It is rare that mediations to settle disputes hit the news. The strict and strictly guarded confidentiality usually extends to the very existence of the mediation. And when media reports that a dispute had been settled through mediation, the report normally contains the rider: the terms of the settlement remain confidential. End of the story.

But recently, there was news that a dispute involving the government of the Australian State of Victoria had been resolved through mediation. The media coverage offered an interesting insight into this very successful dispute resolution process. It is an example of how mediation can be used by governments – and why they remain in two minds about it.

 The mediation ended the dispute that arose after the Victorian government’s decision to pull out of hosting the Commonwealth Games, a decision that had made considerable headlines. For weeks, the government, the opposition, municipalities, and legal experts debated the pros and cons as well as the legal ramifications of the decision.

 Of course, the decision was not simply accepted by the Commonwealth Games Federation, Commonwealth Games Federation Partnerships, and Commonwealth Games Australia (Commonwealth Games). A protracted, lengthy, and very costly international dispute about significant damages payments was on the horizon. According to some legal experts, the government would have been forced to play a (legally) rather weak hand, resulting in a real risk that it would have to pay substantial damages.

 The parties opted against pursuing their claims through international arbitration or litigation. Instead, they agreed to negotiate solutions with the help of independent neutrals, the mediators. The mediation successfully ended the dispute and Victorian Premier Andrews commented: “[n]ot a dollar more, no court action, the matter is closed off and finalised”.

Interestingly, on this occasion, the media could report that the:

  • mediation had been conducted as a so-called “co-mediation”, with two eminent jurists, The Hon Kit Toogood KC and The Hon Wayne Martin AO KC, former (Chief) justices from New Zealand and Western Australia, jointly facilitating the negotiation.
  • two mediators supported the settlement agreement reached by the parties, as reported at least by some media outlets.
  • Parties agreed that the originally envisaged hosting model was more expensive than traditional hosting models.
  • Victorian government agreed to pay AUD$ 380 million to the Commonwealth Games.

This offers glimpses into the mediation, of some interesting details about the dispute resolution process and the settlement, but also how governments can use mediation strategically and intelligently.

First, as part of their settlement, the parties must have agreed to release certain information. This included that the parties undertook mediation to end the dispute. Moreover, the parties also agreed to release details about the process itself as well as the terms of settlement. It is likely that the parties negotiated exceptions to the otherwise strict confidentiality, probably in the form of a communication strategy carefully crafted to suit the government’s narrative around its exit from hosting the Commonwealth Games.

Second, the parties opted for a so-called “co-mediation”, a still (and sadly) rather underutilised process that can yield excellent results, especially in complex international disputes. In co-mediations, parties select multiple mediators, usually based on their specific, often complementary skills, (cultural) backgrounds, and characteristics. With those, co-mediators can add real value to mediations.

Third, their significant gravitas is likely to have been an important consideration in the appointment of the co-mediators. The media reported that both mediators supported the settlement. Here, too, the parties, including the mediators, must have agreed that this support becomes public. This is a good indicator of the significant political dimension this mediation had. Mediators normally do not comment on the outcome of mediations; they remain neutral and detached from the solutions and results the parties agree to. In this instance, however, the Government sought and received the imprimatur of the co-mediators to assuage any later criticism of the settlement. As an aside, a similar political motivation can be seen in the parties’ agreement that the originally envisaged hosting model was more expensive than traditional hosting models.

 Fourth, the mediation was far quicker. The Victorian government announced its decision to pull out of hosting the Games in July 2023. The mediation ended the dispute some time in August 2023, i.e., approx. 1.5 months after the dispute arose. It is almost trite to state that this is a far cry from the time it would have taken to decide the dispute through international multi-party arbitration or litigation. Such proceedings would have included complex arguments over procedural, jurisdictional, meritorious, and, possibly, quantum issues – arguments that are likely to last years, and certainly not months.

Fifth, even though there are no official figures, it is very likely that this mediation was more cost-effective (read: less expensive) than an international multi-party arbitration or litigation, i.e., through procedures that are known to be expensive. The resources required to prepare and run such complex and lengthy cases are always considerable. Moreover, the parties would have shared the costs for the mediation and the mediators, while paying their own costs for participating in the process, avoiding any negative cost orders.

With mediation, the parties chose a party-centred, interest-based consensual dispute resolution process. Rather than surrendering control over the outcome of the dispute to decision-makers, facing largely unpredictable win-lose decisions, they opted to remain in control and found their own solutions that ended their disagreement fast, effectively, and cost-efficiently. In addition, the parties could agree on exceptions to the mediation’s confidentiality, enabling the parties to release targeted information. The political nature of the information is obvious, making this mediation a good example of how governments can use this process intelligently to advance their (political) narrative.