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ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms

Kestrel Ltd and Bolt Co are in dispute over a supply contract and appoint a mediator. During the mediation, Kestrel's manager says: 'The mediator should decide who is right and we will be bound by it.' Which statement about the mediator's role is correct?

The mediator only facilitates discussion and helps the parties reach their own agreement. A mediator has no power to impose a binding decision, so the manager's expectation is wrong. Binding awards and reasoned decisions under evidence rules belong to arbitration or litigation, not mediation.

  1. AThe mediator facilitates discussion and helps the parties reach their own agreement, but has no power to impose a decisionCorrect
  2. BThe mediator issues an award that is automatically enforceable as a court judgment
  3. CThe mediator must apply strict rules of evidence and give a reasoned decision

Explanation

A mediator is a neutral facilitator who assists the parties in finding their own solution. The mediator cannot impose a binding outcome. Any settlement binds the parties only once they agree it, usually as a contract. Options 1 and 2 describe adjudication or arbitration.

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