Mediation in United Kingdom

Law and policy

Is there any legal definition in your jurisdiction of the terms ‘ADR’, ‘conciliation’ and ‘mediation’?

There is no legal definition of ‘ADR’ in English law. In the United Kingdom, the term is generally used to describe all methods available to resolve a dispute other than court proceedings and arbitration. The glossary to the Civil Procedure Rules (CPR), which govern civil litigation in England and Wales, describes ADR as a ‘collective description of methods of resolving disputes otherwise than through the normal trial process’. The Centre for Effective Dispute Resolution (CEDR), a well-known ADR service provider, defines ‘ADR’ as ‘A body of dispute resolution techniques which avoid the inflexibility of litigation and arbitration, and focus instead on enabling the parties to achieve a better or similar result, with the minimum of direct and indirect cost’.

Mediation, conciliation, early neutral evaluation and expert determination are examples of different types of ADR. Mediation is the most widely used.

English law provides no definitions of ‘conciliation’ or ‘mediation’.   

Mediation is a process in which an independent neutral third party assists parties to a dispute to work towards a negotiated settlement. Mediation is described in the CPR as ‘a third party facilitating a resolution’. The mediator does not decide the case; their role is to facilitate the settlement discussion. The parties decide whether to settle and on what terms.

Conciliation is similar to mediation, but differs in that the independent third party takes a more proactive role in guiding the parties towards settlement, by offering opinions on the claim or proposing settlement terms. Conciliation is often used in employment law disputes.

What is the history of commercial mediation in your jurisdiction? And which mediation models are practised?

Mediation has been used to resolve commercial disputes in the United Kingdom for many years. However, it truly came to the fore in 1999, when sweeping reforms (known as the ‘Woolf reforms’, which ushered in the CPR) aimed at making civil litigation quicker, simpler and less adversarial took effect. Since then, parties to a dispute must consider ADR at both the dispute’s outset and throughout the dispute. If a party fails to do so, the court has a wide discretion to order that party to pay some or all of their opponent’s legal costs, regardless of whether they succeeded in the underlying claim. This has led to a significant cultural shift whereby the use of ADR – and particularly mediation – is commonplace and expected. Today, mediation is more popular than ever.

The most common type of mediation in the United Kingdom is facilitative mediation, in which the mediator will work with the parties to facilitate an agreement between them, but does not have the power to impose a decision. Occasionally, mediators may be asked to evaluate the claim or a particular issue (evaluative mediation).

Are there any domestic laws specifically governing mediation and its practice?

The CPR are the primary source of domestic law. Parties to domestic disputes must refer to the CPR pre-action protocols, which set out steps that parties should take before commencing court proceedings. These expressly require that parties first try to settle their dispute without recourse to the courts and consider ADR, including mediation. The CPR Practice Direction Pre-Action Conduct and Protocols specifically states that litigation should be a last resort and that if proceedings are issued, the parties may be required by the court to provide evidence that ADR had been considered. 

The CPR also include domestic rules applicable to cross-border mediations that are subject to the EU Mediation Directive (2008/52/EC). The Mediation Directive aims to facilitate and promote settlement through mediation in cross-border disputes, and applies to most civil and commercial cross-border disputes where one party is domiciled in the United Kingdom and the other in another EU member state. It was implemented into English law, in relation to such cross-border mediations only, by way of the Civil Procedure Amendment Rules 2011, which came into force on 6 April 2011, and the Cross-Border Mediation (EU Directive) Regulations 2011 (SI 2011/1133), which came into force on 20 May 2011. The Civil Procedure Amendment Rules 2011 amended the CPR to include provisions, found at CPR 78.23 to 78.28, governing the procedures for:

• making a mediation settlement enforceable;
• the disclosure and inspection of evidence; and
• obtaining mediation evidence by witness summons and cross-examination.

There is no distinction between disputes where both parties are based in the jurisdiction and disputes with a cross-border element that are not subject to the Mediation Directive. Mediations in international disputes which fall under the jurisdiction of the English courts but are not caught by the Mediation Directive are subject to domestic laws in the same way as a domestic mediation.

Is your state expected to sign and ratify the UN Convention on International Settlement Agreements Resulting from Mediation when it comes into force?

