What 'failed' mediation often produces
A mediation that does not produce a full settlement is not necessarily a failure. Even unsuccessful mediations typically:
- Narrow the issues in dispute — the parties often agree on facts or quantum elements, leaving fewer matters for a court to determine
- Produce a partial settlement — some claims or parties may be resolved even if the full matter is not
- Clarify each party's genuine bottom line, reducing wasted time in subsequent proceedings
- Demonstrate good faith, which courts take into account in cost orders
Next steps by dispute type
| Dispute type | Typical next step |
|---|---|
| Contract dispute | District or Supreme Court proceedings; or arbitration if the contract requires it |
| Shareholder dispute | Supreme Court oppression proceedings (Corporations Act s.232) |
| Building/construction dispute | NCAT (NSW), VCAT (Vic), or relevant state tribunal; or expert determination |
| International commercial dispute | International arbitration under ACICA, ICC, or LCIA rules |
Does failed mediation affect costs in subsequent proceedings?
Yes — and this can cut both ways. If a party attended mediation in bad faith (for example, without genuine authority to settle, or with no intention of settling), courts may penalise that party in costs. Conversely, a party who attended in good faith and made reasonable proposals can use the failed mediation to demonstrate reasonableness — which is relevant to cost outcomes in subsequent proceedings.
Is a second mediation worth trying?
Often yes — particularly where the first mediation broke down early, involved a mediator not well suited to the dispute type, or used a format (such as a joint session) that was inappropriate for the relationship between the parties. A second mediation with a different mediator, a different format, or after interim steps (such as an expert report) resolves many matters that did not settle the first time.
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