Mediation: Frequently Asked Questions
Mediation, also known as conciliation in many parts of the world, has a long history in the diplomatic arena. In the commercial world, interest in it has increased sharply in recent years. In part, this growth of interest is attributable to dissatisfaction with the cost, delays and length of litigation in certain jurisdictions. The growth of interest results also, however, from the advantages of mediation, particularly its appeal as a procedure that offers parties full control over both the process to which their dispute will be submitted and the outcome of the process.
Where mediation has been used, it has enjoyed very high rates of success in achieving a result acceptable to both sides to a dispute. Because it is a relatively unstructured procedure, however, some hesitate to use it for fear of not knowing what to expect. This document seeks to allay such fears by explaining simply the main features and advantages of mediation and how mediation under the WIPO Mediation Rules works in practice.
Mediation is first and foremost a non-binding procedure. This means that, even though parties have agreed to submit a dispute to mediation, they are not obliged to continue with the mediation process after the first meeting. In this sense, the parties remain always in control of a mediation. The continuation of the process depends on their continuing acceptance of it.
The non-binding nature of mediation means also that a decision cannot be imposed on the parties. In order for any settlement to be concluded, the parties must voluntarily agree to accept it.
Unlike a judge or an arbitrator, therefore, the mediator is not a decision-maker. The role of the mediator is rather to assist the parties in reaching their own decision on a settlement of the dispute.
There are two main ways in which mediators assist parties in reaching their own decision, which correspond to two types or models of mediation practiced throughout the world. Under the first model, facilitative mediation, the mediator endeavors to facilitate communication between the parties and to help each side to understand the other's perspective, position and interests in relation to the dispute. Under the second model, evaluative mediation, the mediator provides a non-binding assessment or evaluation of the dispute, which the parties are then free to accept or reject as the settlement of the dispute. It is up to the parties to decide which of these two models of mediation they wish to follow. The WIPO Arbitration and Mediation Center ("the Center") will assist them in identifying a mediator appropriate for the model that they wish to adopt.
Mediation is a confidential procedure. Confidentiality serves to encourage frankness and openness in the process by assuring the parties that any admissions, proposals or offers for settlement will not have any consequences beyond the mediation process. They cannot, as a general rule, be used in subsequent litigation or arbitration. The WIPO Mediation Rules contain detailed provisions directed also at preserving confidentiality in relation to the existence and outcome of the mediation.
The differences between mediation and arbitration all stem from the fact that, in a mediation, the parties retain responsibility for and control over the dispute and do not transfer decision-making power to the mediator. In concrete terms, this means two things principally:
- In an arbitration, the outcome is determined in accordance with an objective standard, the applicable law. In a mediation, any outcome is determined by the will of the parties. Thus, in deciding upon an outcome, the parties can take into account a broader range of standards, most notably their respective business interests. Thus, it is often said that mediation is an interest-based procedure, whereas arbitration is a rights-based procedure. Taking into account business interests also means that the parties can decide the outcome by reference to their future relationship, rather than the result being determined only by reference to their past conduct.
- In an arbitration, a party's task is to convince the arbitral tribunal of its case. It addresses its arguments to the tribunal and not to the other side. In a mediation, since the outcome must be accepted by both parties and is not decided by the mediator, a party's task is to convince, or to negotiate with, the other side. It addresses the other side and not the mediator, even though the mediator may be the conduit for communications from one side to the other.
Naturally, in view of these differences, mediation is a more informal procedure than arbitration.
It is possible to combine mediation with arbitration. In such a case, the dispute is submitted first to mediation under the WIPO Mediation Rules. Then, if a settlement is not reached within a defined period of time (it is recommended that the parties provide for either 60 or 90 days), or if a party refuses to participate or to continue to participate in the mediation, the dispute is referred for a binding decision through arbitration under the WIPO Arbitration Rules (or, if the parties so agree, through expedited arbitration). The advantage of the combined procedure is the incentive that it offers for a good faith commitment by both parties to the mediation process, since the consequence of a failure to reach an agreed settlement will be more tangibly measurable in terms of the financial and management commitment that would need to be incurred in the subsequent arbitration procedure.
Mediation is a relatively unstructured and informal procedure in which continued participation in the process, as well as the acceptance of any outcome, depends on each party's agreement. Rules thus have a more limited function in mediation than in binding arbitration. What is that function?
