K.  Consider mediation where a more structured approach to negotiation is required

Mediation is similar to negotiation but with the involvement of a mediator, an independent third party tasked to assist parties to resolve the issue. Mediation is an effective dispute resolution mechanism as the mediator is independent and typically very experienced in the resolution of disputes. The mediator acts as a neutral facilitator to help guide the parties to resolve the dispute and can bring reason to the discussions which is more likely to be accepted given their neutrality and independence.

Mediation should be approached in an open and inclusive manner as it is designed to help parties settle their dispute amicably without harming long-term relationships. It is a flexible confidential dispute resolution method which can accommodate any number of parties and issues, allowing parties to control the process and dispose of issues promptly. A further incentive is that whilst mediation is more expensive and time consuming than unassisted negotiation, the resolution of the matter remains in the hands of the project parties. Any dispute resolution process which involves more formal escalation such as formal court proceedings or arbitration risks generating binding decisions which may not suit either party. 32% of the PPP contracts reviewed globally allowed for mediation. This is the second highest mechanism after arbitration.

Prior to entering mediation the participants must be clear on the strengths, weaknesses and objectives of the mediation. The guidance on preparing for negotiation detailed above at guidance 'I. Appropriately prepare for and resource before entering negotiation' is just as relevant to preparing for mediation, as is the Attachment (Dispute negotiation checklist) to this section.

It is important during mediation that the parties present their cases clearly as the mediators are not necessarily technically skilled people. For example, the mediator may come from a legal background and not be a technical or financial expert. It is normal for the parties to brief the mediator thoroughly beforehand by providing position statements and agreed reading lists.

Mediation does not require a final agreement and there are no consequences if the parties are unsuccessful in concluding a settlement. Parties can walk away from mediation at any time since it is a voluntary process. However, to be successful representatives on all sides of the dispute need to be appropriately motivated and empowered to close out the disputed matter.

If the parties can agree to a resolution it is important this resolution is well documented using a settlement agreement. This topic is detailed above at guidance 'F. Ensure settlement agreements are prepared with appropriate legal input to ensure the dispute or disagreement is unambiguously resolved'.