Mediation

Where the maintenance of a working relationship in the event of a dispute is crucial, mediation can be a particularly attractive option (at least as part of the dispute resolution mechanism) as it aims to allow the parties to agree a resolution voluntarily between themselves, with the aid of a skilled and impartial mediator. Successful mediation can also save a lot of time and expense that would otherwise have to be spent in litigating or arbitrating. The potential downside of mediation is that parties can withdraw at any time and although any settlement will have contractual force, that will only be enforceable by starting litigation proceedings

The current position under English law is that mediation (if not provided for contractually) is encouraged by the judiciary but cannot be ordered. However, judges regularly award costs penalties against parties that unreasonably refuse to mediate, when asked to do so by the other side. The Civil Justice Council (CJC) has now published its report on the future of compulsory alternative dispute resolution (ADR)  including not just mediation but also, for example, Early Neutral Evaluations, ombudsmen and online processes. 

The CJC concludes that it can be lawful for the courts to compel parties to participate in ADR (meaning that would not breach human rights law). Whether ADR should be ordered in any particular case will depend on a range of factors (such as the cost and time burden on the parties and the stage of the proceedings reached between the parties).

The CJC envisages that for most areas, although the court will be able to order mediation, the parties will be able to decline to settle and opt to return to court instead. The sanction for non-compliance with an order to participate in ADR might include preventing the claim or defence continuing (depending on which party refuses to participate), or even refusing to allow the claim to start in the first place.

However, the report recognises that there is a risk that even compulsory ADR will not work if one or both of the parties participates but is intransigent. Nothing in the proposals really addresses this issue: while there will potentially be sanctions for not taking part at all (although query what sanction there would be if both sides refuse to take part), there is nothing to require proper engagement once they have turned up at the mediation. That has long been the perceived flaw of a compulsory system.The hope will be that a compulsory mediation will at least serve to focus the parties' minds on what they might be prepared to settle for (something that could otherwise easily become lost during the adversarial litigation process).