The Nigeria judicial system has accommodated the mechanisms of Alternative Dispute Resolution to enable parties in a dispute explore the arms of settlement so as to resolve dispute in a manner that not only saves their time but also is cost –effective and still maintain the relationship between the parties.

There are different types of Alternative Dispute Resolution (ADR).

  1. Arbitration
  2. Mediation
  3. Conciliation
  4. Negotiation
  5. Hybrid
  6. Mini-trial.

Our focus in this article will be mediation as an Alternative Dispute Resolution (ADR) and how it affects business disputes.


Mediation is a voluntary process in which an impartial/neutral person (to the dispute) -the mediator promotes communication and assists parties  to reach a mutually acceptable agreement.

The mediator manages the overall process and help facilitate negotiation between the parties. For mediation the process is voluntary informal and flexible. It is private and confidential and less expensive than a traditional trial. It is important to have it in mind that a mediator does not make a decision nor force an agreement. The parties directly participate and reach their own settlement.


Business disputes arise frequently and often times when least expected .It could range from initial business formation issues, business contracts, a current or future business venture or dissolving or winding up of a business.

A first approach in the resolution of a Business dispute is through dispute resolution mechanism and our focus will be mediation as a dispute resolution mechanism. Mediation is one of the common mechanisms used in resolving Business dispute.

Mediation offers business owners both small and large, an effective alternative to litigation in the courts and more businesses are turning to Alternative Dispute Resolution (ADR) to resolve their dispute. Mediation provides a framework that strengthens the ability of business people to adjust relations and resolve problems. Efficiently and efficiently without losing control of the outcome to litigation. In mediation the parties jointly select the mediator themselves. The mediator does not also have power to impose a solution upon the parties, although in some cases a mediator may propose solutions-Even occurring before or after the filling of a civil complaint, mediation permits parties to engage in a carefully managed settlement event in which the dispute is viewed against the backdrop of broad business interests, practical considerations and options for mutual gain and it is to the end that a win –win approach and not winner take all is achieved.

It is important to reiterate that Mediation is suitable for all types of business disputes even SMES and it is a way to take away much of that time, distraction and cost.


  • Mediation offers greater flexibility

The orders that a court can make are very limited but parties can be much more commercial and imaginative about settlement terms within mediation.

  • Mediation is less adversarial

The parties don’t even have to face each other if they don’t want to but at same time, the less adversarial approach can help mend relationships, which is particularly useful where there is a desire for a future business relationship.

  • Parties have more control in mediation.

The parties have greater control over the process within business mediation where as in a court room the case is in the judge’s hands and there is always a risk of a perverse decision. No matter how strong a party thinks its case is, there is always a risks that the judge will disagree.

  • Court rules encourage it.

Not only is the government consulting about making ADR compulsory, but the court rules already actively encourage parties to explore alternative methods of dispute resolution and can penalize a party for unreasonably refusing to mediate.

  • It may be contractually required.

Some business contracts require parties to attempt to mediate before issuing proceedings.

  • Mediation is problem solving in nature.

It encourages communication between the parties involved, affords them the opportunity of coming up with creative solutions and parties can exchange ideas for settlement

  • Mediation is also private and confidential

Unless with the express permission of the parties involved, discussion made in a mediation session are never released to the public.  It is an informal way of resolving disputes as opposed to the formal setting of the court. The mediator and the parties with their advocates can sit around a table to explore the issues surrounding the conflict and how the conflict can ultimately be resolved.

It is important to state here the resolution made at the end of the process becomes binding on the parties once it has been reduced into writing, and signed by them.   


Here are key steps involved in a typical mediation process:

  1. To choose a mediator

The parties agree on an independent mediator. Quite often, parties will engage an external mediation organization who can suggest a number of local mediators. Mediation comes from a range of disciplines but, in many cases, are experienced solicitors who will be able to gasp the issues that are in dispute very quickly.

  • Mediation setup

The parties drive the format unlike the court which is driven by the Judge or Magistrate. It usually involves a mixture of sessions between all parties and more closed sessions with the mediator alone. Ordinarily all parties will convene in one location, but recently mediations have tended to take place remotely.

The mediator will oversee any group sessions and will act as a go-between between the parties. Ultimately it is for the mediator to dive the settlement that each party can live with.

  • Position statement

From the outset of the mediation, each party tends to set out their position in a “position statement”. This gives the mediator and the parties themselves an idea of the position of eachof the parties in advance.

  • Discussion

Within the discussions, the mediator will look to test the case and highlight potential strengths and weaknesses of the parties’ position with a view to eliciting a first offer and thereafter narrow the gap between the parties. As the mediation is confidential, it allows parties to speak more freely, thereby assisting the bridging of the gap.

  • Settlement

If settlement terms are agreed, they will generally be recorded in a written agreement. If settlement hasn’t been achieved on the mediation day, discussions can continue and settlement still be reached in the days and weeks following the mediation.

Conclusively, business owners cannot afford confined contention, especially in highly competitive markets where effective communication is required this is why discerning business concerns are finding it more and more appropriate to engage in mediation of their dispute rather than go to litigation as first option.

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