Do the courts encourage mediation?
Yes – Judges routinely encourage mediation and stress its benefits, including:
• saving costs which would otherwise be spent in pursuing court proceedings;
• proffering explanations as part of the mediation process; and
• the continuation of the parties' relationships. Mediation is a form of alternative dispute resolution (ADR) and the court guides encourage ADR.
The Technology and Construction Court guide states that the parties should inform the court as to:
• the likely efficacy of ADR;
• the appropriate timing of ADR; and
• the advantages and disadvantages of ADR.
Having heard the parties' representations, the court may:
• order a stay of the court proceedings to enable ADR to take place; or
• encourage the parties to use ADR and make provision for it to take place within the court timetable for the case.
In addition the courts often make ‘ADR orders’ requiring the parties to take such steps as they may be advised to resolve their disputes in mediation.
Will the courts impose mediation on unwilling parties?
No – The Court of Appeal has stated that:
• to require truly unwilling parties to mediate would:- impose an unacceptable obstruction on their right to access to the court; and- be a violation of the European Convention on Human Rights.
• even if the courts did have the jurisdiction to compel mediation, it would be difficult to conceive of circumstances in which its exercise would be appropriate.
Will the courts uphold the validity of a mediation clause?
Yes – But any mediation clause in a contract must be clear and certain in its effect to be enforceable. For example a mere ‘agreement to mediate’ would in all probably be too uncertain to enforce. To ensure that a mediation clause is enforceable, it should:
• set out the particular mediation procedure to be adopted; or
• incorporate such a procedure by reference, for example the mediation procedure of an ADR organization such as CEDR.
Will the courts impose cost sanctions on successful parties who unreasonably refuse to mediate?
Yes - The courts can deprive a party successful in court proceedings of some of its costs of those proceedings which it would otherwise have been awarded. The burden is on the unsuccessful party to show that the successful party unreasonably refused to mediate. Court guidelines to determine whether the successful party unreasonably refused to mediate include:
• the nature of the case (whether the successful party reasonably believed the case was not suitable for mediation);
• the merits of the case (whether the successful party reasonably believed it had a watertight case);
• other settlement options (whether the successful party made any other settlement attempts);
• the cost of mediation (whether the cost of a mediation would have been disproportionately high);
• delay (whether a mediation would have delayed the trial); and
• prospects of success (whether a mediation would have had reasonable prospects of success).
Whilst the court has a discretion to impose a costs sanction by the application of the above guidelines, there have been judicial warnings that any refusal to mediate is a ‘high risk’ option.
Will the courts impose costs sanctions on parties to mediation who conduct themselves unreasonably?
No – Mediations are confidential and the courts will not seek to ascertain the reasons why a mediation was unsuccessful by reference to a party's behaviour at the mediation. The parties are therefore entitled to adopt whatever position they wish in a mediation (however unreasonable that position might be).
Please note: These key points are only intended to give general guidance and are no substitute for specific legal advice on any given situation.