The Courts encourage parties to resolve a dispute through Alternative Dispute Resolution (ADR) such as Mediation. Mediation is a confidential and flexible process where parties are assisted by an independent mediation to seek to reach an amicable resolution with 60-85% settling.
If one party fails to engage in ADR, in particular Mediation, this may be considered as unreasonable conduct resulting in the Court ordering costs sanction against the other party.
In PGF II SA v. OMFS Company 1 Ltd, the Court held that silence in response to an invitation to ADR is highly likely to be considered unreasonable and a refusal to mediate even if reasonable grounds to refuse existed. In Thakkar v Another v Patel & Another, the Court suggested that “foot dragging” could also constitute refusal.
However, the Court do also consider whether the parties' respective positions are too far apart and whether there is any reasonable prospect of success at Mediation (Swain Mason v Mills & Reeve). The Court is required to consider whether the decision to refuse ADR at the time the decision was made (Corby Group Litigation v Corby District Council).
It is therefore important for parties to respond to requests to mediate and if refused, to provide reasons in writing although, ADR is widely encouraged. The Courts will look unfavourably on silence and/or avoidance. If there is doubt, the sensible approach remains to engage in ADR and consider Mediation.
Blaser Mills are committed to helping its clients resolve disputes out of Court. For the months of January-March, we are offering discounted Mediations whereby parties seeking to mediate will share our mediators' hourly rate of £200 only with the first hour free of charge.
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.