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Refusal to mediate – are you at risk?

A refusal to mediate – risks, rules, and cases.

The recent Thakkar v Patel case once again highlighted the courts’ intention to find that a refusal to mediate, or being silent in the face of an invitation to mediate, will generally be found to be unreasonable. This shouldn’t be surprising news for litigators – more and more cases have shown that a refusal to mediate is likely to see sanctions follow. The Thakkar decision follows neatly the decision in PGF II SA v OMFS Co 1 Ltd [2014]. It also referred to the ADR Handbook, at section 11.56 (now 11.59) which states:-

“In PGF II SA v OMFS Co 1 the court extended the Halsey principles and held that, as a general rule, silence in the face of an invitation to participate in ADR was itself unreasonable, regardless of whether there was a good reason for the refusal to engage in ADR. The court noted that there might be rare cases where ADR was so obviously inappropriate that to characterise silence as unreasonable would be pure formalism, or where the failure to respond was the result of a mistake , in which the onus would be on the respondent to prove that explanation.”

The handbook also refers, at paragraph 11.60, to the Practice Direction Pre-Action Conduct and Protocols, paragraph 11, which “also provide that – party’s silence in response to an invitation to participate or a refusal to participate in ADR might be considered unreasonable by the court and could lead to the court ordering that party to pay additional costs.”

It is widely accepted now that the courts expect parties to litigation to have explored ADR before reaching trial. It is also now widely accepted that a refusal to mediate is an EXTREMELY RISKY decision to take. Litigation solicitors must tread very carefully if they have received an offer to mediate or to take part in any other form of ADR.

What Does The Handbook Say?

At paragraph 11.63 the Handbook offers practical steps for parties to take to avoid sanctions. It reads as follows:-

“A party who is faced with a request to engage in ADR , but who believes that they have reasonable grounds for refusing to participate in an ADR process at that stage of the proceedings should consider the following practical steps to avoid a sanction:

  • do not ignore an offer to engage in ADR. Failure to respond is likely to be treated as an outright refusal;
  • Respond promptly, in writing, giving clear and full reasons why ADR is not appropriate at this stage of the dispute or proceedings. There reasons given, where possible, should be justified in light of the relevant principles derived from Halsey and subsequent cases which are explained in this chapter. The response should contained in an open letter or in a letter marked ‘without prejudice except as to costs’;
  • If lack of evidence or information is an obstacle to a successful ADR process being undertaken at that time, this must be canvassed with the other party to the dispute in the correspondence, and consideration should be given to whether that evidence or information can be obtained during the ADR process or in advance of the process. If court proceedings have already commenced, a judge may be prepared to make an order against a recalcitrant party directing further information or evidence to be disclosed prior to using ADR;
  • Letters replying to requests to engage in ADR should be written with care. A party may have good reason to refuse ADR at that point in time, but the correspondence should not be written in such a way that closes off exploration of ADR processes at a later date. An outright refusal to use ADR at any time is more likely to be construed as unreasonable.”

So, What Next?

Litigation is an extremely difficult process, requiring extraordinary skill, knowledge, and attention to detail. We would recommend that litigators (& their clients) keep in mind the desire of the courts for parties to attend ADR before reaching trial and to give careful thought to any potential refusal to mediate. Failing to do so could prove very costly!

Simple steps could include:-

  • Discussing the various ADR options in detail with your client during your initial meetings;
  • Including an offer to attend mediation in your letter of claim, or response to a letter of claim;
  • Considering carefully the above information when faced with an offer to engage in ADR & when preparing your response;

Every litigator will find it useful having a copy of the ADR Handbook available at all times, especially when considering their position in respect of costs.

Mediation & Mediatelegal

Mediation is usually the least expensive form of formal ADR. It also has national success rate of 86%. Inviting a party to mediation, therefore, is not just an exercise to avoid costs sanctions – there is also an 86% chance that you may be able to find a solution to the dispute long before you would reach trial. If you are a litigation solicitor, your client will be relieved to have found a solution quickly and inexpensively. You will receive your costs quickly, and be free to dedicate your time to other files.

Mediatelegal is a panel of 10 carefully selected expert mediators. We offer a nationwide fixed fee mediation service which includes:-

  • providing an agreed mediator for the parties
  • arranging an agreed suitable venue
  • arranging an agreed date
  • dealing with all pre and post mediation admin

Using Mediatelegal allows litigation solicitors to arrange a mediation with just one brief phone call to us. It’s that simple.

 

Gordon Exall has published an excellent review of case law concerning mediation. It can be found here.


Mediation

Joseph Mulrooney is a founder member of Mediatelegal, and experienced civil, commercial and workplace mediator. You can download his CV here and our Fees Overview document here.

Posted in case studies, Commercial Mediation

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Did you know?

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According to the CEDR 2016 audit, 86% of mediations settle successfully on the day or shortly afterwards.

20th January 2017

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