By agreeing to submit a dispute to WIPO mediation, the parties adopt the WIPO Mediation Rules as part of their agreement to mediate. Those Rules have the following main functions:
- They establish the non-binding nature of the procedure (Articles 13(a) and 18(iii))
- They define the way in which the mediator will be appointed (Article 6)
- They set out the way in which the mediator's fees will be determined (Article 22)
- They guide the parties as to the way in which the mediation can be commenced and the process can be established (Articles 3 to 5 and 12)
- They provide the parties with assurances about the confidentiality of the process and the disclosures made during the process (Articles 14 to 17)
- They determine how the costs of the procedure will be borne by the parties (Article 24)
Mediation is not a suitable procedure for settling disputes in all cases. Where deliberate, bad-faith counterfeiting or piracy is involved, mediation, which requires the cooperation of both sides, is unlikely to be appropriate. Similarly, where a party is certain that it has a clear-cut case, or where the objective of the parties or one of them is to obtain a neutral opinion on a question of genuine difference, to establish a precedent or to be vindicated publicly on an issue in dispute, mediation may not be the appropriate procedure.
On the other hand, mediation is an attractive alternative where any of the following are important priorities of either or both of the parties:
- minimizing the cost-exposure entailed in settling the dispute;
- the maintenance of control over the dispute-settlement process;
- a speedy settlement;
- the maintenance of confidentiality concerning the dispute;
- or the preservation or development of an underlying business relationship between the parties to the dispute.
The last-mentioned priority, in particular, makes mediation especially suitable where the dispute occurs between parties to a continuing contractual relationship, such as a license, distribution agreement or joint research and development (R&D) contract, since, as mentioned above, mediation provides an opportunity for finding a solution by reference also to business interests and not just to the strict legal rights and obligations of the parties.
Mediation can be used at any stage of a dispute. Thus, it can be chosen as the first step towards seeking a resolution of the dispute after any negotiations conducted by the parties alone have failed. Mediation can also be used at any time during litigation or arbitration where the parties wish to interrupt the litigation or arbitration to explore the possibility of settlement.
Another common use of mediation is more akin to dispute prevention than dispute resolution. Parties may seek the assistance of a mediator in the course of negotiations for an agreement where the negotiations have reached an impasse, but where the parties consider it to be clearly in their economic interests to conclude the agreement (for example, negotiations on the royalty rate to apply on the renewal of a license).
The Center offers specialized services for mediation of intellectual property disputes, that is, disputes concerning intellectual property or commercial transactions and relationships involving the exploitation of intellectual property. Common examples of such commercial transactions and relationships are patent, know how and trademark licenses, franchises, computer contracts, multimedia contracts, distribution contracts, joint ventures, R & D contracts, technology-sensitive employment contracts, mergers and acquisitions where intellectual property assets assume importance, and publishing, music and film contracts.
It should be noted, however, that there is no limitation on the competence of mediators appointed under the WIPO Mediation Rules to deal with different classes of subject matter. A mediator appointed under the WIPO Mediation Rules is competent to deal with all aspects of any dispute. It is up to the parties to decide whether they consider the subject matter suitable for WIPO mediation.
The choice of WIPO mediation offers the following advantages:
- a low registration fee
- an internationally based independent administering authority with specialized expertise in intellectual property
- an international list of mediators including persons with specialized knowledge and experience in the technical, business and legal subject matter of intellectual property, as well as experience in international commercial mediation
- flexible Rules with provisions sensitive to the need for the protection of confidentiality
- where the mediation takes place in Geneva, hearing rooms provided free of charge
There are few formalities associated with a mediation. The structure that a mediation follows is decided by the parties with the mediator, who together work out, and agree upon, the procedure that is to be followed.
As mentioned above, the somewhat unstructured nature of a mediation can be disconcerting to those who may be entertaining the idea of submitting a dispute to mediation, but who may not be sure what to expect. For such persons, some guidance is set out in the following paragraphs, which outline the main steps in the conduct of a WIPO mediation. The procedure outlined should, however, be understood as being for guidance only, since the parties may always decide to modify the procedure and to proceed in a different way.
Getting to the Table: The Agreement to Mediate
The starting point of a mediation is the agreement of the parties to submit a dispute to mediation. Such an agreement may be contained either in a contract governing a business relationship between the parties, such as a license, in which the parties provide that any disputes occurring under the contract will be submitted to mediation; or it may be specially drawn up in relation to a particular dispute after the dispute has occurred.
The last section of this Guide contains recommended clauses for both situations, which provide a choice between agreeing to mediation alone or agreeing to mediation followed, in the event that a settlement is not reached through the mediation, by arbitration.
