Is Mediation Compulsory in Civil Cases?

Mediation is a form of Alternative Dispute Resolution (ADR) which can be engaged to avoid expensive and protracted litigation and disputes.

The parties choose the timing, location and method that this can take and mediation can provide remedies (such as an apology) which a court does not have the power to award. It provides a level of control to the parties and avoids the risks of litigation. Chances of success are usually high and if nothing else, it can help narrow the issues, establish the parties’ position and facilitate settlement further down the line.

Mediation can be used for both the underlying case as well as the costs once the case has concluded.

With the crippling backlogs in courts, and the contrasting benefits of mediation, it would seem surprising that mediation is not engaged more regularly and voluntarily by the parties.

If a court decides to award costs against a party at the end of a case the usual rule is that the losing party will pay the winner’s legal costs (see Civil Procedure Rule 44.3(2)). However, a court can make a different order and one of the factors that would be taken into consideration is the conduct of the parties before as well as during the proceedings.

Most Pre-Action Protocols require parties (prior to litigation) to consider the appropriateness of ADR (including mediation).

The Practice Direction – Pre-Action Conduct and Protocols goes on to state:

A party’s silence in response to an invitation to participate or a refusal to participate in ADR might be considered unreasonable by the court and could lead to the court ordering that party to pay additional court costs

The burden is on the unsuccessful party to persuade a court why they should not have to pay the costs.

But despite this encouragement (with necessary sanctions) can the courts actually force the parties to mediate?

Halsey v Milton Keynes General NHS Trust (2004)

In this earlier case, the Court of Appeal laid down the principle that parties could not be forced to mediate and that this was a breach of Article 6 being an ‘unacceptable obstruction’ on the right to access to the court.

Whether an ‘unreasonable’ refusal to mediate would lead to costs sanctions would depend on things such as

• Nature of the dispute
• Merits of the case
• Extent to which other settlement methods have been attempted
• Whether costs of ADR would be disproportionately high
• Whether any delay in setting up and attending the ADE would have been prejudicial
• Whether the ADE had a reasonable prospects of success

In these circumstances, the refusal to mediate was not deemed unreasonable and so the losing party could not get out of paying all of the costs.

Since Halsey, the courts have not been deterred from applying costs sanctions where appropriate and even ordered higher ‘indemnity’ costs (rather than the lower ‘standard’ basis of costs usually ordered against a party). As a legal practitioner we would always advise our clients to at least propose if not attempt mediation to avoid the risk of costs sanctions.

The position has however been blurred with the recent case in 2023.

Churchill v Merthyr Tydfil County Borough Council (2023)

The issue in this case which was decided by the Court of Appeal is whether it was reasonable for Mr Churchill to not engage with the Council’s own internal complaints procedure before embarking on issuing of court proceedings, and whether a court could order a stay of the proceedings for parties to be compelled to engage in ADR.

The Court of Appeal felt that Halsey was not a case which considered whether parties should be ordered to participate in ADR, but dealt with the issue of costs sanctions for the unreasonable refusal to engage.

The Court of Appeal decided that it did have inherent power to stay proceedings to allow parties to engage in ADR. Whether and how that power should be exercised would depend on the circumstances of each case and the court did not provide formal guidance on this.

The court should only stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process provided that the order made does not impair the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.

It did not rule out internal complaints procedure as an appropriate form of ADR but this would be dependent on how effective and independent such a procedure was.

Final Words

It is getting harder for a party to not engage in some form of ADR – litigation should be seen as a final resort and not embarked on lightly otherwise you take that risk at your own risk.

There may well be valid reasons not to engage in ADR but this must be kept under review and justified or you will run the danger of not getting the costs benefit even if you win.

We are a great advocate of mediation in the right circumstances and have solicitors who are qualified mediators as this is likely to be a growing trend which will gain traction as the failings of the court process become more pertinent.

To speak to one of our legal experts in mediation, please call 0330 822 3451 or request a callback online.