Mediation and conciliation: alternatives to litigation for startups

Going to court is expensive, takes time and strains key relationships (customers, suppliers, investors). Two effective routes can quickly deliver an enforceable agreement without a hearing on the merits: mediation and conciliation. This practical guide explains when and how to use them, with particular points for startups to watch.

Mediation or conciliation: which route should a startup choose?

- Mediation: a confidential, voluntary, structured process led by a neutral mediator. It may be contractual (provided for in a contract or jointly agreed) or judicial (proposed/ordered by a judge). Legal basis: Articles 1530 et seq. of the French Code of Civil Procedure.
- Conciliation (preventing business difficulties): a confidential procedure under the French Commercial Code for businesses facing legal, economic or financial difficulties but not unable to pay debts as they fall due (cessation des paiements) (or that have been so for less than 45 days). The court president appoints a conciliator to negotiate with creditors and build an agreement. Legal basis: prevention of business difficulties (Commercial Code) and Service-Public guidance.

In practice: - Mediation if the dispute concerns performance of a contract (SaaS, distribution, data/AI partnership), intellectual property (licences, trademarks, patents) or a commercial relationship. INPI offers specialist mediation for IP.
- Conciliation if you need to renegotiate debts (suppliers, landlord, state-guaranteed loan or PGE), avoid multiple summonses and secure a comprehensive agreement within a few weeks.

Preventive conciliation: secure a way out of a crisis in 1 to 4 months

Conditions for opening the procedure

• Established difficulties but no cessation of payments (or for less than 45 days);
• Application to the president of the competent court (in particular the commercial court for traders), setting out the financial position, cash requirements and possible recovery measures (see Service-Public guidance).

The director may propose a conciliator; remuneration is freely set by mutual agreement (source: Service-Public guidance).

Process and duration

• Appointment of a conciliator (usually a highly experienced professional);
• Targeted negotiations with creditors to obtain extensions, instalment arrangements or even debt reductions;
• Duration: a maximum of 4 months, renewable once for 1 month (source: Service-Public guidance).

Agreement, enforcement and effects

• Settlement agreement signed with creditors; it may be formally recorded (constaté) by the court president (enhanced evidential effect) or approved by the court (homologué) (enforceability and limited publication). Basis: Commercial Code.
• Conciliation is confidential. There is no automatic stay of enforcement proceedings as in safeguard proceedings; however, standstill undertakings may be negotiated and a court-approved agreement becomes enforceable against its signatories.
• Possibility of protecting new money (conciliation priority) through court approval, a key factor for bridge financing (Commercial Code).

Warning: if you have been in cessation of payments for more than 45 days, conciliation is no longer available; you must consider collective insolvency proceedings (accelerated safeguard proceedings, judicial reorganisation or even liquidation) with dedicated support (source: Légifrance — French legislation portal).

Commercial and technology mediation: preserve the relationship and move quickly

Mediation is governed by Articles 1530 et seq. of the CPC. In practice, it applies to most B2B disputes: performance of terms of sale/terms of use, API integration, SLAs, data/AI partnerships, breakdown of negotiations and intellectual property (trademarks, patents, copyright). For IP, INPI — French industrial property office offers a dedicated mediation scheme.

The European Commission actively promotes mediation to facilitate the resolution of late-payment disputes and reduce SMEs' exposure, with sector pilots useful in construction and beyond (sources: European Commission and Mediation page). The general European framework is based on Directive 2008/52/CE.

In France, judges may invite parties to mediation, and certain matters now require a prior attempt at amicable resolution before bringing proceedings, subject to exceptions (see Service-Public — participatory procedure and collaborative law and Justice.fr — French justice portal).

Operational checklist for choosing and starting an amicable dispute resolution process

1) Define the strategy

• Map the issues (cash, product, reputation, customer/supplier/investor relationships).
• If you need debt restructuring and cash protection, choose conciliation (preventing business difficulties) if eligible.
• For contractual or IP disputes, start contractual or judicial mediation.

2) Prepare the file

• Conciliation: short business plan, 13-week cash forecast, debt repayment schedule (including PGE), main contracts, creditor schedule and proposed measures (sources: Service-Public guidance and Légifrance — prevention).
• Mediation: contracts, key correspondence, complaints and interests, settlement range, negotiating authority and timetable.

3) Choose the professional

• Prefer an accredited mediator/conciliator with relevant sector expertise (SaaS, deeptech, retail media, healthcare, fintech).
• Establish a confidentiality charter and a short timetable (target: 4 to 8 weeks).

4) Start the procedure

• Mediation: contractual clause (mandatory prior mediation) or an ad hoc agreement. Otherwise, request judicial mediation (CPC, art. 1530 et seq.).
• Conciliation: application to the president of the competent court, with the possibility of proposing a conciliator and agreeing their remuneration (source: Service-Public guidance).

Timelines, costs and effects: what to expect in practice

• Timelines: mediation often concludes within 1 to 3 months; conciliation is subject to a statutory limit (4 + 1 months).
• Costs: mediator/conciliator and adviser fees, generally lower than lengthy litigation. In conciliation, remuneration is freely set by mutual agreement (source: Service-Public guidance).
• Enforcement: a court-approved mediation agreement or court-approved conciliation agreement = an enforceable instrument (compulsory enforcement is possible in the event of default).
• Confidentiality: central to the process (Mediation: CPC; Conciliation: Commercial Code).

Combine amicable resolution and litigation: keep your options open

If the other party refuses mediation or fails to perform an agreement, retain access to fast procedures: an order for payment (injonction de payer) for claims that are certain, of a fixed amount and due, or an interim payment order (référé-provision) if the obligation is not seriously disputable. Before bringing any proceedings, a sound formal demand remains crucial to starting negotiations or establishing useful evidence.

Clauses to include in your contracts

• Mandatory prior mediation clause (designation of a centre and mediator, time limit, allocation of costs) for SaaS, licence and services contracts. See our practical advice on including amicable dispute resolution clauses in your SaaS terms of sale and your services contracts.
• Escalation mechanism (director-to-director negotiation → mediation → arbitration/court).
• Coordination with your Legal Ops to organise the legal function and standardise these clauses.