• MEDIATION IN COURT ACTIONS.
    WHERE ARE WE NOW?

    All civil disputes pursued through the Courts are governed by the Civil Procedure Rules (“CPR”).  CPR Part 1 contains the Overriding Objective of enabling the Court to deal with cases justly.  Under CPR Part 1.4(2)(e) the Court is obliged to further the Overriding Objective by actively managing cases and encouraging the parties to use an alternative dispute resolution procedure (“ADR”), if the Court considers that appropriate, and facilitating the use of such procedure. 

    In recent months there has been a significant amount of new case law on the issue of ADR.

    In the High Court judgment of Mr Justice Blackburne (Chancery Division) of 5 December 2003 the parties in Shirayama Shokusan Company Limited & Others vs. Danovo Limited were directed to undertake a mediation exercise within a very short time scale following the date of the Order.  The Judge in Shirayama proposed that the mediation take place in the second week of January 2004.  This Order was made on the application of the Defendant to require the parties to mediate their various disputes rather than proceed with Court action.  In giving judgment, Blackburne J stated that he took the view that the exercise of the powers provided by CPR Part 1 Rule 1 was not confined simply to the case where the parties jointly wished to settle the whole or part of the case or to use ADR.  He went on to say that there was jurisdiction for the Court to order ADR notwithstanding that one side to the litigation opposes the making of such an order.  Given that the Judge was satisfied there is such jurisdiction, the question to be decided was whether such jurisdiction should be exercised.  In that case the Judge directed that mediation should proceed despite the opposition of the Claimants.

    The decision in Shirayama is to be viewed in light of the most recent Court of Appeal decision in the cases of Halsey vs. Milton Keynes NHS Trust and Steel vs. Joy and Halliday.  In these cases significant attempts had been made to pressurise one party into adopting ADR so as to avoid a trial in the actions.  However, in both cases, the reluctant party who refused to participate in ADR subsequently won the trial and secured costs orders against the losing opponent despite the fact that they had refused the opponent’s requests for ADR.

    In giving judgment the Court of Appeal (Lord Justices Ward, Laws and Dyson) considered when the Court should impose a costs sanction against a successful litigant on the grounds that he has refused to take part in ADR.  In both appeal cases, the Court of Appeal refused to penalise the successful parties who had declined to mediate, but made it clear that the Court had power to do so and gave some guidance as to how Courts should approach such issues.  Lord Justice Dyson in the leading judgment in the Court of Appeal noted “the value and importance of ADR have been established within a remarkably short time.  All members of the legal profession who conduct litigation should now routinely consider with their clients whether their disputes are suitable for ADR.  But we re-iterate that the Court’s role is to encourage, not to compel.  The form of encouragement must be robust”. 

    A shopping list of matters the Court can consider when dealing with a request to impose sanctions in the light of a refusal by a successful party to take part in ADR is:-

    · The subject matter of the action.
    · Whether the refusing party had a reasonable 
      belief that it would win on the merits at trial.
    · Any previous settlement attempts.
    · Mediation costs being disproportionately high.
    · Any risk of delaying the trial by proceeding with
      the mediation.
    · Whether the mediation had a reasonable prospect of 
      success. 

    Readers should note that the burden of proof in respect of showing that the mediation had a reasonable prospect of success lies with the unsuccessful proponent of the mediation and not the successful party who has refused to take part in ADR. 

    Given the current state of the law and practice, any parties to litigation in the Civil Courts should always consider the option of ADR and should not reject an invitation to participate in ADR without very good reason, failing which there is the prospect of the possibility of an adverse costs order being made against the refusing party even if that party proves to be successful at trial.