How commercial mediation works

Mediation is confidential and without prejudice. The mediator does not decide anything — they manage a structured negotiation, test each side's position in private, and help the parties find the deal that is genuinely available. If no agreement is reached, nothing said in the mediation can be used in later proceedings, and everyone's litigation rights are preserved.

That is the fundamental difference from arbitration or court: in mediation the parties keep control. No outcome is imposed. A settlement only happens if both sides sign it — which is exactly why settlements reached at mediation tend to stick.

Many commercial contracts contain a dispute-resolution clause requiring the parties to mediate before they can arbitrate or sue — and the courts will generally hold parties to that bargain. Even without a clause, the courts actively expect parties to attempt settlement: case management directions routinely build in ADR, and a party who unreasonably refuses to mediate can face costs consequences at the end of the proceeding.

The practical upshot is that mediation is rarely a question of "whether" — it is a question of when, and of arriving properly prepared.

Before the day, each party typically provides the mediator with a position paper and the key documents, and signs a mediation agreement covering confidentiality and costs. The day itself usually opens with a joint session — each side states its position — before the mediator moves the parties into separate rooms and shuttles between them in private caucuses.

The caucuses are where the real work happens. The mediator stress-tests each side's case in private, carries offers between the rooms, and narrows the gap. Most commercial mediations resolve in a single day; complex multi-party disputes sometimes run longer or adjourn for information to be exchanged.

A mediated deal becomes binding when it is recorded in a signed settlement agreement — usually drafted and signed before anyone leaves. From that point it is an enforceable contract, and if proceedings are already on foot they are discontinued or resolved by consent on the agreed terms.

Getting the drafting right in the room matters. Payment terms, timing, confidentiality, releases, and what happens on default all need to be nailed down while everyone is still at the table — a "heads of agreement to be finalised later" is where settlements come unstuck.

Mediation assumes two parties genuinely looking for a resolution. It is less suited to cases where one side needs urgent court intervention — an injunction to freeze assets or stop conduct — where a legal precedent is genuinely required, or where there is such an imbalance of power or good faith that a negotiated outcome would not hold.

In those cases arbitration under the Arbitration Act 1996, expert determination, or proceedings remain the right path — and preparing for them well is itself the best settlement lever.

Brett Harris qualified as a commercial mediator in Sydney in 2008 and accepts appointments as mediator in commercial disputes — bringing a litigator's read of how each side's case would actually fare at trial into the room.

Where chambers acts as counsel instead, the job is preparation: knowing the file cold, setting a realistic settlement range before the day, and negotiating from a position of trial-readiness. The parties who settle well at mediation are the ones who arrive ready not to.