Starting the Mediation
Once a dispute has occurred and the parties have agreed to submit it to mediation, the process is commenced by one of the parties sending to the Center a Request for Mediation. This Request should set out summary details concerning the dispute, including the names and communication references of the parties and their representatives, a copy of the agreement to mediate and a brief description of the dispute. These details are not intended to perform the legal function of defining arguments and issues and limiting the requesting party's case. They are intended simply to supply the Center with sufficient details to enable it to proceed to set up the mediation process. Thus, the Center will need to know who is involved and what the subject matter of the dispute is in order to be able to assist the parties in selecting a mediator appropriate for the dispute.
The Appointment of the Mediator
Following receipt of the Request for Mediation, the Center will contact the parties (or their representatives) to commence discussions on the appointment of the mediator (unless the parties have already decided who the mediator will be). The mediator must enjoy the confidence of both parties and it is crucial, therefore, that both parties be in full agreement with the appointment of the person proposed as mediator.
Typically, the Center would discuss the various matters described in the section "Selecting the Mediator" in order to be in a position to propose the names of suitable candidates for the consideration of the parties. Following these discussions (which may take place by telephone or in person), the Center will usually propose several names of prospective mediators, together with the biographical details of those prospective mediators, to the parties for their consideration. If necessary, further names can be proposed until such time as the parties agree upon the appointment of a mediator.
At this stage also, the Center will commence discussions with the parties concerning the physical arrangements for the mediation: where it is to take place (which will usually have been specified in the agreement to mediate), a meeting room and any other support facilities needed.
The Center will also fix, in consultation with the mediator and the parties, the fees of the mediator at the stage of the appointment of the mediator.
Initial Contacts Between the Mediator and the Parties
Following appointment, the mediator will conduct a series of initial discussions with the parties, which typically will take place by telephone. The purpose of these initial contacts will be to set a schedule for the subsequent process. The mediator will indicate what documentation, if any, he or she considers should be provided by the parties prior to their first meeting and set the timetable for the supply of any such documentation and the holding of the first meeting.
The First Meeting Between the Mediator and the Parties
At the first meeting, the mediator will establish with the parties the ground rules that are to be followed in the process.
In particular, the mediator will
- discuss with, and obtain the agreement of the parties on, the question whether all meetings between the mediator and the parties will take place with both parties present, or whether the mediator may, at various times, hold separate meetings (caucuses) with each party alone; and
- ensure that the parties understand the rules on confidentiality set out in the WIPO Mediation Rules.
At the first meeting, the mediator will also discuss with the parties what additional documentation it would be desirable for each to provide and the need for any assistance by way of experts, if these matters have not already been dealt with in the initial contacts between the mediator and the parties.
Depending on the issues involved in the dispute and their complexity, as well as on the economic importance of the dispute and the distance that separates the parties' respective positions in relation to the dispute, the mediation may involve meetings held on only one day, across several days or over a longer period of time. The stages involved in the meetings held after the first meeting between the mediator and the parties would, where the mediator is playing a facilitative role, normally involve the following steps:
- the gathering of information concerning the dispute and the identification of the issues involved;
- the exploration of the respective interests of the parties underlying the positions that they maintain in respect of the dispute;
- the development of options that might satisfy the respective interests of the parties;
- the evaluation of the options that exist for settling the dispute in the light of the parties' respective interests and each party's alternatives to settlement in accordance with one of the options; and
- the conclusion of a settlement and the recording of the settlement in an agreement.
Naturally, not all mediations result in a settlement. However, a settlement should be achieved where each party considers that an option for settlement exists which better serves its interests than any alternative option for settlement by way of litigation, arbitration or other means.
Parties' Private Consultations
Throughout the process of the mediation, naturally each party will wish to undertake, at various stages, private consultations with its advisors and experts for the purposes of discussing various aspects of the mediation or of evaluating options. It goes without saying that such private consultations may occur during the mediation process.
- The Agreement to Mediate
- Commencement: Request for Mediation
- Appointment of the Mediator
- Initial Contacts Between the Mediator and the Parties
- setting up the first meeting
- agreeing any preliminary exchange of documents
- First and Subsequent Meetings
- agreeing the ground rules of the process
- gathering information and identifying issues
- exploring the interests of the parties
- developing options for settlement
- evaluating options
The parties decide the language in which the mediation will take place. They may choose a single language or they may choose to use two languages and to have interpretation, although the latter choice will obviously increase the costs of conducting the process.
Perhaps the most important step in the whole process is the selection of the mediator. What should the parties consider?
