Mediation clause
A mediation clause requires the parties to try resolving a dispute with a neutral mediator before going to court or arbitration.
What it means
A mediation clause commits the parties to try mediation before suing or starting arbitration. A mediator is a neutral third party who helps the sides negotiate. Unlike a judge or arbitrator, the mediator does not decide who wins, and nothing is binding unless both sides sign a settlement.
Imagine a contractor and a restaurant owner arguing over a renovation that ran over budget. A mediation clause means they sit down with a mediator, often for a single day, before either can file suit. Many disputes settle at that stage, at a fraction of the cost of litigation.
Clauses vary in detail. Some simply require “good faith” mediation, while others name a provider, a location, how the mediator is chosen, a deadline, and how costs are split. Courts in many places will pause or dismiss a case filed before a required mediation, so skipping it can backfire.
Mediation suits parties who want to keep a working relationship and control costs. It can also be used to delay, which is why a firm deadline matters.
What to watch for
- Check whether mediation is required before filing a lawsuit or arbitration, or merely optional.
- Look for a deadline, such as 30 or 60 days, after which either party may move on if mediation fails.
- See how the mediator is chosen and how the fees are shared.
- Check whether urgent claims, like requests for an injunction, can go straight to court.
- Note whether skipping mediation carries a penalty, such as losing the right to recover attorneys’ fees.
Example clause
Before starting any arbitration or litigation, the parties shall attempt in good faith to resolve any dispute through non-binding mediation with a mutually agreed mediator, with the mediator’s fees shared equally. If the dispute is not resolved within forty-five (45) days after a written request for mediation, either party may pursue its other remedies.
You must try mediation first, but if it fails within 45 days you are free to go to court or arbitration.