As a mediator, I’ve been resolving disputes for CEDR and many others for over 20 years. And here at Anthony Collins, we’ve seen the power of mediation time and again, especially in the context of Private Finance Initiative (PFI) contracts. It never ceases to amaze me how the most difficult and complex of disputes can be resolved through a mediation process.

PFI disputes are often high-value, technically complex, and expensive to run, both in terms of legal costs and management time. What’s more, they can severely damage the operational relationship between the parties; a relationship that may need to endure for years to come, or be crucial in the lead-up to PFI expiry and handback.

A real-life case study: £200m+ dispute resolved

Consider a real-life example involving a £200m+ dispute between a local authority and a contractor, with only a few years left before handover. Legal proceedings had already begun. The pleadings were long and intricate, and disclosure involved trawling through hundreds of thousands of documents. 

Whilst litigation can sometimes be necessary, these parties faced a lengthy trial, spiralling costs, and an uncertain and inflexible outcome. There was also a reputational risk for both parties in the publicity surrounding the litigation.

Why mediation works better

The court has very restrictive powers to make orders. Usually, those orders relate to how much money is owed by one party to the other. Occasionally, the court will also be asked to make declarations as to how a payment mechanism should operate or to clarify some other aspects of the project agreement. 

But what about creative solutions that could put all parties in a better position? 

This can’t be done by the courts, but it can be achieved through a well-managed mediation process.

It is often possible to find added value in a settlement, over and above the money. In the above case, the parties combined settling a monetary claim with:

• reviewing how the project agreement was working and whether any changes to operations (provided these are permitted by law) could reduce costs;
• agreeing a variation that also made the re-procurement process smoother, coming up to PFI expiry and handback;
• Agreeing on terms relating to public statements and 
• A complete set of legally binding documents for the operational teams to follow - a settlement and deed of variation to the project agreement with practical support. 

In the above case, the outcome achieved through mediation was far more valuable to the parties than they could ever have achieved if the case had trundled on to trial. Significant legal and expert fees were avoided, and, also importantly, officers’ time could now be focused on the operation of the project agreement, ensuring a sustainable contract and excellent delivery of public services for the local authority.

When to use mediation?

The great thing about mediation is that it can be used at any time, pre-action or during legal proceedings, including before or after an adjudication.

In some cases, mediation has helped parties agree on future working arrangements, and even reset strained relationships on the ground – this can be vital in the final years of a PFI contract.

Ultimately, mediation brings parties back together, pulling in the same direction rather than apart, which is very much in keeping with PFI guidance. 

I commend it to you.