The debate over whether mediation should be mandatory or could be compelled has churned on for longer than I have been in this profession, and across my time I have watched with interest as the debate has shifted through a slow erosion from an apparent and unequivocal no, to where we are today.
Yesterday, the Master of the Rolls, Sir Geoffrey Vos, handed down the leading judgment in Churchill v Merthyr Tydfil County Borough Council. Other than being a lesson in how to deliver a judgment, it is also a generally enjoyable read – I highly recommend it to those qualified and not qualified alike.
Mediation
By way of brief background, ADR refers to Alternative Dispute Resolution – in essence anything other than traditional proceedings (although several years ago I did write noting it has become synonymous with ‘mediation’).
Mediation is a party led process, involving an independent third party (a mediator) who is impartial and seeks to broker a resolution between the parties. The structure of the mediation is party led, however, with commercial mediations these tend to occur in the shuttle form (ie: the mediator beetles back and forth between the parties in different rooms).
The process is confidential (often subject to a specific mediation agreement) and therefore can be highly desirable to those seeking to avoid public proceedings. It also provides the parties an opportunity to reach resolutions which may be outside of the court’s gift to order.
The benefits of mediation have long been recognised, with Lord Slynn some 20 years ago considering it a rival of arbitration and not merely some “amiable outsider blundering into a dispute”. For my part, I will admit there is none more devout than the convert – my first foray into mediation was met by me with considerable scepticism, however, after recognising it for what it is I went on to become a mediator and act as trustee for a community mediation charity. Summarily, I never recommend anyone discounts it.
Notwithstanding the recognised benefits, the issue compulsory mediation has caused a stir both within this jurisdiction and without on the question of whether compelling parties to engage in resolution activities outside of the normal trial process compromises Article 6 rights – the right to a fair trial.
For mediation to be successful it is predicated on the willingness of those involved to reach an agreement – the old adage of leading a horse to water has never felt truer than in the reflected upon in the early hours of a morning listening to birdsong, with no end in sight to what was scheduled to have been a 6 hour mediation – and it is well established that you cannot compel a party to contract. If therefore a party is adamant not to cut a deal, and wants their proverbial day in court, how can the parties be forced / encouraged to engage in mediation?
Halsey
Although not being the torch bearer, Dunnet v Railtrack PLC pre-dated it by two years, Dyson LJ’s judgment in Halsey v Milton Keynes General NHS Trust has become the starting point for any question of compelling mediation.
In Halsey the question revolved around cost sanctions and whether a party had unreasonably refused to mediate (in Dunnet the sanctions were applied for a refusal to mediate between the first instance hearing and the appeal). Dyson LJ set down 6 factors (not exhaustive) which should be considered when determining whether a refusal to mediate was unreasonable, being:
- the nature of the dispute;
- the merits of the case;
- whether other ADR activities have been attempted;
- whether the cost of ADR would be disproportionate;
- whether ADR at the time of proposal would have created a prejudicial delay; and
- whether ADR would have had reasonable prospects of success.
Most practitioners will be familiar with this case, and often cite it to an opponent who is refusing to mediate irrespective of whether or not their client has a desire to settle but in order to ensure they are protecting their client’s position on costs as best they can.
It should be noted that following the Dunnet decision all mediations have a ‘prospect’ of success:
In the usual way, it would follow that [the claimant] should pay the defendants’ costs. However, Schiemann LJ…said…‘I have advised her that she ought to explore the possibility of [ADR]…She has indicated that she is in favour of doing that, if the other side are also willing to do that. I cannot say any more about that, beyond suggesting that she tries it.’
The claimant referred this suggestion to the defendants, who instructed their solicitors to turn it down flat. They were not even willing to consider it.
I pause here to note that the defendant was successful at first instance, and this was the claimant’s appeal so they already held a winning judgment.
Mr Lord, when asked by the court why his clients were not willing to contemplate [ADR], said that this would necessarily involve the payment of money, which his clients were not willing to contemplate, over and above what they had already offered. This appears to be a misunderstanding of the purpose of [ADR]. Skilled mediators are now able to achieve results which are satisfactory to both parties in many cases which are quite beyond the power of lawyers and courts to achieve…Occasions are known to the court in claims against the police, which can give rise to as much passion as a claim of this kind where a claimant’s precious horses are killed on a railway line, by which an apology from a very senior police officer is all that the claimant is really seeking and the money side of the matter falls away.
