ADR is a term that is sometimes taken to refer to mediation and sometimes to arbitration, conciliation and a number of other different processes.
The term Alternative Dispute Resolution seems to suggest that it is an alternative to something else, court for example, and doesn’t make it clear that there are a range of equally valid ways of resolving disputes. Mediation is simply one of a wide range of options available. Many court cases settle before trial as going to court is extremely expensive and time-consuming.
In an article written in 2015 by John Sturrock, a Scottish commercial mediator, he reported that the estimated costs of litigation to United Kingdom businesses was “over £30bn a year, takes up to 20% of leadership time and results in the loss of 370 million working days”. Costs are often not fully recovered, even by the winning party. Similar statistics do not appear to be freely available for South Africa but the cost of litigation locally is likely to be on a par with that overseas.
Litigation is also detrimental to business performance and company valuation in ways other than financial, such as lost opportunities, time not spent pursuing profitable work, poorer service performance, damage to relationships and reputation, staff demotivation, increased uncertainty, and loss of confidence.
While litigation is inevitable, the sooner that it can be dealt with, the better, and mediation is an effective way of dealing with conflict, in a time- and cost-effective manner.
Mediation can also be used as part of an overall dispute resolution strategy. Choosing to mediate does not mean ruling litigation out as an option. Even if the main issue is not resolved through mediation, this can be used as a means of limiting or resolving issues that are secondary to the main issue, which can then be decided by a court.
Mediation takes place in confidence and on a without prejudice basis. If mediation does not produce an agreed outcome, the parties can proceed to litigation knowing that the information disclosed in the mediation process cannot be used as evidence in future litigation, or in any other process.
This article has been written by Clea Rawlins, an Associate in the Commercial Department of Garlicke & Bousfield Inc
NOTE: This information should not be regarded as legal advice and is merely provided for information purposes on various aspects of mediation.