According to the latest audit on mediations published by CEDR, the public sector is a key growth area. So how do public authorities fit into the world of mediation? Does mediation really work for public bodies? Or for people who have a dispute with a public body? In short, the answer is yes. In fact, it very often does.
Whilst the nature of some disputes does not always lend itself to commercial discussions or inter-party negotiations – for example some judicial review or human rights claims, or those that involve points of principle – there are a huge number of disputes that can successfully be settled through mediation.
Where there is a dispute capable of settlement or compromise in some way with, for example, a procurement dispute, termination and breach of contract claim, or a dispute relating to the payment of monies or debt, it can pay dividends for a public body to attempt to avoid the costly and time consuming process of litigation through mediation. The potential savings can be huge.
There are however additional key issues that need to be considered by public bodies in advance of any mediation:
Public bodies calculate the risk associated with litigation on a different basis to commercial parties. There are many more considerations to take into account than just the payment or receipt of cold hard cash. They will also need to consider their duties to the public and other fiduciary duties, the statutory and political framework within which they operate, the continuation of service provision to the public, particularly when key services might be at risk, and whether the public body is acting within its powers.
Does the public body have the authority to enter into a settlement agreement on the terms proposed and do those attending the mediation have power to bind the public body through the signing of the settlement agreement? Often public bodies may only be able to reach an agreement in principle at a mediation and an agreement may need to be formally ratified or approved before it can become legally binding. The parties will need to consider whether it would be possible or appropriate for those at the mediation to be given delegated authority to settle on certain terms beforehand, or whether authority can be delegated over the telephone if an agreement in principle is reached on the day. Parties should also bear in mind that public bodies may also be required to justify their decision to settle a dispute on a particular basis, and that may limit the terms on which it can realistically propose settlement.
Public bodies also have an obligation to act transparently. The parties should carefully consider the terms of any settlement, particularly issues of confidentiality, and whether any agreement, agreement summary or press release will need to be agreed and publicised once the mediation has concluded. Parties should be live to this from the outset when any proposal to mediate is being considered. One of the benefits to mediation is that the parties can settle matters in private and any agreement can remain entirely confidential. However, if a public body considers that some form of publicity will be required this should be flagged early on to ensure that the parties are proceeding to mediation on the same basis and with similar expectations.
Central Government is already formally committed to resolving disputes effectively and expediently through mediation and other ADR processes, and the Ministry of Justice has set out plans to create a similar Dispute Resolution Commitment for Local Authorities and businesses. Whilst that work is underway, the facts speak for themselves – public bodies are increasingly using mediation to successfully resolve their disputes; saving money, time, and business relationships as they go.
Guest blog: Charlotte Clayson, Trowers & Hamlins LLP