If the European Union ratifies the UN Convention on International Settlement Agreements Resulting from Mediation (commonly referred to as the Singapore Convention), it is expected that the United Kingdom – which at the time of writing is an EU member state – will become party to the Singapore Convention through its EU membership for such time as it remains a member state. 

However, the European Union has not yet decided whether it has the competence to do so, or alternatively, whether each member state must sign the Singapore Convention individually (as was the case with the New York Convention). 

If the European Union determines that it does not have competence, the United Kingdom would need to ratify the Singapore Convention itself in order to adopt it. Otherwise, should the European Union determine that it has competence, but the United Kingdom leaves the European Union, the United Kingdom would need to ratify the Singapore Convention itself in order to adopt (or continue to adopt) it. It is unclear whether the United Kingdom intends to ratify the Singapore Convention in either of these circumstances.

To what extent, and how, is mediation encouraged in your jurisdiction?

Mediation is strongly encouraged in the United Kingdom. The overriding objective of the CPR are to enable the courts to deal with cases justly and at proportionate cost, and the courts are under a duty to actively manage cases to further that objective. CPR 1.4(2)(e) expressly states that that duty includes ‘encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate and facilitating the use of such procedure’. Often, the court will be willing to stay (ie, pause) proceedings to enable a mediation to take place, and sometimes it may explicitly order the parties to take part in some form of ADR. The CPR pre-action protocols also require the parties to consider ADR, including mediation, or risk an adverse costs order being made against them. In addition, the directions questionnaire (a court form which must be filed in most cases) specifically requires legal representatives to confirm that they have explained to their client the need to try to settle, the options available to do so and the possibility of costs sanctions if they refuse to try to settle.

Nonetheless, although parties are strongly encouraged to mediate, they cannot be forced into mediation. This is because the success of mediation largely depends on all of the parties being willing to cooperate and compromise: if the parties are not willing, but are forced to the negotiating table, mediation is less likely to succeed. In November 2018 a working group of the Civil Justice Council published a report on the role of ADR in the civil justice system of England and Wales. While strongly advocating the greater promotion of ADR and mediation, the report did not support the introduction of compulsory ADR or mediation. 

Any parties to litigation which are not willing to participate in mediation must be prepared to explain to the court why mediation is not suitable for their case in order to justify that decision, particularly when the court considers which party should pay the costs of the litigation.

Are there any sanctions if a party to a dispute proposes mediation and the other ignores the proposal, refuses to mediate or frustrates the mediation process?

If a party refuses to mediate, ignores a request to mediate or otherwise acts in a way to frustrate the mediation process, they risk sanctions in the form of an adverse costs order being made against them, which could potentially be substantial. Under CPR 44.2, the court has discretion as to whether costs are payable by one party to another, in what amount and when. In deciding how to exercise that discretion, the court will consider (among other things) the parties’ conduct, including in relation to mediation.

The default position in English litigation is that costs follow the event (ie, the losing party pays the winning party’s legal costs). Nonetheless, that position can be departed from. In Halsey v Milton Keynes General NHS Trust ([2004] (EWCA Civ 576)) the question before the court was whether it should use its discretion under CPR 44.2 to impose a costs sanction against the winning party on the grounds that it had refused to mediate. It was held that the court has the power to deprive a winning party of some or all of their costs on this basis, but the burden is on the losing party to demonstrate that the normal rule should be departed from. To justify such a departure, it must be shown that the winning party acted unreasonably in refusing mediation (or ADR generally), by reference to considerations set out in that case.

Thakkar v Patel ([2017] (EWCA Civ 117)) is an example of a party frustrating the mediation process. The claimant attempted to arrange a mediation, but the defendants procrastinated and delayed for so long that the claimant lost faith in the process. This was found to be unreasonable behaviour on the part of the defendant, and a substantial costs order was made against them.

How common is commercial mediation compared with litigation?

