In situations when there are opposing parties to the dispute, in most cases they entrust the resolution of that dispute to the court. Because court proceedings are conducted according to formal rules, the outcome of court proceedings does not always lead to a solution that is the best for the parties. Therefore, there is also a way of mediator-mediated alternative dispute resolution called mediation. Such a procedure is less formal than a court procedure, and it gives the parties an opportunity to negotiate and to settle a dispute in which the parties are those who decide the dispute, not the court.

Mediation may be mandatory or voluntary. In Croatian legislation, mediation is mandatory in three cases:

  • in labor disputes before carrying out the strike
  • in family disputes before filing for divorce when spouses have a joint minor child but have not reached an agreement on joint parental care
  • payment service providers (usually banks) are required to participate in a consumer-initiated mediation process.

In all other cases, mediation is a voluntary procedure initiated either by the suggestion of a single party or at their joint proposal. Mediation may take place before the court proceedings are instituted, as well as at the time when the parties are already before the court. When the judicial proceeding is conducted, the judge may direct the parties to resolve the dispute through mediation. The result of the rejection of this proposal is that the litigation costs that incur from that moment cannot be awarded to the party, regardless of who succeeds in the dispute. The parties to the dispute may decide to have mediation conducted before or outside the court. When mediation is conducted out of the court, the opposing parties have greater freedom to choose the mediator who will help them to resolve the dispute as well as the time and place where they will conduct the mediation.

The mediation process is conducted in the way that the mediator schedules one or more meetings attended by the mediator, the parties and their proxies. All information that the mediator finds out in the mediation process is confidential and the facts and evidences presented by the parties in the mediation process cannot be used in the subsequent court proceedings. The opposing parties play an active role in the meetings, presenting the reasons for the dispute and seeking to resolve the conflict that has arisen between them, while the mediator mediates between them seeking parties to find a common solution. Mediation also includes the legal assistance of a lawyer who can advise clients on legal issues as well as assistance in arranging a settlement. The settlement ends the mediation, the parties settle their dispute and it constitutes an enforcement document. It is therefore important that such a document is drafted in accordance with applicable laws in order to produce legal effects. It is therefore advisable that the parties seek legal advice from a lawyer.

The advantage of mediation is that the parties themselves decide how to proceed. In court proceedings the parties are obliged to act in accordance with the legal rules of procedure and by order of the court. Therefore, there is no uncertainty about the costs and duration of the proceedings in mediation, as these factors are again decided by the parties. Most often, the costs of mediation shall be shared equally unless the parties decide otherwise.

It is crucial to emphasize that, in addition to resolving the current dispute between them, mediation can also resolve mutual conflict that would prevent them from cooperating in the future, and because of this permanent conflict resolution, if they wish, can maintain good business, family relations in the future or other relations.