Compulsory Mediation- A Step Closer?

Mediation has long been recognised as a valuable form of alternative dispute resolution (ADR), able to achieve a settlement in seemingly intractable commercial disputes. One of the reasons for that is often said to be the fact that mediation is a voluntary process, so in entering a mediation both parties have (at least in theory) a positive desire to compromise. But can you make mediation compulsory? And what happens if you do? In this article Gavin Evans, Partner in the Commercial Dispute Resolution team at Wilkes, considers the recent case of Churchill -v- Merthyr Tydfil County Borough Council, where the Court of Appeal had to grapple with the first of those questions.

In almost all commercial disputes that result in Court proceedings – or look as if proceedings might be necessary – the question of mediation will arise at some point. For many years now, solicitors have been advising clients that the Courts like mediation, and warning of potentially dire costs consequences if parties refuse an offer to mediate. However, the bottom line has always been that mediation is a voluntary process, and that you cannot be compelled to participate.

Now, though, is all that going to change? In the recent case of Churchill -v- Merthyr Tydfil County Borough Council, the Court of Appeal said yes, actually, you can be compelled to mediate, and the Court can stay (pause) Court proceedings for, or order the parties to, engage in a non-Court based dispute resolution process – usually, but not always, likely to be mediation. The Court said that the non-Court based process should be proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost; and must not deny the Claimant’s fundamental right to proceed to a judicial hearing. Previously, it had been understood that the Court could not order a party to mediate, as opposed to dropping subtle or not-so-subtle hints. Not so, says the Court of Appeal.

So does this mean that orders for mediation will become commonplace? Quite possibly yes. The pressures on the Court system in terms of time and costs means that Judges may well see such orders as an attractive way to relieve pressure on the system and to push parties into resolving their differences outside Court.

But will it achieve anything? In theory, an increased number of cases settling at mediation. However, in reality, most commercial disputes of any significant value already involve a mediation at some point. And whatever the Court might say about attending a mediation,  the Court cannot compel a party to settle – or even try to settle – once they get there. Everything said or done in a mediation is without prejudice, meaning the Court cannot be told what went on, much less look into who did or did not try to settle. Is a party forced to mediate likely to embrace the process, or merely “go through the motions”? If the latter, that will be positively detrimental to the process the Court is trying to promote.

Either way, Churchill is plainly another step toward making mediation (or some ADR process) essential in the vast majority of commercial disputes, and so it is a process that parties and their solicitors need to be familiar with and make best use of.

The Commercial Dispute Resolution team at Wilkes deal with commercial mediations on a regular basis and have an excellent track record in resolving disputes effectively without the costs, stress and uncertainties of a contested trial. For more information or to discuss a commercial dispute please contact Gavin Evans on 0121 233 433 or by email at [email protected].