Commercial mediation is common and often a part of the litigation or pre-action settlement discussions. A mediation audit carried out in July 2018 by the CEDR found that 12,000 commercial mediations (excluding those for small claims) took place in the previous 12 months with a combined value of approximately £11.5 billion. This represented a 20% increase in the number of commercial mediations since the last audit in 2016 (which in itself was a 5% increase on the 2014 audit) and a 500% increase from the first CEDR audit in 2003. Therefore, the picture is one of steadily increasing popularity.  

Mediators

Is there a professional body for mediators, and is it necessary to be accredited to describe oneself as a ‘mediator’? What are the key requirements to gain accreditation? Is continuing professional development compulsory, and what requirements are laid down?

Mediation in the United Kingdom is largely unregulated by legislation. There is no central professional body and no particular accreditation that must be gained in order for a person to use the title ‘mediator’. However, a private institution, the Civil Mediation Council (CMC), provides voluntary training and practice standards for individuals and organisations.

The CMC registration scheme for individual civil and commercial mediators includes the following requirements:

• The mediator must have passed a registered CMC training course.
• They must follow an appropriate code of conduct no less rigorous than the EU Model Code of Conduct for Mediators 2004.
• They must have a published complaints handling procedure which meets the CMC’s minimum standards and keep published records of any complaints.
• They should undertake at least six hours of mediation-specific continuing professional development per year, in addition to other practice requirements specified.
• They should have professional liability insurance cover of at least £1 million (and additional cover in place where the sums involved in the work exceed that amount).
• They should have access to suitable and sufficient administrative arrangements.
• They should be able to demonstrate that they are appropriately trained, experienced and skilled in the disputes that they mediate.

The full CMC requirements can be found here.  

Many alternative dispute resolution organisations will also have their own training and accreditation systems in place.

Mediators who are not affiliated to an accredited provider are free to practise, but in reality are likely to find little work. 

What immunities or potential liabilities does a mediator have? Is professional liability insurance available or required?

The relationship between the parties and the mediator is governed by a mediation agreement. Mediation agreements may seek to exclude the mediator from personal liability, but whether such an exclusion is enforceable will depend on the application of the rules of contract law to the particular circumstances. Certain liabilities, such as for fraud, cannot be excluded. 

As mediation is largely unregulated by government legislation, there is no particular legal requirement for a mediator to hold professional liability insurance. However, the institution or provider that a mediator is attached to will usually require them to take out appropriate insurance. For example, the CMC stipulates that mediators should have professional liability insurance cover of at least £1 million, plus additional cover where the sums involved in the work exceed that amount. Parties considering appointing a mediator should check that they hold professional liability insurance to a sufficient level before confirming the appointment.

Is it required, or customary, for a written mediation agreement to be entered into by the parties and the mediator? What would be the main terms?

There is no legal requirement for the parties and mediator to enter into a written mediation agreement, but it is standard practice to sign a written agreement before the commencement of the mediation. Many mediation providers have their own standard template mediation agreement. 

A mediation agreement is a contractual document which sets out the legal framework for a mediation, including:

• the appointment of the mediator and their role and responsibilities; 
• that the parties agree to negotiate in good faith;
• that the representative signing on behalf of each party has authority to bind that party and to settle the dispute;
• the procedure for the mediation, including any steps to be taken beforehand, such as exchanging position statements;
• the terms as to confidentiality;
• that any settlement must be in writing and signed to be enforceable; and
• the payment of the mediator’s fees and other costs of the mediation.

How are mediators appointed?

Most frequently, mediators are appointed by agreement between the parties. If the parties cannot reach an agreement, they may ask a third party (eg, a mediation service provider) to make the appointment for them. 

If the parties have agreed in a mediation clause that the mediation is subject to a particular set of mediation rules (eg, the London Court of International Arbitration Mediation Rules or the International Chamber of Commerce Mediation Rules), the mediator will be appointed in accordance with those rules. This may mean that the institution in question appoints the mediator.

If a mediation has been arranged through a court-operated mediation service, a mediator will be appointed in accordance with the particular scheme.

Must mediators disclose possible conflicts of interest? What would be considered a conflict of interest? What are the consequences of failure to disclose a conflict?

