While mediation is highly praised, it is not a "magic bullet" and carries specific risks:
Power Imbalance: If one party is significantly more powerful, wealthy, or aggressive than the other, they may dominate the negotiation. A mediator must be skilled to prevent a "forced" settlement.
Lack of Finality: Unlike arbitration, if mediation fails, no decision is imposed. This can lead to a waste of time and money if parties are not negotiating in good faith.
No Legal Precedent: Mediation is private and confidential. It does not establish a legal precedent that can guide future cases, which is sometimes necessary for public interest or corporate policy.
Disclosure Risks: Parties might reveal sensitive information during the process, hoping for a settlement. If the mediation fails, the other party might try to use that "inside information" in a subsequent court trial (though legally protected by confidentiality).
Enforcement Issues: While the 1996 Act treats a signed settlement as an award, reaching that stage requires 100% mutual consent. Without that signature, the process has no legal teeth.
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