Commercial Dispute Mediation: Prepare the Case

Decide What Mediation Must Resolve

Define the decisions the mediation must produce before preparing the position paper. Identify each party by its legal capacity, the disputed obligations and the remedies sought. Include any counterclaim, guarantee or insurer whose participation affects a proposed resolution.

Use the following preparation sequence.

1. Identify the contract and dispute-resolution clause, including any notice or preliminary negotiation requirements.
2. Read the mediation order and applicable court directions. Record attendance requirements, document-exchange deadlines and who receives each paper.
3. Identify the governing legislation and mediation agreement, including confidentiality obligations and the mediator’s process.
4. List the factual questions and missing records that prevent an informed offer. Seek targeted exchanges before the session.

For Federal Court proceedings, section 53A of the Federal Court of Australia Act permits a mediation referral without the parties’ consent. That referral does not require them to agree to a settlement. State court and privately arranged mediations require their own analysis of the governing framework.

The Federal Court’s Central Practice Note expects parties to exchange information needed for informed dispute resolution. If payment allocation is disputed, exchanging the relevant invoices and bank entries can narrow the negotiation before anyone discusses a discount.

Separate the client’s legal remedy from its commercial objective. A supplier might seek payment while also needing stock returned and a continuing distribution arrangement clarified. Record which outcomes are necessary and which can be traded. Use the commercial litigation guide when deciding how mediation fits the wider proceeding.

Prepare the Mediation Evidence and Position

Build an issue matrix that connects each disputed proposition to its supporting record and financial consequence. Give the mediator a short path through the dispute, with enough source detail to examine a contested amount.

Issue and Loss Schedule

The following fictional invoice dispute shows the distinction between a recorded payment and its contested treatment.

Issue	Source evidence	Agreed position	Disputed question
Invoice balance	Invoice register and contract	Invoices total $200,000	Was all work within scope?
Payment allocation	Statement-A.pdf, page 4 and remittance advice	Customer paid $50,000	Which invoices did it discharge?
Defect deduction	Inspection report and repair quote	A complaint was notified	Is the claimed $30,000 deduction justified?
Remaining payment	Reconciled transaction schedule	$150,000 before the disputed deduction	Is $120,000 or $150,000 the supported balance?

These figures assume the $50,000 payment reduces the same $200,000 invoice balance. Accepting the $30,000 deduction produces $120,000. Rejecting it leaves $150,000. The example excludes interest and legal costs, and assumes the invoice figures already reflect their stated tax treatment.

Keep separate columns for principal, credits, interest and costs in the working schedule. Show the source for every amount and the calculation behind each alternative. Do not add a bank transfer to an invoice total as a second loss. A payment between related accounts can also appear twice unless both sides of the transfer are identified.

If a figure depends on causation or a contested legal entitlement, identify that assumption beside the number. Where records are missing, show the affected amount as unresolved instead of putting an unsupported figure into the agreed subtotal.

FinTrace saves legal teams and forensic accountants hours of statement conversion and review when disputed payments span a large PDF bundle. The service delivers a searchable Excel ledger and clear findings report, with direct PDF filename and page references. Advanced AI workflows combine source-grounding checks with independent reviews, preserving the transaction facts used in the schedule. Statement-analysis work is delivered at a fraction of the cost of manual review or engaging a forensic accountant for the same task.

Position Paper and Negotiation Material

A position paper explains the dispute, the evidence behind each position and the outcomes the client wants to discuss. Follow the mediator’s directions on length, recipients and exchange. Keep the internal authority range out of an exchanged paper unless the client authorises its disclosure.

Maintain separate files for underlying evidence, exchanged negotiation papers and confidential instructions to the legal team. Record whether a mediator-only paper can be shared. Preserve the original bank statements and contracts in the evidence set.

In a Federal Court referral under section 53A, section 53B addresses evidence of statements or admissions made at the mediation conference. Section 131 of the Commonwealth Evidence Act separately addresses settlement communications and documents prepared for settlement negotiations. Its application depends on the proceeding and statutory conditions.

Putting a pre-existing invoice or statement in the mediation bundle does not itself remove an existing discovery obligation. Keep the underlying record separate from the negotiation commentary attached to it. The without prejudice guide explains the protection analysis for correspondence beyond this preparation task.

Confirm Settlement Authority and Scenarios

Confirm who can approve each proposed settlement term before the mediation starts. The Federal Court’s mediation guidance requires an organisational attendee who can decide settlement terms and bind the organisation.

Record the client’s financial limits privately, together with the process for obtaining additional authority. Identify any board, insurer or other approval needed and arrange access to that decision-maker. Resolve a known approval dependency before presenting a proposal as available.

Authority must cover more than the headline amount. Discuss the payment timetable, any security, costs treatment and tax consequences. Record which non-monetary terms the client can perform, who controls the required assets and what must happen before proceedings end.

Immediate Payment and Staged Terms

Assume a fictional client can choose between $120,000 paid immediately and $132,000 paid over six months. The staged proposal pays $22,000 at the end of each month. Both figures are assumed net receipts, with identical costs and tax treatment and no additional fees.

At an assumed monthly discount rate of 1%, six payments of $22,000 have a present value of approximately $127,500. The calculation adds each payment divided by 1.01 raised to its payment month. The discount rate is illustrative and does not price default risk.

If the payer makes only the first two instalments, the client receives $44,000 before enforcement. The remaining scheduled amount is $88,000. This is a stress scenario, not a prediction or a default probability.

The $12,000 nominal premium therefore requires a decision about payment risk as well as timing. Obtain evidence of the proposed funding and assess the actual security available. A promise to provide security is different from completed security with an assessed priority and realisable value.

Write the client’s instructions against both scenarios. If instalments are acceptable only with specified security, record that condition with the authority. If acceptable funding or security is unavailable, revise the proposal before agreement.

Record the Agreement and Verify Performance

Record agreed terms precisely enough for the solicitors to prepare the required settlement documents and manage completion. The Federal Court describes signed terms as the usual outcome when mediation resolves some or all of a dispute. A negotiated outcome still needs the intended legal instrument and completion steps.

Before the parties leave, identify the following matters in the terms.

• Name every party giving an obligation or receiving a release, with the correct capacity.
• State each amount, payment recipient and due-date mechanism, including how interest, costs and tax are treated.
• Describe non-monetary obligations, responsible parties and the documents or evidence required to confirm completion.
• Specify the proposed security, its completion requirements and the agreed response to a missed payment.
• Record who prepares and signs the settlement instrument and when court steps occur.

Have the solicitor state whether the signed terms are intended to bind immediately or depend on later execution. Do not assume that calling a document heads of agreement settles that question. Where a deed is required, use the deed of release guide for its scope and legal drafting issues.

Create a performance schedule from the final obligations. For each payment, record the amount due, actual receipt and remaining balance, with a bank reference. In the fictional instalment example, three cleared payments total $66,000 and leave $66,000 outstanding. Reconcile cleared funds before recording a payment obligation as complete.

If a payment is missing, identify the applicable notice and default provisions before taking the next step. If mediation ends without agreement, record the procedural outcome separately from confidential negotiations. Identify the remaining factual disputes and the next court deadline, then decide whether targeted evidence or another negotiation can resolve the remaining gap.

Close the mediation file only when the agreed legal documents and completion record support the outcome the client authorised.