The impartiality of the mediator is a fundamental aspect of mediation, and anything with the potential to call that into doubt should be disclosed so that the parties can make an informed decision about whether to proceed with the appointment. Although there is no statutory requirement for a mediator to disclose a possible conflict, it is standard practice do so, and the European Code of Conduct for Mediators, to which many adhere, expressly requires them to be disclosed. Such circumstances include:

• ‘any personal or business relationship with one or more of the parties’;
• ‘any financial or other interest, direct or indirect, in the outcome of the mediation’; and
• if ‘the mediator, or a member of [their] firm, [have] acted in any capacity other than [as a] mediator for one or more of the parties’.

Many mediators also come from professional backgrounds in which conflict checks are routinely carried out in any event (eg, lawyers).  

Are mediators’ fees regulated, or are they negotiable? What is the usual range of fees?

There is no statutory regulation of mediators’ fees. Fees are negotiated in each individual case and reflect the complexity and value of the dispute and the expertise and reputation of the mediator. Often, mediators will offer a fixed fee which covers a certain amount of preparation and a mediation up to a certain number of hours, with additional hours charged over and above the fixed fee at an hourly rate. 

Mediators’ fees vary considerably, but the Centre for Effective Dispute Resolution 2018 mediation audit states that the average fee of a less experienced mediator for a one-day mediation is currently £1,512, whereas the average fee for an experienced mediator is £3,627.

Usually the parties will agree to split the costs of the mediation (which, as well as the mediator’s fees, may also include the cost of venue hire and refreshments), but each pays for their own legal representation. It is also possible (although much rarer) that one party might offer to pay all of the costs of the mediation in order to encourage their opponent to mediate.

Procedure

Are the parties typically represented by lawyers in commercial mediation? Are fact- and expert witnesses commonly used?

The mediation process is flexible and can be adapted to what is appropriate for each particular case. Depending on the nature and value of the dispute, the parties may have solicitors, counsel and potentially other professional advisers or experts (eg, accountants or surveyors) in attendance. It is common for parties to attend with at least their solicitors. The parties should notify the other parties and the mediator in advance as to who will be attending the mediation. 

Are there rules governing the mediation procedure? If not, what is the typical procedure before and during the hearing?

In keeping with its flexible nature, no particular rules govern the mediation procedure (the exception to this being a minority of cases where the parties have agreed to mediate under the mediation rules of a specific institution, such as the London Court of International Arbitration). However, there are likely to be terms regarding the mediation procedure set out in the mediation agreement on matters, such as:

• the preparation of position statements or case summaries – these will be prepared by each party, and copies exchanged with the other party and provided to the mediator in advance of the mediation; and 
• the preparation of a bundle of key documents (the mediation bundle). As in litigation, the parties will usually agree a bundle index, following which one party will take responsibility for production of the bundle, providing copies to the other party and the mediator ahead of the mediation. The mediation bundle will normally include:
  • key contractual and evidential documents;
  • key items of correspondence; and
  • statements of case and other relevant documents (eg, witness statements and costs budgets) if proceedings have been issued. 

Prior to the mediation day, the mediator will usually contact each party or their legal representatives by way of a telephone call. 

On the day itself, a typical one-day mediation will run roughly as follows:

• The parties arrive at the venue and go to their separate rooms, where they consult in private with their lawyers and any other advisers. The mediator comes to each room to introduce themselves to each group.
• The parties gather together in one large room for a joint opening session (the plenary session). The mediator explains the terms of the mediation and emphasises its confidential nature. Each party then has an opportunity to speak, explaining the issues that concern them in the dispute and their hopes for the mediation (this is known as the opening statement).
• The parties return to their separate rooms and the mediator ‘shuttles’ between the rooms, exploring each side’s concerns and challenging and testing their positions. Eventually, the mediation will reach the negotiation phase, whereby one party makes an opening settlement offer, and then further counter-offers are made. The mediator will communicate each offer and encourage the parties towards settlement, until an offer is accepted in principle.
• Once an offer has been accepted, the parties’ lawyers work together to draft a settlement agreement recording the terms of settlement.
• The parties reconvene to sign the written agreement.

There may be variations to the above, such as the lawyers having a joint session without clients present to debate a point of law, or the parties having a joint session without lawyers present to discuss commercial considerations.

Does commencement of mediation interrupt the limitation period for a court or arbitration claim?

