This clause forces both parties to attempt mediation (a negotiation with a neutral third party) before they can go to court or arbitration. Mediation is non-binding, meaning the mediator can't force a decision on you—they just help you talk and find common ground. This clause matters because mediation is usually cheaper and faster than court, but it also delays your ability to get a final legal decision if the other side won't cooperate. The legal principle here is that courts in both the UK and US encourage alternative dispute resolution, but a mandatory mediation clause can sometimes trap you in lengthy negotiations with an unreasonable opponent.
Check whether mediation is truly mandatory or just encouraged—if mandatory, ask for a time limit (like 30 days) so you're not stuck negotiating forever. Also clarify who pays for the mediator and whether either side can skip mediation if the dispute is urgent (like a business emergency); otherwise, you could be forced to mediate even when you need immediate court action. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause forces both parties to attempt mediation (a negotiation with a neutral third party) before they can go to court or arbitration.
Why should I care about this clause?
Mediation is non-binding, meaning the mediator can't force a decision on you—they just help you talk and find common ground.
What are my options?
This clause matters because mediation is usually cheaper and faster than court, but it also delays your ability to get a final legal decision if the other side won't cooperate.
How does this affect small businesses?
The legal principle here is that courts in both the UK and US encourage alternative dispute resolution, but a mandatory mediation clause can sometimes trap you in lengthy negotiations with an unreasonable opponent.