The Irish Court of Appeal’s recent decision in Atlantic Shellfish Limited & anor -v- The County Council of the County of Cork & ors1 provides helpful guidance on the likely circumstances when a court will exercise its discretion to direct parties to litigation to engage in Alternative Dispute Resolution (“ADR”).
The Irish Court Rules permit the Courts on the application of any party to litigation, or on the Court’s own motion, where appropriate, to order that any issue in the proceedings be resolved by ADR. ADR includes mediation or conciliation but not arbitration.
The Court Rules also provide that where a party to litigation refuses or fails without good reason to participate in ADR, that party may expose themselves to the risk of failing to obtain an order for the full extent of their cost. This is even if they successfully pursue or defend a claim.
Atlantic Shellfish Limited appealed a decision of Mr Justice Gilligan in the High Court who refused to grant an order directing the parties to engage in ADR.
Ms Justice Irvine in the Court of Appeal held that the Court could only exercise its discretion to direct the parties to engage in ADR where "appropriate" to do so. She outlined that it is inferred from the Court Rules that the Court must be satisfied that the ADR process proposed must be capable of determining the issues between the parties. The Court then must consider whether the applicant is genuinely willing to engage in ADR or is simply trying to advance its own bargaining position.
Justice Irvine outlined that the Court would be influenced by factors including:
(a) the manner in which the parties had conducted the litigation up to the date of the application;
(b) the existence of any relevant interlocutory orders;
(c) the nature and potential expense of the proposed ADR;
(d) the likely effect of the making of the order sought on the progress of the litigation if the invitation is accepted and the ADR proves to be unsuccessful;
(e) the potential saving in time and costs that might result from the acceptance of an invitation;
(f) the extent to which ADR can or might potentially narrow the issues between the parties;
(g) any proposals made by the applicant concerning the issues that might be dealt with in the course of the ADR; and
(h) any proposals as to how the costs of such a process might be borne.
Atlantic Shellfish lost its appeal as the Court held that the nature of the legal issues between the parties was not one that could be resolved by ADR.
This is a significant decision as it is judicial acknowledgement that this provision of the rules is “an important litigation tool” because of the potential for adverse cost consequences which a refusal to mediate involves.
As Ms Justice Irvine said, “I am all too mindful of the fact that litigation is becoming ever more complex and lengthy such that it places considerable financial strains on the participants. It also places ever increasing demands on scarce judicial resources. For these reasons it behoves the court pro-actively to encourage parties to try, wherever possible, to resolve their disputes through participation in the ADR process.”