Ideasroom

Mediators resolve 80 percent of disputes

Sorting out your disputes with an independent mediator can pay off - the latest survey by Victoria University of Wellington shows 80 percent achieve a result.

Numbering around 1,000 a year, commercial mediations play an important role in the New Zealand economy by resolving disputes, saving time and money for users, supporting commercial relationships and reducing pressure on the court system.

It is a process where commercial parties work together with the assistance of an impartial mediator to address their issues in a problem-solving manner and come to a consensual resolution.

The mediations are carried out by a small group of full-time commercial mediators and a larger group of dispute resolution practitioners who mediate on a part-time basis.

Earlier this year, I conducted the second national survey of commercial mediators. The study provides a vital longitudinal element to the New Zealand Commercial Mediation Study (NZCMS), the country’s first and only comprehensive analysis of this market. The last mediator survey was in 2015 and the 2019 results show important similarities and intriguing differences.

The dominant subject areas for commercial mediation remain contractual disputes, construction, insurance and commercial property.

There is still a large amount of scepticism from mediators regarding support from the legal profession. Many respondents noted the lukewarm support from lawyers and judges in this area. This view contradicts the 2016 NZCMS study of lawyer attitudes to mediation, which found strong support from lawyers, albeit on their own terms.

The settlement rate for commercial mediation remains high – over 80 percent for most mediators. More research is needed into the quality of settlements rather than just the quantity, although this is challenging given the confidential nature of mediation.

Some interesting changes from 2015 include more mediators trying co-mediation and a strong opposition to mandatory mediation in District and High Courts. A new question explored mediation clauses in contracts and found only a minority of commercial mediations flow directly from these.

Mediators identified a need to promote mediation more in the business world and convince more lawyers, judges and potential users of its benefits.

The one-day mediation model is still the most popular option for users. This reflects the importance of cost and time in our dispute resolution market.

In fact, the primary importance of cost is perhaps the most consistent factor in all empirical mediation research, including all four NZCMS studies. Mediation can preserve relationships, provide confidentiality, facilitate creative options and emphasise party autonomy, but these attributes are ranked below the ability to save money by resolving disputes by consensus rather than by court decision.

Due to the NZCMS, the New Zealand commercial mediation market is no longer opaque. The market is robust, with capable practitioners. Its size is respectable for a nation of five million. It will be interesting to see the changes that occur over the next four years. There is potential for significant growth but we still await the required ‘game-changer’ to make this happen.

There is also potential for more commercial mediation research beyond the NZCMS and hopefully this report will spark interest from government, scholars and private organisations that could lead to future research partnerships and projects.

Meanwhile, the NZCMS continues with a study currently focusing on users of construction mediation.

I carried out this research in collaboration with the Resolution Institute as a 2018/19 Victoria University of Wellington Summer Scholarship project. The summer scholar was third-year law student Sapphire Petrie-McVean.

The full report and other NZCMS reports can be found here.

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