Resolving Disputes Without Trial: Mediation, Negotiation and Settlement
A legal dispute does not always have to end in court. Parties may be able to resolve it through alternative dispute resolution (ADR). ADR can include arbitration, but this article focuses on negotiation and mediation - processes in which the parties decide whether to settle and on what terms.
What is negotiation?
Negotiation is the most direct form of dispute resolution. The parties communicate with each other, personally or through their lawyers, to see whether an agreement can be reached without a third party deciding the dispute. A solution may include payment arrangements, compensation, an apology, changes to a contract, confidentiality obligations or an agreed exit from a business or personal relationship.
Negotiation can save time and cost, but parties should understand their rights, evidence and risks before accepting terms. Important claims, future obligations and enforcement issues should not be overlooked.
What is mediation?
Mediation is a structured negotiation assisted by an independent mediator. The mediator does not decide who is right or force either party to settle. Instead, the mediator helps the parties communicate, identify the real issues and explore solutions they may both accept.
Mediation may be useful where parties want privacy, control over the outcome, a flexible solution or a chance to preserve a family, employment or business relationship. It may produce practical outcomes that a court would not ordinarily order, such as instalment payments, revised arrangements, a handover process or an apology.
It may be less suitable where urgent court orders or an authoritative ruling are needed, or where a party is unwilling to participate genuinely.
Are settlement discussions confidential?
Communications genuinely made to settle an existing dispute may be protected by "without prejudice" privilege (s 23 Evidence Act 1893; Mariwu Industrial Co (S) Pte Ltd v Dextra Asia Co Ltd and another [2006] 4 SLR(R) 807 at [24]). This generally prevents concessions made during negotiations from being used against a party if settlement is not reached.
The label is not decisive: an unlabelled communication may still be protected, while marking a letter "without prejudice" does not automatically create protection (Cytec Industries Pte Ltd v APP Chemicals International (Mau) Ltd [2009] 4 SLR(R) 769 at [16]).
Mediation is also generally private, but confidentiality is not absolute. Disclosure may be permitted under the applicable law, mediation agreement or recognised exceptions, including where necessary to establish or enforce a settlement.
When does a settlement become binding?
A settlement may become binding once the parties agree on sufficiently certain terms and objectively intend to be bound. A formal agreement is not always required, although the parties may provide that they will not be bound until a document is signed.
The settlement should be recorded clearly in writing. It should state what each party must do, payment dates, whether claims are released, confidentiality obligations, responsibility for costs and what happens if someone does not comply.
A qualifying mediated settlement may, with all parties' consent and subject to the Mediation Act 2017, be recorded as a court order. Where no proceedings have commenced, an application ordinarily must be made within eight weeks after the agreement is concluded, unless the court allows more time. Where proceedings are already underway, the parties may instead seek a consent judgment or consent order, depending on the case.
Do parties have to consider settlement?
For civil proceedings governed by the Rules of Court 2021, parties must consider amicable resolution before and during proceedings. Unless there are reasonable grounds not to do so, a party should make a written offer before commencing an action, and an offer should not be rejected without reasonable grounds. The court may consider the parties' conduct concerning settlement and mediation when deciding costs.
What should you do?
Gather the important documents, understand the main facts, identify your preferred outcome and decide what compromises may be acceptable. Anyone attending for a company or organisation should have authority to negotiate and conclude a settlement. Legal advice can help ensure that the proposed terms protect your interests and can be enforced.
Key takeaway
Negotiation and mediation can resolve disputes more quickly, privately and flexibly while allowing the parties to retain control over the outcome. Whether they are suitable will depend on the dispute, its urgency and the willingness of both sides to engage constructively.