Commercial mediation and alternative dispute resolution in Scotland

What is commercial mediation in Scotland?

Commercial mediation is a confidential process in which a neutral third party, the mediator, helps businesses in a dispute reach their own agreement. The role of the mediator is to facilitate discussion, not to decide who is right. Instead, they help each side understand the other’s position, test the strengths and weaknesses of their case, and explore solutions that a court could not order, such as a new supply contract or a phased payment plan.

In Scotland, mediation is voluntary, and there is no general rule requiring businesses to mediate before going to court. Even so, the courts and the Scottish Government encourage parties to consider it, and the simple procedure rules ask the sheriff to encourage negotiation or alternative dispute resolution. A settlement agreement signed at the end of a successful mediation is legally binding.

The benefits of mediation for businesses

• Cost effectiveA mediation usually takes a day, compared with months or years of court proceedings, and the costs are shared.
• FasterA mediation can often be arranged within weeks.
• ConfidentialUnlike court, mediation is private, protecting your reputation and commercially sensitive information.
• Control over the outcomeNothing is agreed unless both sides accept it, and the solution can be tailored to your business.
• Preserves relationshipsImportant where you need to keep working with a customer, supplier, landlord or fellow shareholder.

Mediation works best where both parties want to resolve the dispute. It may be less suitable where urgent court orders are needed, or where one side refuses to engage in good faith.

Dispute types suited to commercial mediation

Mediation can help with almost any commercial dispute, including:

• Contract and supply chain disputes
• Shareholder and partnership disputes
• Commercial landlord and tenant disputes
• Construction disputes
• Professional negligence claims
• Disputes after a business sale
• Intellectual property disputes
• Debt and payment disputes

Other forms of alternative dispute resolution

Mediation is not the only alternative to litigation. Depending on your dispute and your contract, other options include:

• NegotiationDirect discussions, often with solicitors, which resolve many disputes at an early stage.
• ArbitrationA private process where an arbitrator makes a binding decision. In Scotland, arbitration is governed by the Arbitration (Scotland) Act 2010 and the Scottish Arbitration Rules. Appeals are limited, which brings finality.
• Expert determinationAn independent expert, such as a surveyor or accountant, decides a technical issue. It is often used for rent reviews, share valuations and completion accounts.
• AdjudicationA fast, statutory process for construction disputes, where the adjudicator must reach a decision within 28 days of referral unless the time is extended.

Many commercial contracts already contain a dispute resolution clause requiring one of these steps before court. We can tell you what your contract requires and which route is likely to give you the best result.

How our solicitors support you through the mediation process

Good preparation is the key to a successful mediation, and mediation is most likely to succeed when both sides come prepared to negotiate. We advise you on whether mediation is suitable, help choose an experienced, accredited mediator, prepare a clear position paper, and attend the mediation with you to advise on offers as they are made. If agreement is reached, we draft a binding settlement agreement on the day. If it is not, the discussions remain confidential and we are ready to pursue your claim through the courts.