The Role of Mediation in Alternative Dispute Resolution

19 April 2026 in Dispute Resolution Law | 5 min read | skip to FAQs

This article describes the process of mediation, provides guidance on what parties to a mediation can expect, explores various mediation strategies and the advantages and disadvantages of mediation in dispute resolution.

What is Mediation?

Mediation is a form of Alternative Dispute Resolution (ADR). It is frequently used to assist parties reach settlement as a part of a negotiation process or as a preliminary step in litigation. Mediation is a negotiation that usually involves the parties meeting to participate in a negotiation process that is structured and facilitated by a mediator.

Participation in mediation is usually voluntary, however mediation may be ordered by a court as a preliminary step in litigation or may be a contractual requirement pursuant to a dispute resolution clause. Even in such circumstances the parties cannot be forced to reach agreement and any agreement or settlement is entirely voluntary. Mediation is also confidential and “without prejudice” which means that anything discussed during the mediation cannot be used later in court.

During the mediation the mediator (a dispute resolution practitioner) may assist the parties to identify the disputed issues, develop options and consider alternatives to reach an agreement. There is less focus on the legal issues and more focus on the methods to resolve the dispute. The mediator has no part in making determinations or decisions and does not provide legal advice, including advising on the strength or weakness of a party’s case.

Which Disputes are not Suitable for Mediation?

Not all disputes are suitable for mediation. For instance disputes of  a very complex nature such as disputes regarding complex engineering projects, which  may be better suited to a form of ADR called expert determination. Disputes involving unpaid payment claims in a building and construction dispute are often more efficiently resolved using adjudication, pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW). For further information on how building disputes can be resolved by adjudication, please see our article on SOPA. Finally, disputes where the parties have a very acrimonious relationship with no trust are usually not suitable for mediation.

Preparation for Mediation

Prior to mediation the parties will usually be required to provide a mediation paper that sets out the background to the matter, the issues in dispute and a brief statement of the party’s legal position. Drafting a mediation paper is a very useful method of preparation for mediation even where the drafting of such a paper has not be directed by the mediator.

Preparation for a mediation is very important to develop an understanding of the strengths and weaknesses of each party’s case and understanding the opposing party’s case.

Each party should also understand the elements of any offer that each party may be prepared to accept. Understanding each element of any dispute enables a party to structure an offer that is more likely to satisfy the requirements of each party, for instance these elements may include a payment of a certain sum of money within a specified time period, completion of a project within a certain time period, termination of any contract between the parties and release from any future claims.

It is useful for each party to develop a range of positions representing their preferred and least acceptable settlement outcomes. It is highly recommended that each party obtains expert legal advice to assist with the preparation and conduct of the mediation.

What Happens During the Mediation?

Both parties typically attend with their lawyers, and the mediator facilitates discussions between the parties. In most cases, the parties begin in a joint session. The mediator will provide an introduction which explains the mediation process and the benefits of settling the dispute during mediation. Each party is then provided with the opportunity to present their case and often to make an opening offer. This is usually conducted by the lawyers representing each party.

The parties then move to separate rooms. The mediator then moves between each room to convey offers and counteroffers. This is often referred to as shuttle mediation. It means you are not required to sit directly with the other party for the entire mediation. It allows each party to privately discuss their position and the progress of the mediation with their legal representative.

Possible Outcomes of the Mediation

1. Full agreement: where both parties agree on all issues that were in dispute a written agreement often called a Deed of Settlement and Release is drafted and signed by both parties making all of the contents in this document legally binding and enforceable. At this stage any court proceedings may be discontinued or dismissed with the consent of the parties.
2. Partial agreement: where both parties may agree on some issues but not all. Although it is not a full agreement a partial agreement is still useful as it narrows the main issues in dispute helping save time in court.
3. No agreement: where the parties do not agree to any settlement leaving the dispute unresolved. If the matter does not resolve at mediation, nothing is lost from a procedural point of view. The proceedings simply continue and further informal settlement negotiations may continue and are often more successful after a mediation.

What are the Advantages of Mediation in Alternative Dispute Resolution?

1. The parties retain some control and involvement over the conduct of the dispute and the process of settlement.
2. The parties save the time, stress and cost associated with litigation.
3. The settlement outcomes may be more flexible and include elements that could not be ordered by a court, such as an agreement to a future course of cooperative conduct that the court would not order.

What are the Disadvantages of Mediation in Alternative Dispute Resolution?

1. The main disadvantage is that there is no guarantee of resolution, particularly if the parties’ positions are too far apart. Mediation is generally encouraged by the Court and is often a sensible step to at least explore whether the matter can be resolved before incurring further costs.

How can BSM Sydney Lawyers assist you?

The lawyers at Brander Smith McKnight have over four decades of experience in solving a wide range of disputes including business and commercial, building and construction, property and employment. Our experienced dispute resolution lawyers recognise that there are many different ways of resolving disputes and work hard to find practical, creative and commercially advantageous solutions for our clients. Our lawyers are renowned as highly competent negotiators who strive to achieve the best possible outcomes at a highly competitive cost to our clients. We provide a responsive legal service with a fast turn-around and extensive communication. Our senior dispute resolution lawyers provide a free 20-minute consultation to discuss your individual dispute.

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BSM Lawyer Sydney has conveniently located offices in Sydney CBD, Sutherland, Parramatta, Shellharbour and Wollongong.