Is mediation compulsory?

Two ladies shaking hands with a man looking on

If you’re involved in a business dispute, a meeting with a mediator before you can go to court can sometimes be compulsory, and it might even be helpful. But attending the meeting doesn’t mean you must compromise your claim.

The Retail Leases Act 1994, requires that people with lease-related disputes that they can’t resolve themselves, try mediation before they can take the matter to a court or a tribunal for a decision.

The Local or District Court may insist that your matter goes to the NSW Small Business Commissioner for mediation before a magistrate or judge will hear it.

About mediation

If people feel forced to attend mediation, the process could be unproductive. The person could sit on their hands, keep their mouth closed and wait it out. Other people might act as if they are participating, but resist saying or doing anything that might contribute to a mutually beneficial outcome.

It’s better to think of mediation as non-compulsory in the sense that nobody can force you to agree to a deal that you don’t want.

Benefits of mediation

If you’re involved in a dispute that requires a meeting with a mediator, there are many advantages to attending. For example, you can narrow down the issues and stop wasting time examining things that might be of little or no relevance.

Mediation with the 'other side' in the room will often reveal things that you hadn’t been aware of. For example, if you are claiming that you’re owed a significant amount of money, a key consideration in any civil dispute will be where the money will come from if you manage to win the case. Mediation will often help you make better decisions about the likelihood of recovering that money.

You may also get a better idea of the likely costs of taking the matter to court. You will also understand more about the arguments that will need to be put and the evidence required.

Ninety per cent of civil matters – typically business-to-business contract disputes – are settled out of court. Often the only questions are 'When?', 'What’s the cost?' and 'Has our important business relationship just been destroyed?'

It’s worth considering that if your matter has a good chance of being settled, it’s far better to reach settlement as soon as possible. Minimising the time and cost of being in dispute is another key benefit of mediation.

Brushing your teeth isn’t compulsory. But it’s a great way to reduce the time, pain and cost of being in the dentist’s chair.

Where to get advice

The NSW Small Business Commissioner (SBC) can help you if you have a commercial dispute.

SBC offers information, advice and mediation services for businesses caught up in all types of business-related disputes.

For many people, getting some free strategic and procedural advice from SBC is enough to work out their issue.

Call We Assist on 1300 795 534 or email us at we.assist@smallbusiness.nsw.gov.au.

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