UK Courts May Be Signaling A Preference For Mediation: Bryan Shacklady and Joe May write for Law360
Attention has recently focused on the Dec. 9, 2021, decision of Master Richard Davison in the Queen's Bench Division to order compulsory alternative dispute resolution between the parties in a high-value contentious claim under the Civil Liability (Contribution) Act 1978, albeit by consent.
The case was not publicly handed down, and some commentary has focused on the belief that the order is the first of its kind.
In fact, orders of this sort are not entirely new. Our own team has been involved in litigation in the Commercial Court where, as long ago as the summer of 2016, the ruling, which was also not publicly reported:
- Ordered the parties to exchange lists of neutral individuals available to conduct alternative dispute resolution procedures by a certain date;
- Ordered the parties to in good faith endeavor to agree a neutral individual from the lists exchanged;
- Provided that in the event of failure to reach agreement on a neutral individual, the case management conference was to be restored;
- Ordered the parties to take such serious steps as they might be advised to resolve their disputes by alternative dispute resolution procedures before the neutral individual chosen;
- Ordered the parties to inform the court before a certain date what steps towards alternative dispute resolution had been taken and why such steps had failed; and
- Provided that in the event of a failure to initiate alternative dispute resolution procedures, the case management conference was to be restored for a further consideration of the case.
Notably, Master Davison's order differs in mandating mediation as the ADR method and ordering specifically the mediation to be conducted on a without prejudice save as to costs basis. In any event, however storied their provenance, such orders move significantly beyond the language of encouragement that is used in the various court guides.
The Chancery Guide, for example, merely sets out:
Where appropriate the court will, as part of the overriding objective, encourage the parties to use ADR or otherwise help them settle the case or resolve particular issues.
The Commercial Court Guide contains similar provisions, and the Technology and Construction Court Guide has contained such provisions for years.
How seriously should practitioners and clients regard these developments? There is no doubt that they reflect a willingness on the part of the courts to save scarce court resources by compelling parties to engage in meaningful attempts at settlement. We should assume that such willingness will come with consequences for those who disregard the court's wishes.
Although represented parties in commercial litigation are unlikely to engage in the kind of blatant disregard of the court's wishes that could lead to them being found in contempt, the court has a range of other tools at its disposal to see that its wishes are carried into effect.
The court could potentially disallow interest on damages where parties have failed to mediate or engage in other forms of ADR according to a court order. Advisers should remember that courts have discretion as to whether to award interest at all, as to the period for which it should be awarded and as to the rate at which it can be awarded. A cavalier attitude to the court's order in relation to ADR could well see the court's discretion being used to reflect the court's view of that attitude.
Parties should also bear in mind the general rule about the award of costs, set out in Civil Procedure Rule, or CPR, 44.2(1):
- The court has discretion as to:
- Whether costs are payable by one party to another;
- The amount of those costs; and
- When they are to be paid.
It is possible that a court could reflect recalcitrance to comply with an order for compulsory ADR by exercising its discretion as to costs other than in accordance with the general principle that the loser pays the winner's costs. That will be particularly so where the court perceives that the failure to comply has caused court time to be expended unnecessarily.
Remember that the first of the circumstances to which the court may have regard in making an order as to costs is listed by CPR 44.2(4)(a) as the "conduct of the parties." That must include the parties' conduct in complying with the wishes of the court as to ADR.
Can the Parties Sit on Their Hands?
Many litigators will have encountered the client who does not wish to mediate and who turns up at the mediation determined not to engage. That has always been a case of shooting oneself in the foot by turning down an opportunity to settle and so prolonging exposure to the inherent — and sometimes unanticipated — risks of litigation.
It has, however, been traditional for such parties to assume that they will remain protected by the confidentiality of the mediation process — and, usually, the mediation agreement.
No longer. The Master Davison order specifically provided that the mediation be conducted without prejudice save as to costs. That leaves open the opportunity for the court to examine what occurred at a later date when considering the question of costs — and so specifically engages the possibility of the court registering displeasure in the form of an unwelcome costs order.
And the 2016 order above specifically provided for the parties to have to explain themselves as to the failure of any ADR process, leaving open the possibility of consequences if any such explanation was deemed unsatisfactory by the court.
Both orders discussed above were made with the cooperation or consent of the parties. The real test of the court's willingness to push the issue of compulsory ADR will come when such orders are made against the will of one or more of the parties.
It should also be remembered that although parties may focus on mediation as a form of ADR, there are other options. A recent development has been the introduction of the concept of early neutral evaluation, which the court is given power to order under CPR 3.1(m). This is usually carried out by a judge, retired judge or Queen's Counsel.
There is conflicting authority on whether the courts have the power to order early neutral evaluation absent the consent of the parties, and it is notable that the Chancery Guide, the Commercial Court Guide and the Technology and Construction Court Guide all envisage the practice as involving the consent of the parties.
Perhaps the next development in the court-ordered ADR saga will be consideration of whether a refusal to consent to such an order is itself unreasonable?