When a supply arrangement, service agreement or construction contract goes wrong, the first instinct is often to reach for the dispute clause. Mediation offers a different route: a structured negotiation, assisted by a neutral person, in which the parties keep control of the outcome. For commercial contracts the attraction is practical, because the parties usually have a relationship worth preserving. This article explains how commercial contract mediation works in Kenya and how to prepare for it.
Quick answer
Mediation is a confidential, voluntary process in which a neutral mediator helps the parties reach their own settlement. It can deal with a contract dispute before or during litigation or arbitration, and it can settle the past account and the future relationship in one agreement. A mediated settlement is recorded in a written contract, and where a court adopts it in court-annexed mediation it can be enforced through the court process.
A court decides who is right on the evidence and awards a remedy. A mediator does not decide; the parties do. That difference allows terms a judgment cannot easily produce, such as a revised delivery schedule, a payment plan, continued supply, a service credit or an agreed variation. Mediation can also be faster and more private, and it can narrow the issues even when it does not settle the whole dispute.
Mediation is not a substitute for legal advice. Each party should understand its legal position, the value of the claim and the cost of the alternatives before the session.
Which contract disputes suit mediation
Most commercial contract disputes can be mediated, including disagreements over price adjustments, delivery delays, quality rejections, variations, service levels, termination and outstanding invoices. The cases that suit mediation best are those where the parties expect to keep working together, where confidentiality matters, and where the cost of a contested hearing would be disproportionate to the amount at stake.
Check the contract first. Many negotiated agreements now contain an escalation clause requiring senior representatives to meet, and sometimes to mediate, before proceedings are issued. The article on contract clauses that prevent disputes explains how these tiers are drafted.
Court-annexed mediation and private mediation
Kenya has two practical routes. In court-annexed mediation, a court refers a suitable case to mediation under the Civil Procedure Act and the Civil Procedure (Court-Annexed Mediation) Rules, 2022. The process is administered through the court, the mediator is drawn from the accredited panel, and a settlement can be adopted by the court. The Mediation Accreditation Committee accredits mediators for this purpose, and the Judiciary publishes guidance on the process.
In private mediation, the parties agree on a mediator, a venue and a timetable, either directly or through an institution. Private mediation can begin before any case is filed and can run alongside arbitration. The agreement to mediate should record the mediator’s appointment, the fees, the confidentiality terms and the effect of a settlement. The related article on mediation and arbitration compared explains which route may suit a particular dispute.
Preparing for the first session
Preparation decides the quality of the session. The party should bring a short case summary, a chronology, the contract and any variations, the invoices and payment records, the correspondence and any technical or expert report. The figures should be organised into a schedule so that the claim, the counter-claim and the disputable items are visible.
Settlement authority is just as important. The person attending must be able to agree a figure and the non-monetary terms without adjourning to a board meeting. That means agreeing the range in advance, recording the authority in writing and deciding which terms are essential and which are negotiable.
Confidentiality and the without prejudice position
Mediation depends on candour, so confidentiality terms matter. In court-annexed mediation the rules provide for confidentiality, and in private mediation the mediation agreement should do the same. Settlement discussions are also commonly protected by the without prejudice principle, which prevents an offer made to settle from being used against the party that made it if the negotiation fails.
Confidentiality is not absolute. Fraud, threats, criminal conduct and disclosure required by law or regulation can fall outside it, and the exact position depends on the mediation agreement and the rules that apply. Sensitive documents should be shared on terms recorded in advance, not assumed to be protected.
Documenting and enforcing the settlement
A settlement should be reduced to a written agreement drafted with the same care as the original contract. It should identify the obligations, the dates, the payment mechanics, the releases, the consequences of default and the dispute route for any future disagreement. Vague language about the parties intending to cooperate is not a settlement.
Where the mediation is court-annexed, the settlement can be recorded and adopted by the court, and enforcement then follows the ordinary court process. A settlement reached in private mediation is a contract, so a breach can be pursued as a contract claim. The related article on mediated settlement agreements explains how a settlement is made binding.
Timing and cost considerations
Mediation works best before positions harden and before costs accumulate: before stock is written off, before a substitute supplier is locked in and before pleadings are filed. It can also run during litigation or arbitration and narrow the issues, but the later it comes the more the parties have invested in their positions.
The cost includes the mediator’s fees, the venue, legal fees for preparation and attendance, and management time. Those costs are usually modest against a contested hearing, an appeal or an arbitration, especially where the relationship has continuing value. A settlement also lets the parties allocate costs between them.
When mediation is not the right route
Mediation is not suitable where urgent relief is needed to preserve assets or evidence, where one party is not willing to negotiate, where there is a serious power imbalance or coercion, or where the dispute requires a public judgment or a precedent. Where fraud or forgery is alleged, the civil claim can sometimes be mediated while the criminal complaint follows its own course, but the two tracks should be considered together before anything is signed. The firm’s arbitration and ADR practice advises on mediation strategy, preparation and settlement drafting.
Preparation checklist
- Confirm whether the contract requires mediation before litigation or arbitration.
- Assemble the contract, variations, invoices, correspondence and any expert report.
- Prepare a chronology and a schedule of the claim, counter-claim and disputed items.
- Agree the settlement range, the non-monetary terms and the authority to settle in advance.
- Confirm attendance and the mediator’s appointment terms.
- Check the confidentiality and without prejudice position for sensitive documents.
- Draft the settlement agreement before the session so that a deal can be recorded immediately.
Primary sources
- Judiciary of Kenya: Court Annexed Mediation, for the court-annexed mediation process and guidance.
- Civil Procedure (Court-Annexed Mediation) Rules, 2022, Kenya Law, for the procedure and confidentiality of court-annexed mediation.
- Kenya Law, for the Civil Procedure Act and related legislation.
This article is general information, not legal advice.