement in advance. If the mediation fails, then parties can continue with the court action and, in some cases, attempt to mediate at a later stage if appropriate. Ultimately there is little to lose by engaging in the process.

Is a court initiated process needed?

Mediation takes willingness on the part of both parties to come to the table and meaningfully discuss the dispute and how to resolve it. Whilst the current proposal is not for mandatory mediation, it does involve an element of court involvement in suggesting and initiating a mediation. This does remove some choice from the process. Choice of when, where and how to mediate is critical in achieving the right mentality to reach a compromise.

At present, some judges do suggest to parties that mediation might be a good way to resolve a dispute. There are specific rules in relation to certain lower value disputes and family disputes in Scotland. The English courts may punish parties by way of adverse costs if they fail without good reason to engage with alternative dispute resolution. However, early court engagement may risk bringing parties to the table at the wrong time or for the wrong reasons.

In some cases, it may be appropriate to mediate early but in many cases, it is better to wait until positions are better formulated - particularly because parties can be entrenched in their positions at the beginning.

Whilst waiting will incur legal expense, it may not be until further down the line that a party may fully appreciate the strengths and weaknesses of their own and the other side's case. Knowledge of potential strengths and weaknesses in a case is important in reaching a compromise as it highlights the risks of continuing with the court action.

Psychologically, agreement on when to mediate shows willingness on both sides to engage in a discussion with a view to settlement. If that choice is interfered with then a key benefit of the process is potentially lost. There is a danger that if mediation is only considered at the outset, where it is treated as a box ticking exercise, then parties lose sight of it at later stages. On that basis, it is preferable that mediation remains a flexible process with the freedom to choose when, where and how the mediation is to be run and indeed whether to attempt it at all.