Mediation is defined as a structured process, however named or referred to, whereby two or more parties to a dispute
attempt by themselves, on a voluntary basis, to reach an agreement on the settlement of their dispute with the
assistance of a physical person called the “Mediator”.
It is a confidential process whereby parties try to settle their dispute without the need to resort to Court whereas
however their right to access the Court is not in any way affected.

WHAT ARE THE BENEFITS OF MEDIATION

Mediation is less expensive and more time-efficient than the Court procedure. As the preamble of Directive 2008/52/EC of
the European Parliament and of the Council of 21 May 2008 on Certain Aspects of Mediation in Civil and Commercial
Matters explains:

“Mediation can provide a cost-effective and quick extrajudicial resolution of disputes in civil and commercial matters
through processes tailored to the needs of the parties. Agreements resulting from mediation are more likely to be
complied with voluntarily and are more likely to preserve an amicable and sustainable relationship between the parties.
These benefits become even more pronounced in situations displaying cross-border elements.”

Mediation provides the opportunity to the parties involved to settle the dispute in a friendly manner and thereby allows
them to continue to do business in the future. Furthermore, the contracting parties also benefit from the fact that the
proceedings are conducted privately and confidentially which leads to a further advantage given that the reputation of
the business of the Trader is maintained.

1. The procedure offers flexibility because the “parties remain in control of the decision to settle and terms of the
   settlement”.
2. Even though it is not a Court judgement the parties could proceed with an agreement, which is enforceable by a Court.
3. The discussions that take place during the Mediation are without prejudice (i.e. cannot be used against the party in
   subsequent judicial proceedings), this in turn allows the party to negotiate freely while at the same time reserving
   the right where the negotiation is frustrated to proceed to the Court.
4. Mediation is a voluntary process in which the parties enter into on their own accord, in good faith in order to
   resolve the issue/issues at hand.
5. Mediation is not a judicial or arbitration procedure and therefore a possible solution is not imposed on the parties
   by an independent authority or party, but it can be reached by the parties themselves and imposed on them only in
   case they agree.
6. The nature of the resolution of the dispute may be practical and not necessarily legal i.e. the resolution must not
   necessarily follow any laws or commercial practices which are usually followed in that specific field provided
   however that the resolution is not illegal, against moral standards or the public interest.
7. The Mediator does not act as a judge or arbitrator and does not impose an outcome on the parties nor does s/he rely
   on any legal or other principles. S/he merely facilitates the process and encourages finding a solution.
8. The mediation process in confidential at all stages (as opposed to the judicial process) and therefore any
   discussions or suggestions taking place during the mediation cannot be used in any subsequent procedure (e.g. another
   mediation, judicial or arbitral process) unless they form part of the final agreement reached between the parties.
9. The mediation process is faster, generally cheaper and more flexible for the parties compared to the judicial
   process, especially when you compare it with the Cypriot reality.
10. The parties may terminate the proceedings and withdraw at any time without giving any explanation and without being
    adversely affected.
11. The whole process takes place in a comfortable and friendly environment and not in the courtrooms.
12. An attempt is made to establish an appropriate environment and behaviour therefore there is no animosity and the
    adversarial process between the parties and their lawyers.
13. Each of the parties bears its own costs. There is also no obligation to be represented by a lawyer and therefore,
    any of the parties who do not have the financial means of representation, may limit their costs only to those of the
    mediator.
14. Any agreement reached by the parties in mediation will be difficult to challenge except in cases of misinformation,
    deception or coercion.

WHAT ARE THE CHARACTERISTICS OF MEDIATION?

Mediation is an alternative, structured, dispute resolution process in which the parties, with the help of an
independent third party, facilitate the process and encourage (without imposing a solution on the parties or
manipulating them) the parties to find a practical solution themselves to resolve their differences.

