What is Mediation?

In mediation, both parties sit down with a neutral mediator to find a solution together. The mediator facilitates the conversation, asks questions, and helps parties clarify their underlying interests. Unlike a judge or arbitrator, the mediator does not make a ruling. The solution comes from the parties themselves.

A mediation starts with a joint session where both parties present their perspective. This is often followed by separate sessions (caucus) where the mediator speaks with each party individually to uncover the interests behind their positions. Most business mediations take one to three days and cost between EUR 3,000 and EUR 8,000, including the mediator's fees. By comparison, civil litigation easily costs EUR 15,000 to EUR 50,000 in legal fees and takes 12 to 18 months.

In the construction sector, mediation is particularly effective for disputes over scope changes. A contractor who invoices EUR 22,000 in additional work on a EUR 120,000 renovation that the client disagrees with can reach a settlement through mediation within two weeks. The same dispute in court takes a year or longer.

The outcome of a successful mediation is recorded in a settlement agreement. This is an ordinary contract that is legally enforceable. Approximately 70 to 80 percent of business mediations end in an agreement.

Business disputes consume time, money, and relationships. Deloitte and DocuSign (2024) estimate that USD 2 trillion is lost globally each year due to poor contract management. A portion of that loss comes from disputes that escalate to legal proceedings when they could have been resolved faster and cheaper through mediation.

For SMBs, going to court is often disproportionately expensive relative to the amount in dispute. A conflict over a EUR 15,000 invoice can easily generate EUR 10,000 in legal costs in court. Mediation costs a fraction of that and preserves the business relationship, which is valuable when dealing with a long-term supplier or client.