The general approach to the decision in Halsey was that whilst mediation is not compulsory, a party who unreasonably refuses to engage in it could suffer negative costs sanctions – even if they turned out to be the eventual victor in any formal proceedings. Perhaps best coined as the ‘strong encouragement’ rule. The second point, and most relevant to the current case, was that a party unwilling to engage in mediation, could not be compelled to do so.
Debate on Compulsory Mediation
The question of compulsory mediation has not been limited to the domestic courts; it has been considered in the CJEU, the ECtHR, by the Civil Justice Council (in their June 2021 report on the topic forming the view mandatory ADR is lawful, although in the November 2018 the working group report was reticent to take such a stance), and various other interest groups – in Churchill the interveners included:
- The Law Society:
- The Bar Council;
- The Civil Mediation Council;
- The Centre for Effective Dispute Resolution;
- The Chartered Institute of Arbitrators;
- Housing Law Practitioners’ Association; and
- The Social Housing Law Association.
Yesterday’s decision in Churchill represents a turning point in the law and on the previous two decades of interpretation of the scope of Halsey, and this is why it is significant and why there is such interest.
Churchill
In Churchill the local authority sought a stay (pause) of the proceedings against them on the basis Mr Churchill had not made use of their ‘Corporate Complaints Procedure’. At first instance the Court refused the stay, following Halsey and in particular:
[The Judge] held that he was bound to follow Dyson LJ’s statement in Halsey v. Milton Keynes General NHS Trust [2004] EWCA Civ 576, [2004] 1 WLR 3002 (Halsey) to the effect that: “to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court”. [3]
Permission to appeal was sought, granted, and then the appeal was leap frogged up to the Court of Appeal where the current judgment was given.
Taking all practitioners back to law school, the Master of Rolls then proceeded to distinguish Halsey from the current question entirely: in summary, he stated that the basis Hasley related to cost sanctions and not the question of whether the court could compel ADR (as was the situation in the immediate instance).
Although the court has now held that it would be lawful for a court to stay proceedings to compel a party to engage in ADR, it is not a blanket policy.
The court can lawfully stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process provided that the order made does not impair the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.
Whilst the court was not willing to lay down ‘fixed principles’, the following factors may be relevant in reaching any decision:
- the form of ADR being considered;
- whether the parties [are] legally advised or represented;
- whether ADR is likely to be effective or appropriate without such advice or representation;
- whether it [is] made clear to the parties that, if they did not settle, they were free to pursue their claim or defence;
- the urgency of the case and the reasonableness of the delay caused by ADR;
- whether that delay would vitiate the claim or give rise to or exacerbate any limitation issue;
- the costs of ADR, both in absolute terms, and relative to the parties’ resources and the value of the claim;
- whether there [is] any realistic prospect of the claim being resolved through ADR;
- whether there [is] a significant imbalance in the parties’ levels of resource, bargaining power, or sophistication; and
- the reasons given by a party for not wishing to mediate: for example, if there had already been a recent unsuccessful attempt at ADR. [61]
What Next?
I anticipate (hope) there will be an update to the White Book coming soon, or in the very least a practice direction to resolve these matters and provide litigants with more clarity before they either commence proceedings on the prospect that any pre-action ADR will not apply, or make (or actively resist) any application for a stay such as that pursued in Churchill.
For me, I will await with continued interest the flurry of first instance decisions seeking to apply Churchill, the majority of which will distinguishable on their own facts. Whether this be the floodgates moment, I’m not persuaded, but it will certainly be remembered as a turning point.
Contact our Litigation and Dispute Resolution team
Charles Jamieson is an experienced Senior Associate in the Dispute Resolution Department. If you would like to speak with Charles, or any member of the dispute resolution team, contact Bishop & Sewell by email to: litigation@bishopandsewell.co.uk
The above is correct as at 30 November 2021. The information above may be subject to change.
The content of this note should not be considered legal advice and each matter should be considered on a case-by-case basis.
