General Counsel: Energy Sector (UK and Ireland, Southern Europe and Japan)

1. As General Counsel, what is your perception of the benefits of mediation as a form of dispute resolution for your organisation?

At SSE we have a large and varied supply chain, dealing with a plethora of third parties and intermediaries across the world and, in most cases, we engage in business relationships with suppliers and third parties on a regular basis across our different business functions. Mediation, which provides a cheaper and faster way of resolving disputes than litigation, has been a very effective tool, particularly for relatively low-value disputes. Furthermore, confidentiality is important, and the private process of mediation encourages parties to discuss their concerns more openly, allowing the mediator to get to the real or key issues or concerns quickly. Mediation can also allow the parties more flexibility in resolving the dispute with a focused outcome that will be acceptable to both sides.

2. Is there a lack of awareness and understanding about mediation within your sector/jurisdiction? If so, what misconceptions about mediation do you encounter?

The energy sector is adept at using alternative dispute resolution (ADR) for resolving conflict, with a well-refined process of senior management escalation leading to the ADR method of choice depending on the contract and type of dispute. Mediation is a key tool within the dispute resolution process and is widely used across the organisation for a variety of disputes such as personal injury, property, employment, and commercial claims. It has also been used for some high-value and complex disputes; however, the normal escalation process is adjudication in construction disputes and arbitration in other high-value commercial disputes.

3. What are the business and legal challenges which influence your decision-making process when considering entering into mediation?

Depending on where liability rests and the type of dispute, the priority is to resolve the dispute as efficiently as possible, in which case mediation is commonly used prior to litigation. Mediation can be viewed as a type of facilitated commercial negotiation which allows the parties to explore alternative and innovative ways of resolving the dispute as it is confidential, voluntary and on a without-prejudice basis. This allows the parties to find mutually acceptable solutions to the dispute, which they may not be able to in other adversarial processes such as adjudication and litigation. The benefits of this approach are that parties’ relationships are maintained and/or the dispute is resolved quickly and effectively. However, when dealing with large renewable energy projects such as offshore wind farm construction, due to the huge infrastructure involved, there are often delay, defect and costs overruns claims or other issues which need to be resolved as soon as possible. In these instances, the contracts typically provide for adjudication or arbitration as a mechanism to resolve the issue.

4. Is mediation specifically included as a form of alternative dispute resolution in your organisation’s standard form contracts? If so, why? If not, would you support the courts being able to mandate mediation by parties to a dispute?

Mediation is included in some of our standard form contracts as a form of ADR. In some contracts we include arbitration or adjudication as a form of ADR, depending on the type of dispute, and in some instances, expert determination. In most cases, the dispute resolution process starts with senior management discussions; if this fails to resolve the dispute then we proceed to the formal contracted ADR process. I would welcome the courts being able to mandate mediation by the parties as this would inevitably save costs and time.

5. At what point in a dispute would you consider initiating a mediation process and why?

A mediation is only useful once you have understood the full facts and issues of a dispute; you can then go into the process with a view to achieving a resolution that works for both parties. We have seen that entering a mediation too early can result in the relationship between the parties being further exacerbated and frustrated. However, once the parties have exchanged statements of case, for example, but ahead of the costly disclosure process, is an effective time to enter a mediation. If this fails, we will not rule out a mediation after the disclosure process or even after the exchange of witness evidence or before the trial date. We would keep such an open mind in cases where we feel that there is no black or white solution and where we feel the other side is genuinely interested in resolving the dispute. Once we get to trial then the outcome will be binary.

6. What is your experience of appointing external mediators? Was this a straightforward process and what resources did you use to find the right mediator for your situation?

We find an effective way of appointing a mediator is with both sides recommending a mediator of their choice, failing which we usually ask the Centre for Effective Dispute Resolution to appoint a suitable mediator. The determining factors for choosing a mediator will be the nature of the dispute and whether the mediator has a good track record in this field.

7. What steps do you think are key for GCs to take to maximise the chances of a successful mediation?

We take entering into a mediation seriously, and do not treat it as a fishing expedition. In the run up to the mediation, it is important to understand your case fully, including whether there are any weaknesses. This then informs your mandate for settlement, which should be flexible and allow for some compromise that is close to the outcome you are hoping to achieve. Without compromising your own position, the focus should be on practical solutions where possible and having an open mind to understand the other parties’ issues and concerns.

8. Have you experienced a hybrid mediation (where some or all participants attend online) and if so, was it as effective as an in-person mediation? What would be your tips for ensuring a hybrid mediation is a successful process?

I have not attended a hybrid mediation myself, however, I understand that the team has experienced these on a regular basis for settling smaller civil claims. These can be effective if managed very carefully by the mediator. They can also be less intimidating for parties who are not used to litigation. The challenges are to keep the parties engaged and focused on seeking a resolution and having the impetus to get the deal done.

9. Have you seen an increase in the use of mediation in your sector since 2020? If so, what do you think are the causes at play?

I haven’t seen an increase in mediation in the energy sector per se, although there is more emphasis on alternative dispute resolution and remote/hybrid hearings to increase efficiency. In the energy sector there are complicated relationship structures with third parties based in multiple jurisdictions. Our renewable energy projects are particularly large, with complex structures and varied supply chains, involving numerous stakeholders and many moving parts. There are invariably complex and large-value disputes with joint-venture partners and other parties as a result of these complex arrangements involving multiple jurisdictions. In these circumstances, mediation is less likely to be used, and the majority of dispute resolution is focused on arbitration and adjudication.