For some years the courts have recognised that mediation is often a cheap and effective form of dispute resolution, compared to the alternative of litigating to trial. Mediation and other methods of “alternative dispute resolution” (ADR) were also endorsed in Lord Justice Jackson’s review of civil litigation costs and in the Government’s 2011 "dispute resolution commitment". Mediation can be used as an alternative to, or alongside litigation, and the courts have power to impose costs sanctions on parties who unreasonably refuse to mediate.
A court ruling earlier this year highlights the risk of unreasonably ignoring mediation. Litigation arose over a tenant’s alleged failure to repair or reinstate commercial premises in EC3. In the months before trial, the landlord proposed mediation, but the tenant failed to respond. The case eventually settled on the day before trial. The court held that the tenant had acted unreasonably in failing to respond to the mediation proposal, and barred it from recovering legal costs which otherwise it could have recovered.
Decisions about the correct approach to ADR need to be tailored to the particular situation, but this decision underlines the potential consequences of making the wrong choice.