Outline of mediation in the Federal Court Of Australia
A quick guide for clients
Most intellectual property disputes in Australia are litigated in the Federal Court of Australia. For some time the Federal Court of Australia Act 1976 (FCA) and the Federal Court Rules of Procedure (FCR) have made provision for disputes to be resolved by mediation.
What is mediation?
There are a number of definitions of mediation. It has been defined as follows:
“Mediation is a process in which the parties, with the assistance of a dispute resolution practitioner (the mediator), identify the disputed issues, develop options, consider alternatives and endeavour to reach an agreement. Another definition is ‘a process in which the parties to a dispute, with the assistance of a dispute resolution practitioner (the mediator) negotiate in an endeavour to resolve their dispute’. The mediator has no advisory or determinative role in regard to the content of the dispute or the outcome of its resolution, but may advise on or determine the process of mediation whereby resolution is attempted. Mediation may be undertaken voluntarily, under a court order, or subject to an existing contractual agreement.”1
How does mediation work in the federal court context?
Before the mediation
Mediation is a voluntary process and may be agreed to by the parties in any litigation. It may also be suggested or ordered by the Court. In either case it is prudent that f mediation is to occur the Court make a formal order, ordering mediation.
Selecting the mediator
Once mediation has been ordered the parties must choose a mediator. The mediator can be a Judge or, more commonly, a Registrar of the Federal Court. Alternatively, the parties can agree to appoint a private mediator. Usually orders for mediation provide that if the parties cannot agree on a private mediator a Registrar is appointed.
There are advantages and disadvantages in selecting a Registrar or a private mediator. The cost for a Registrar to mediate a dispute is generally much lower than the cost of a private mediator mediating a dispute. The Court usually charges about AU$800 for a Registrar to mediate a dispute. This includes room hire at the Court.
Private mediators can often charge each party between AU$3000 or AU$6000 and unless one of the parties hosts the mediation, hire of the mediation room is extra. The advantage of a private mediator is that some intellectual property disputes require specialist intellectual property knowledge on the part of the mediator. While most Registrars are familiar with intellectual property law they are by and large generalists, whilst some private mediators have specialist IP knowledge.
What happens after a mediator is agreed upon?
If a private mediator is appointed he or she will usually schedule a preliminary conference with the legal advisors for the parties. At the preliminary conference the parties will discuss and set a date for the mediation, agree a location for the mediation and set a date for documents required for the mediation to be provided. At the preliminary conference the parties will also agree the form of the mediation agreement. The mediation agreement is usually provided by the mediator and is entered into by all parties and the mediator. It provides for such things as payment of the mediator and that nothing said or done in the mediation can be used as evidence in the proceeding.
Private mediators will also generally ask each party to prepare a position paper which sets out that party’s view of the case from a factual and legal point of view. Some private mediators will also ask the parties to set out what they want to achieve from the mediation. The position paper is given to the mediator and sometimes to the other party or parties.
Where a Federal Court Registrar conducts the mediation he or she will ask each party’s lawyers to tell their client how much they have spent on the case to date, to provide an estimate of costs up until the end of the trial, to provide an estimate of what proportion of the legal costs spent to date and to be spent in the future will be irrecoverable even if that party wins and to provide their client with advice on prospects of success. Although a Registrar will not have the parties sign a mediation agreement, confidentiality of the mediation process is provided for in Section 53B of the FCA which provides that evidence of anything said at the mediation is not admissible in any proceedings.
Regardless of whether a private mediator or a Registrar is used to conduct the mediation, the mediator will ask the parties to come prepared to consider what their interests are, not what their legal positions are. Importantly, it is necessary for a representative of each party to the dispute with authority to resolve the matter to attend the mediation.
The mediation itself
The mediation will usually start with the mediator, the parties and their legal representatives gathered around a table. After introductions the mediator will start by outlining his or her role in the mediation process.
The mediator’s role
The role of the mediator in the mediation process is to assist the parties in resolving their dispute. The mediator will question (often vigorously) the position and assumptions of the parties. This can be done in a number of ways including discussing with a party the costs of the litigation and what a party might get out of litigation financially and otherwise. The mediator might ask a party questions about their interpretation of the law and ask them what will happen if the law is interpreted in a way which does not favour their case. The mediator might ask what will happen if a particular witness’ opinion or version of events is not accepted. A mediator should always ask a party to consider what their best alternative is to a negotiated agreement and worst alternative to a negotiated agreement is. That means the mediator will ask the party to evaluate matters in light of the best possible and worst possible outcome to the litigation. The mediator may also assist the parties in finding creative solutions to the dispute.
What the mediator will not do is give the parties legal advice, express opinions on the strength and weaknesses of a party’s case or express views on the appropriateness of any settlement.
Once the mediator has explained his or her role the parties are invited to make brief opening statements. Often the legal representatives will make these statements but on occasion a party will make the statement or supplement their lawyer’s statement.
Once opening statements have been made one of the parties may put a settlement proposal to the other. It is also common for the parties to separate and for the mediator to meet separately with them before any offers are made. These meetings are called private sessions.
Private sessions are confidential to the mediator and the party in the private session. The mediator is obliged not to repeat anything said by a party in a private session to the other party (or anyone else) unless he or she has approval from the party to do so. This is done so there can be an open discussion between each party and the mediator without fear of communications being repeated to the other party.
The mediator will have a private session with each of the parties. During the private sessions a party may formulate a settlement proposal to put to the other party. Once a settlement proposal has been put the mediator will often discuss the proposal with the party to whom it has been put.
Often a number of offers may go back and forth and are discussed with the mediator until an agreement is reached. In which case the agreement should be documented and signed before the mediation concludes.
Even if a matter does not resolve during mediation quite often the parties will be much closer to a resolution of the proceedings after a mediation than before the mediation.
There are a number of reasons why mediation can be a good idea. They include:
- Litigation will often produce a black and white result. One party will win and the other will lose. A mediation can allow the parties to negotiate a position where both may benefit.
- Mediation can act as a reality check for the litigants.
- Mediation can assist the parties to better understand their opponent’s case.
- An early resolution of a matter reduces costs and management time spent on litigation.
- A negotiated resolution produces certainty and gives the parties control over the outcome of proceedings.
- LEADR website: www.leadr.com.au