Therefore:

• Mediation is an alternative to litigation and arbitration.
• It is a voluntary process in which the parties enter on their own accord and in good faith to resolve their dispute.
• The finding of a solution is not mandatory.
• The mediation is not a judge and therefore may not impose a solution on the parties. The mediator facilitates the
  process and encourages the parties themselves to reach a solution to the issue at hand.
• The resolution of a dispute may not necessarily follow the law or other practices provided that it is morally just, it
  is not illegal and not against the public interest.
• Mediation is not a panacea for all issues which may arise between the parties. In particular, mediation can be used in
  private disputes provided that there is a power of disposal i.e. the law does not require the parties to resolve a
  dispute through another route.
• Unlike other procedures, mediation presupposes the personal attendance of the parties (unless the party is a company
  or group of persons).
• Any resolution of the issues through mediation must be signed by all of the parties and may enforceable in a court of
  law.
• The mediation process is confidential.

WHAT ARE THE STAGES OF MEDIATION?

Even though the Mediator in the Mediation proceedings does not offer an opinion and makes no binding decisions, his
evaluative role should not be regarded as worthless. The Mediator aims to find the cause of the problem and create an
understanding between the parties in order for them to be able to move forward. All in all, the Mediation route is not
only a risk-free option but also offers the opportunity to the parties to reach a “less traumatic resolution of
disputes” while at the same time reserving their right if things turn the ‘wrong way’ to proceed with other Alternative
Dispute Resolution (ADR) proceedings or with litigation.

The stages of mediation are the following:

• Preparation: At the preparation stage the mediator examines whether there is a conflict of interest between
  him/her and the parties (or in some cases with their lawyers). If not, the mediator may accept his/her appointment and
  the mediation agreement is signed which signals the start of the mediation process. The mediator will then request a
  brief summary of the dispute by each party and will address any issues relating to the sessions.

• Opening Statements - firstly by the mediation, who will explain the mediation process (and will present to the
  parties the mediation agreement fully signed) and the procedure to be followed. Then the parties will proceed with
  their opening statements followed by their lawyers (if present).

• Investigation and negotiation – these stages take place during the private sessions (caucuses). During the first
  2 (usually) private sessions with each of the parties, emphasis is places on the events and the feelings of the
  parties. Then, during the other private sessions, the negotiation stage begins where the parties are invited to think
  about their priorities and possible solutions.

  • In case where a solution is reached, then there is a final stage where the final agreement is prepared (either by
    the lawyers of the parties with the parties and/or with the contribution of the mediator) and is signed by all of
    the parties.

WHAT IS THE DIFFERENCE OF THE ROLE OF THE MEDIATOR AS OPPOSED TO THAT OF THE JUDGE OR THE LAWYER OF EACH PARTY?

Due to the nature of the mediation process, the role of the mediator has nothing to do with that of the judge. The
mediator facilitates the process, encourages the parties to the resolve the issue, focuses on the psychology of each
party and identifies the real issues to be resolved and does not impose a solution. The aim is not to reveal the truth
about facts and therefore anything said during the mediation is basically taken for granted without further examination.
The power of the mediator in the process is that actually s/he has no power! The procedure is essentially determined by
the parties themselves.

Instead, the judge strictly focuses on the facts and decides a case on the basis of law and legal principles. Therefore,
s/he is not interested in identifying the agenda of the parties, nor the deeper issues which the parties have between
them. The judge is limited to the issues in the pleadings and s/he imposes a decision on the basis of testimony and law.

As far as the parties’ lawyers are concerned, it is important for them to realise that their role in a possible
mediation is very different from that of the court. The lawyers must understand that the purpose of mediation is to find
a solution which satisfies both parties. For this reason, they should try cultivating the idea of a possible compromise,
by understanding the red lines of their client as well as the following: (a) what are the facts, (b) what is the ideal
scenario for their client, (c) what is the worst scenario for their client, (d) what scenarios could be the basis of a
satisfactory (not perfect) compromise, (e) what is the psychological position of the client i.e. would an apology
satisfy the client and to what degree.

For this reason, the lawyers of each party, facilitates the role of the mediator in the sense that the role of the
mediator is to identify the real issues to be resolved, the psychology of the parties and the goals of each party. The
lawyer o the other hand is able to manage the expectations of his/her client by emphasizing what is possible, what is
impossible and what is a good compromise since he knows his client’s position very well.

Therefore, both the mediator as well as the lawyers of each party do their utmost to find a common solution.