Why Should I Agree to Commercial Mediation?

The Question Every Business Owner Faces

When a commercial dispute arises and one party proposes mediation, the other party must decide whether to agree. This is one of the most important strategic decisions in any commercial dispute, and it deserves careful thought rather than a reflexive response. Agreeing to mediation is not a sign of weakness. Refusing it without good reason is increasingly likely to attract adverse consequences. And the calculus of whether to agree depends on a range of commercial, legal and strategic factors that vary significantly from one dispute to another.

This chapter addresses the benefits of commercial mediation compared with the alternatives, the risks of refusing, the strategic considerations that should inform the decision, and the circumstances in which refusal may nonetheless be appropriate. This page is part of the Commercial Mediation Knowledge Guide. If you need a commercial mediator see my commercial mediator page.

The Benefits of Agreeing to Mediation

Speed. Commercial mediation can be arranged and completed within weeks or months. Contested litigation typically takes two to three years to reach trial. For business owners, the difference is enormous: three years of uncertainty, management distraction, escalating legal costs and the constant risk of a damaging outcome is three years in which the business cannot move forward cleanly.

Cost. The cost of a commercial mediation, including the mediator’s fees and preparation time, is typically a fraction of the cost of taking a dispute to trial. Contested litigation in the High Court routinely costs hundreds of thousands of pounds across both sides. Even where a party ultimately succeeds in litigation, the costs recovery is rarely complete, meaning a significant net cost remains. Mediation offers the possibility of resolution at a cost that is justified by the outcome.

Control. In litigation, the outcome is determined by a judge applying the law to the facts as found. The parties have no control over the outcome once the case is in court. In mediation, the parties retain full control: no settlement is reached unless both parties agree to it. The terms of any settlement reflect what both parties have decided is acceptable, not what a judge has decided is legally correct.

Confidentiality. Mediation is private and confidential. What is said in mediation cannot be used in subsequent proceedings. The commercial, financial and personal details of the dispute do not become part of a public court record. For business owners whose commercial reputation, client relationships or market position would be damaged by public exposure of the dispute, this confidentiality has real commercial value.

Relationship preservation. Litigation is adversarial and almost invariably damages the relationship between the parties beyond repair. Mediation provides a forum in which the dispute can be addressed constructively and in which the parties may be able to find a way to continue working together or to separate on agreed terms that preserve mutual respect. Where the parties are business partners, family members, significant commercial counterparties or long-standing suppliers, the ability to manage the ending of the relationship rather than having it destroyed by adversarial proceedings has significant practical value.

Commercial flexibility. Courts can only award remedies that the law provides. Mediation can produce outcomes that go beyond anything a court could order: a revised commercial arrangement, a restructured relationship, a creative solution that addresses the underlying commercial interests of both parties. This flexibility makes mediated solutions significantly more likely to be genuinely workable in practice.

The Risk of Refusing to Mediate

Refusing to agree to commercial mediation carries significant legal risk in England and Wales. The courts have consistently penalised parties who have unreasonably refused to mediate, including by making adverse costs orders against the refusing party even where they ultimately succeeded in the litigation. Following the Churchill v Merthyr Tydfil ruling in 2023, courts can now order parties to engage in alternative dispute resolution before or during proceedings.

The key word is “unreasonably.” A refusal is not automatically unreasonable simply because the refusing party believes it has a strong case, or because it expects to win at trial. The court asks whether mediation had a reasonable prospect of success in the circumstances of the dispute. Where that question can be answered yes, a refusal to engage is likely to attract costs consequences. For detailed guidance on when refusal is permissible see the chapter on can I refuse to agree to commercial mediation.

Does Agreeing Signal Weakness?

A common concern is that agreeing to mediation signals weakness or an implicit concession about the merits of the dispute. This concern is largely misconceived. Courts, legal advisers and sophisticated commercial counterparties understand that agreeing to mediation is a sign of commercial maturity and risk awareness, not a concession on the merits. Refusing mediation, by contrast, may be interpreted as a sign that the refusing party is more interested in the conflict than in a commercially sensible resolution.

Moreover, the without prejudice nature of mediation means that nothing said or offered in the mediation can be used as evidence of a concession in subsequent proceedings. Agreeing to explore whether settlement is possible does not prejudice your legal position if mediation fails.

Strategic Timing: When to Agree and When to Wait

The timing of mediation matters. Mediation is most effective when both parties have enough information to assess the strength of their respective positions and to make informed decisions about settlement. Very early mediation, before either party has investigated the facts properly or obtained legal advice, may result in an uninformed settlement that neither party would have agreed to on better information.

On the other hand, mediation that takes place after years of costly litigation, when both parties have spent large amounts on legal fees and entrenched their positions through adversarial proceedings, is more difficult and less likely to produce a genuinely workable settlement than mediation conducted earlier in the dispute.

The optimum time to mediate is typically after the parties have exchanged sufficient information to understand the legal and commercial parameters of the dispute, but before full-scale contested proceedings have caused the relationship to deteriorate beyond any prospect of constructive dialogue. In many cases, that window is earlier than business owners and their advisers expect.

Published Resources

My book Winning in Commercial Mediation: A Business User’s Guide covers all of these questions in detail, including action checklists for each decision point and a worked analysis using the Whitcombe Family Business dispute scenario.

See all books.

Frequently Asked Questions

Does agreeing to mediation mean I think I might lose?

No. Agreeing to mediation reflects commercial and legal maturity, not a concession on the merits. The strongest parties in litigation are often the most willing to mediate, because they understand the risks, costs and uncertainties of contested proceedings and recognise that a negotiated settlement may deliver a better outcome than even a successful judgment.

What if the other side is mediating in bad faith?

This is a concern that is often raised but less common in practice than it appears. A party that engages in mediation in bad faith, attending without any genuine intention to settle, takes a significant legal risk: a court is likely to take a dim view of procedural bad faith and may make adverse costs orders accordingly. It is also worth noting that even where one party begins the mediation with fixed positions, a skilled mediator can often move them through the course of the day. For more detail see the chapter on can I refuse to agree to commercial mediation.

Should I suggest mediation or wait for the other side to suggest it?

In most cases there is no disadvantage in suggesting mediation first. A willingness to engage with mediation is viewed positively by courts and reflects well on the proposing party if the matter proceeds to litigation. Waiting for the other side to propose mediation when it would have been appropriate to do so earlier can itself attract criticism if costs are assessed after unsuccessful proceedings.

Get in Touch

If you are deciding whether to agree to commercial mediation for a business dispute, I would be glad to discuss the specific circumstances and what approach is likely to serve your interests best.

Call 020 4538 0246, use the contact form below, or book a call directly.

Important disclaimer: This page is provided for general information and educational purposes only and does not constitute legal advice. The content relates to the law of England and Wales only. Always seek independent legal advice from a qualified specialist before making decisions that affect your legal rights or commercial interests. The author accepts no responsibility for any decisions made or outcomes arising from use of this material. If you would like specific advice, contact me here.

Mediation – Why Should I Agree or Not Agree to Commercial Mediation?