The domestic position is that the commencement of mediation does not interrupt the limitation period for bringing a court or arbitration claim. If parties to a dispute wish to suspend the limitation period in order to attempt mediation, they may enter into an agreement to that effect called a ‘standstill agreement’. A standstill agreement suspends or extends a statutory or contractual limitation period. Alternatively, the claimant can issue a protective claim before limitation expires and then seek an immediate stay (ie, pause or suspension) of the proceedings to enable a mediation to take place.

The position differs in cross-border disputes within the scope of the EU Mediation Directive (2008/52/EC). In these disputes, the limitation period may be extended in certain circumstances (set out in Section 33A(2) of the Limitation Act 1980) where a cross-border mediation has started before the expiry of the relevant limitation period.

For cross-border disputes which do not fall within the scope of the Mediation Directive, the position is the same as for domestic disputes.

Is a dispute resolution clause providing for mediation enforceable? What is the legal basis for enforceability?

No special requirements must be met in order for a dispute resolution clause providing for mediation to be enforceable. Rather, the clause must satisfy the normal requirements of English contract law. This means that the clause must be sufficiently certain in order to be enforceable (ie, it must specify with particularity the procedure that the parties must follow before they can refer the dispute to court proceedings or arbitration). This means that each step of the process should be set out clearly, with a specified timeframe.

In Ohpen Operations UK Limited v Invesco Fund Managers Limited ([2019] EWHC 2246 (TCC)) the English High Court set out the factors that the court will consider when deciding whether to stay proceedings and uphold a dispute resolution clause. These included that:

• the agreement must create an enforceable obligation for the parties to engage in ADR;
• the obligation should be expressed clearly as a condition precedent to court proceedings or arbitration;
• although the dispute resolution process to be followed does not have to be formal, it must be sufficiently clear and certain by reference to objective criteria, including machinery to determine any necessary steps in the procedure (eg, appointing a mediator) without the need for any further agreement between the parties; and
• the court has discretion to stay proceedings brought in breach of an enforceable dispute resolution clause.

Are mediation proceedings strictly private and confidential?

Mediation is private and confidential in nature, and terms as to confidentiality will normally be included in the mediation agreement and any settlement agreement. Confidentiality usually extends to what happens in the mediation and any settlement arising out of it, but not to the fact that a mediation is taking place. Sanctions and remedies for breach of confidentiality provisions will apply in accordance with the normal principles of English contract law.

As well as express contractual confidentiality terms, a mediation will also be protected by without prejudice privilege, given that it is a process aimed at settling a dispute. 

Express non-disclosure provisions and without prejudice privilege will usually prevent information regarding the mediation from being subsequently disclosed. However, there are limited exceptions (see ‘In what circumstances can the mediation settlement agreement be challenged in court? Can the mediator be called to give evidence regarding the mediation or the alleged settlement?’).

What is the likelihood of a commercial mediation being successful?

According to the Centre for Effective Dispute Resolution’s 2018 mediation audit, the overall success rate of commercial mediation is high, with an aggregate settlement rate of 89%. The proportion of cases achieving settlement on the day of mediation currently stands at 74%, with the proportion of cases that settle shortly after the mediation standing at 15%.

Settlement agreements

Must a settlement agreement be in writing to be enforceable? Are there other formalities?

A settlement agreement is a contract. Under English law, a contract does not have to be in writing to be enforceable; an oral agreement will suffice. However, it is risky to rely on a non-written agreement, and from a risk and evidential perspective, a settlement agreement should always be recorded in writing. In order to be enforceable, it must comply with the formalities of English contract law.

Settlement agreements arising out of cross-border mediations subject to the EU Mediation Directive (2008/52/EC) must be in writing. Civil Procedure Rule (CPR) Part 78 (which implements the Mediation Directive, including enforcement provisions, into English law) defines a ‘mediation settlement agreement’ as ‘a written agreement resulting from mediation of a relevant dispute’, and stipulates that the written agreement must be annexed to any application to court for a mediation settlement enforcement order. 

In what circumstances can the mediation settlement agreement be challenged in court? Can the mediator be called to give evidence regarding the mediation or the alleged settlement?