One of the principal functions of the WIPO Arbitration and Mediation Center is to assist the parties in identifying and agreeing upon the mediator. The Center does this through consultation with the parties and by supplying them with the names and biographical details of potential candidates for their consideration.
The parties should consider at least the following matters in deciding whom to appoint as mediator:
- what role do they want the mediator to play; do they want the mediator to provide a neutral evaluation of their dispute, or do they want the mediator to act as facilitator of their negotiations by assisting them in identifying the issues, exploring their respective underlying interests and developing and evaluating possible options for settlement?
- do they want a mediator with substantial training and experience in the subject matter of their dispute, or do they want a mediator more particularly skilled in the process of mediation? This will depend in part on whether they wish the mediator to play an evaluative or a facilitative role.
- do they want a single mediator or more than one mediator? In particularly complex disputes involving very specialized and highly technical subject matter, the parties may wish to consider having both a subject-matter and a process specialist as co-mediators. Similarly, where the parties have very different cultural and linguistic backgrounds, they may wish to envisage two co-mediators.
- what nationality should the mediator have (or what nationalities should the mediator not have)?
- are the candidates independent, that is, are they free of any past or present business, financial or other disqualifying connections with either of the parties to the dispute or with the particular subject matter of the dispute?
- what are the professional qualifications and experience, training and areas of specialization of the candidates?
The Center performs the following functions as administering authority of a mediation:
- it assists the parties in selecting and appointing the mediator, as described above;
- it fixes, in consultation with parties and the mediator, the fees of the mediator;
- it administers the financial aspects of the mediation by obtaining a deposit from each party of the estimated costs of the mediation and paying out of the deposit the fees of the mediator and any other support services or facilities, such as fees for interpreters, where they are required;
- where the mediation takes place at WIPO in Geneva, it provides a meeting room and party retiring rooms free of charge; where the mediation takes place outside Geneva, it assists the parties in organizing appropriate meeting rooms;
- it assists the parties in organizing any other support services that may be needed, such as translation, interpretation or secretarial services.
The parties decide where they would like the mediation to take place. It is not necessary for a mediation conducted under the WIPO Mediation Rules to take place in Geneva.
If the parties do decide to conduct their mediation in Geneva, WIPO will provide them with a meeting room and party retiring rooms free of charge (that is, at no additional cost to the registration fee payable to the WIPO Arbitration and Mediation Center). If the parties choose to conduct their mediation outside Geneva, the Center will assist them in arranging suitable meeting facilities.
Two sets of fees must be paid for a mediation.
- the registration fee of the Center, which amounts to 0.10% of the value in dispute, up to a maximum of US$10,000, which is reached where the amount in dispute is US$10,000,000.
- those that are payable to the mediator. As mentioned above, these are negotiated and fixed at the time of the appointment of the mediator. They are usually calculated on a hourly or daily basis at a rate which takes into account the circumstances of the dispute, such as the complexity of the dispute and its economic importance, as well as the experience of the mediator. The Schedule of Fees to the WIPO Mediation Rules sets out indicative hourly and daily rates for the fees of mediators which are as follows:
|Minimum ($)||Maximum ($)|
The WIPO Mediation Rules (Article 24) provide for the costs of the mediation (the registration fee of the Center, the mediator's fees and all other expenses of the mediation) to be borne in equal shares by the parties. The parties are free to agree to change this allocation of costs.
For those parties for which mediation is a new procedure and which may wonder what benefits mediation offers, two factors can usefully be considered:
- Where mediation has been used, it enjoys remarkably high rates of success, given its non-binding nature. Indeed, on one view, mediation never fails, even if a settlement is not reached, because the parties will always come away knowing more about the dispute and, probably, at least having narrowed the issues in question.
- A second factor to be taken into account is that the commitment to mediation involves a low risk. The parties remain always in control of the dispute. Each party may terminate the mediation at any stage, if it feels that it is not making any progress, that the procedure is becoming too costly, or that the other party is not acting in good faith. The commitment to mediation is thus controllable at all stages.
The Center has established a recommended contract clause for the reference of future disputes under a contract to mediation under the WIPO Mediation Rules.
The Center has also established a recommended submission agreement for the reference of an existing dispute to mediation under the WIPO Mediation Rules.
The Center organizes workshops for mediators, as well as conferences on various aspects of the resolution of intellectual property disputes. It also has available a number of publications, including the WIPO Mediation Rules, the Guide to WIPO Mediation and the publication of the proceedings of the WIPO Conference on Mediation organized in March 1996.