Can, and should, the courts force parties into ADR?
Mediation is designed to be a voluntary process that requires all participants to be willing to reach a settlement. But are there situations where courts could or even should force unwilling parties to mediate?
This article written by mediator Charles Gordon examines recent cases in which the courts made decisions regarding alternative dispute resolution.
We have all grown up with the belief and indeed desire that ADR, particularly mediation, should be an entirely voluntary process. The idea that a party can be dragged to a meeting to try to settle a case has generally been seen as likely to be unproductive, to increase cost and, quite possibly, make relationships worse. We are all well aware that the Court can impose penalties on parties which refuse to mediate, particular if they don’t articulate a good reason for their refusal. Silence in response to a request to mediate was held to be unreasonable and led to a cost penalty – PGFiiSA v OMFS Company (2013). Two recent cases also illustrate the Court’s approach.
In Simon Kelly v Raymond Kelly (2020) the parties had twice attempted to resolve their dispute through mediation. The Defendant refused to mediate a third time and explained why: the Claimant’s failure to honour two previous mediated agreements and to make written offers when invited to do so, bad feeling between the parties and other grounds. The Court held that the Defendant’s conduct was not unreasonable, given the Claimant’s broken promises, and the Defendant was awarded costs on the basis claimed. By way of contrast, in DSN v Blackpool Football Club (2020) the Defendant had simply advised the Claimant that it would not mediate because it maintained its defence and denied liability! Costs were awarded on the indemnity basis.
So the Courts will clearly encourage mediation and will penalise a party which unreasonably refuses to mediate. On the other hand, compulsory mediation in civil disputes (outside the Family Courts) has been off the agenda since Halsey v Milton Keynes General NHS Trust (2004). That at least is the conventional wisdom. However, the tectonic plates have actually been moving on this issue for some time and a mini eruption has just occurred which may herald wider changes of perception and practice.
Contractually agreed dispute resolution clauses have been in vogue for many years. Although voluntarily entered into at the time of contract, Courts have proved willing to enforce them even when one party has become adamantly opposed to the ADR envisaged by the contract. Whole industries and some countries (and the EU) have mandated ADR for certain types or size of dispute. We now also have the Singapore Convention which provides for international recognition and enforcement of mediated settlements.
Closer to home, the Family Courts have for many years required parties to child arrangement disputes to try mediation in limited circumstances before they can go to Court. Very importantly and indeed successfully, Financial Dispute Resolution appointments are now the norm in Family cases. A typical FDR proceeds as follows. After an application has been issued to the court and formalities such as financial disclosure have been complied with, the parties are given the opportunity to settle the case on a “Without Prejudice” basis, similar to mediation.
A judge hears the parties in a courtroom and attempts to effect a settlement. The parties are not called upon to give evidence, but listen to the arguments advanced on their behalf. The judge will have read the details of the parties’ respective positions beforehand. The judge indicates how the case is likely to play out, and the parties then go away to try and reach an agreement between themselves.
In civil and commercial disputes, Early Neutral Evaluation is the equivalent to FDR. The Courts have had the power to direct an ENE but it had been widely thought this could not or would not be done without the consent of the parties. No Longer! In Lomax v Lomax (2019), the Court of Appeal has decided that the Courts have the power to compel ENE in appropriate cases. Ironically, this was a case in which one of the parties simply wanted to mediate but the Court felt that an ENE, as requested by the other party, was the way to go.
Of course, Lomax does not make Halsey bad law and parties can’t start rushing to Court to compel mediation. However, the dispute resolution landscape has changed out of all recognition in the last 15 years and the implication may well be that the Courts will find an opportunity to revisit Halsey. After all, ENE is clearly a form of ADR. The judge’s evaluation of the case is non-binding and the ENE will very likely lead to settlement negotiations, now strongly influenced by the judge’s evaluation of the case. This doesn’t sound very different from the format of many a mediation.
One early indication of changing judicial attitudes has already manifested itself in comments by Sir Geoffrey Voss in McParland v Fairstone Financial Management (2020). The learned judge said: “The question in Lomax was whether the Court had the power to order the parties to undertake an early neutral evaluation under CPR r 13. It was held that there was no need for the parties to consent to an order for a judge-led process. I mentioned that Lomax inevitably raised the question of whether the Court might also require the parties to engage in mediation despite the decision in Halsey…….”
This article was first published on the website of In Place Of Strife Mediation.