Before a Claim

An increasing number of dispute resolution clauses in contracts and standard terms and conditions provide for mediation.

A typical clause will provide as follows:

"Any dispute or difference between the parties will be referred to mediation in accordance with the NIPC Mediation Rules by a mediator agreed by the parties or, in default of agreement within 14 days appointed by the Managing Director of NIPC Ltd."

Often the clause will contain a second paragraph referring the dispute to arbitration if it is not resolved by mediation. NIPC Ltd. provides an arbitration service for that purpose.

There is, of course, nothing to stop parties to a dispute from referring their dispute to mediation even without such an agreement. That might happen after a letter before claim has been sent. Para 2.2 (2) of Annex A of Practice Direction - Pre-Action Conduct requires a letter before claim to set out the form of alternative dispute resolution ("ADR") (if any) that the claimant considers to be most suitable and invite the other side to agree to this. There is a similar requirement in the Code of Practice for Pre-Action Conduct in Intellectual Property Disputes. Para 6.1 (2) of the Practice Direction imposes a duty on all parties to consider mediation and other forms of ADR and the courts can penalize failure to do so.

Rule 4 (1) of the NIPC Mediation Rules provides that a mediation begins with the appointment of a mediator. If, as in the example, the mediation agreement provides for the appointment of a mediator those provisions prevail. Otherwise rule 4 (4) requires a party to serve a notice on the other party in accordance with rule 4 (5). The notice nominates at least one mediator and allows the other side 28 days in which to concur. If it fails to do so within that time either party may ask NIPC Ltd. to appoint a mediator under rule 4 (8).

A request to the company under rule 4 (8) must be supported by a witness statement exhibiting correspondence of the parties' attempts to agree the appointment (Condition 3 (1) of NIPC Mediation's Terms of Business). It must also be accompanied by a £50 appointment's fee.

Once the mediator is appointed it will be up to him or her to decide how it is to proceed. If he or she calls a meeting the company will make all necessary arrangements. The mediation will continue until the dispute is resolved, one or other party walks away or the mediator decides that there is no real prospect of settlement.