Isle of Man: Mediation & Alternative Dispute Resolution: A New Era For Litigation?

In recent years the Isle of Man Courts, in common with their counterparts in many other jurisdictions, have demonstrated a strong desire for parties in litigation to attempt to resolve their issues by means other than litigation, most notably mediation.

In May 2012, the English Court of Appeal issued a stern warning to a defendant who rejected mediation offered at a previous hearing, with Lord Justice Longmore referring to the decision as an "inadequate response". The defendant in Ghaith v Indesit successfully defended a personal injury claim by an employee, but the employee was subsequently given leave to appeal and the Court urged both parties to pursue mediation. Indesit rejected that advice, a decision which LJ Longmore said will "inevitably lead to a substantial increase in costs" for the defendant. Another member of the Court of Appeal panel, Lord Justice Ward, said that mediation has "a canny knack of transforming the intractable in to the possible" and reiterated that, when offered, mediation should be embraced.

The attitude of the English Court of Appeal mirrors that of the Isle of Man Courts. In his 2009 judgment in Association of Cosmetic Surgery, Deemster Doyle (who as First Deemster is the Island's Chief Justice) said, "law is sometimes a very blunt instrument to try and solve disputes...and I would encourage the endeavour to resolve their disputes through the mediation process."

Deemster Doyle summarised the Court's attitude to ADR in his 2003 judgment in Vrinera Marine Company Limited:

"Litigation these days is moving away from confrontation and more towards co-operation. Parties are being encouraged to engage in the mediation process rather than destroying valuable personal and commercial relationships and wasting valuable time and costs in court. Those involved in commerce are fast coming to the sensible conclusion that their time and money is best spent on constructive commerce rather than on lawyers and destructive litigation."

The introduction of the "new" Rules of the High Court of Justice of the Isle of Man 2009 (the "Rules") has instigated changes to the way in which the different methods of ADR are viewed. The Rules allow for active case management encouraging parties to use ADR if the Court considers it appropriate: a claim or any matter arising from it may, if all parties agree, be referred to mediation and the Court action will be stayed.

In recent years, and not least because of the introduction of the Rules, it has become increasingly common for ADR to be used to settle differences between parties to a dispute; it is becoming a vital tool for all involved in dispute resolution. ADR techniques have gained prominence due to their speed, flexibility and relatively low cost.


Mediation is a form of ADR in which a mediator follows a structured process in an attempt to facilitate an agreed settlement between parties to a dispute. The mediator, who will be entirely independent of both the dispute and the parties, does not decide how to resolve the dispute but instead assists the parties in finding a mutually agreeable solution.

A mediator's skill as a mediator is often more important than any legal or technical knowledge relating to the dispute. Mediators tend to operate in one of two ways: they may be "facilitative", assisting the parties without expressing a view on the dispute or appropriate settlement terms; or "evaluative", playing an active role in the process and suggesting solutions. In reality, many mediators adapt their style to suit the situation during the mediation and they routinely use a combination of techniques to aid the parties in reaching a mutually agreeable outcome.

The mediation process is often likened to an exhausting rollercoaster ride which can be frightening yet fulfilling. It is conducted on a "without prejudice" basis, so the parties are free to offer concessions or compromises and to negotiate freely without influencing, in any way, any Court action that may follow if the mediation fails. Each "session" solely with the mediator is confidential unless one party permits the mediator to raise certain issues with the other party. Mediation is non-binding in the sense that the parties can walk away at any time and any agreed settlement will be set out in a binding agreement to be signed by both parties.

It is now common practice for commercial contracts to contain an ADR clause stipulating that attempts must be made to settle any dispute of its terms using ADR and, in many cases, specifying details of the procedure to be used. Inclusion of such a clause ensures that neither party is able to force the other into costly, time-consuming, constrained litigation through the Court without at least attempting ADR, thereby protecting the parties' ability to benefit from its myriad advantages.

Advantages of Mediation

Mediation offers a number of advantages when compared to protracted, expensive and potentially damaging litigation in Court, such as:

  • potentially huge savings in terms of both management hours and money;
  • enabling the parties to retain control of the dispute and its settlement rather than placing control in the hands of a third party (e.g. the Courts, an arbitrator);
  • greatly reducing disruption to the parties' businesses;
  • confidentiality (in contrast to court proceedings which are a matter of public record and may attract press attention);
  • minimising harm to relationships between the parties; and
  • allowing the parties to agree innovative solutions rather than the restricted awards available to the Courts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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