As a settlement agreement is a contract, it can be challenged as any other contract. Thus, it could be found to be void on grounds of concepts such as mistake, frustration, fraud and illegality. It could also be set aside on grounds of misrepresentation, duress and undue influence.

Farm Assist Limited v The Secretary of State for the Environment, Food and Rural Affairs (No 2) [2009] (EWHC 1102 (TCC)) involved proceedings to set aside a settlement agreement entered into at a mediation on the grounds of alleged economic duress. The mediation agreement contained a clause specifying that the parties agreed not to call the mediator as a witness in subsequent litigation, as well as terms regarding confidentiality and privilege. The mediator was served with a witness summons, which she made an application to set aside, but the court found that she should give evidence. In so doing, it was held that although the court will generally uphold the confidentiality of mediation, it will permit evidence of confidential matters to be given where it is necessary in the interests of justice. Moreover, although a mediation will be protected by without prejudice privilege, the parties may choose to waive that privilege; it is a privilege belonging to the parties, not the mediator.

In cross-border mediations to which the Mediation Directive applies, Article 7 (implemented into English law at CPR 78.27) sets out that unless the parties agree otherwise, the mediator cannot be compelled to give evidence except in limited circumstances.

Are there rules regarding enforcement of mediation settlement agreements? And on what basis is the mediation settlement agreement enforceable?

Settlement agreements entered into as a result of mediation are enforceable in the same way as any other legally binding contract, on the normal principles of English contract law. Under English law, a contract does not have to be in writing to be enforceable. However, the mediation agreement is likely to stipulate that any settlement must be recorded in writing and signed to be enforceable. A settlement agreement may also be incapable of enforcement if its terms are too uncertain.

Article 6 of the Mediation Directive addresses the enforcement of settlement agreements arising out of cross-border mediations that are subject to it. Article 6 was implemented into English law under CPR 78.24, which contains provisions for the making of mediation settlement enforcement orders. At CPR 78.23(2) a ‘mediation settlement agreement’ is defined as ‘a written agreement resulting from mediation of a relevant dispute’ and a written agreement must be annexed to any application for a mediation settlement enforcement order.

Stays in favour of mediation

Must courts stay their proceedings in favour of mediation?

The English courts are not specifically required to stay proceedings in favour of mediation. However, they are under a duty to actively manage cases, which includes encouraging the parties to use alternative dispute resolution procedures, such as mediation, where appropriate (Civil Procedure Rule 1.4(2)(e)). Consequently, although the courts are not expressly obliged to stay proceedings for mediation to take place, in reality they will often be willing to do so if the parties express a genuine desire to attempt mediation, and the timetable of the claim (particularly any trial date) will not be unduly compromised.

Miscellaneous

Are there any distinctive features of commercial mediation in your jurisdiction not covered above?

Although mediation is not compulsory, the United Kingdom is distinctive for its progressive approach to commercial mediation, with the courts supporting and encouraging mediation, and agreements to mediate found in dispute resolution clauses largely being upheld. As a prominent global dispute resolution centre, the United Kingdom – and London in particular – also has a large and well-developed mediation industry, including a significant pool of eminent mediation professionals. 

Update and trends

What are the key opportunities, challenges and developments which you anticipate relating to mediation in your jurisdiction?

Following the United Kingdom’s 2016 vote to leave the European Union – and as part of a general policy to revoke domestic implementation of EU laws based on reciprocity – the UK government has published legislation to repeal the implementation of the Mediation Directive. Assuming a no-deal Brexit, this will come into force on exit day and include transitional provisions for where the Mediation Directive applied to a mediation before exit day.

However, should the United Kingdom and the European Union reach a deal, it is expected that domestic legislation derived from EU law, including the Mediation Directive, will continue to be in force for a transitional period. At the time of writing, it is not yet known whether the United Kingdom will leave the European Union with or without a deal or, if a deal is reached, what arrangements would take effect after the end of the transitional period.

The United Kingdom’s unwinding of EU-based legislation will have no impact on domestic mediations or cross-border mediations that are not subject to the EU Mediation Directive (2008/52/EC).

Law stated date

Give the date on which the above content is accurate.

31 July 2019.