The provisions of the Mediation Act 2017 ("the Act"), signed into law last autumn, commenced operation on 30 January last. The Act, which is intended to promote the option of mediation as an alternative to the issue of court proceedings, places new obligations on solicitors to furnish information to their clients about the potential for resolving legal disputes by mediation. The Act’s provisions will apply generally to all legal disputes other than arbitrations, employment law matters, judicial review, and certain other specified exclusions.
Before proceeding to initiate a court action on a client's behalf, solicitors must now:
Advise clients to consider mediation as a means of resolving their dispute
Provide information in respect of mediation services, including the names and addresses of persons offering mediation services
Furnish information about the benefits of mediation and the advantages of resolving disputes otherwise than by legal action
Prior to instituting court proceedings, solicitors must now swear a statutory declaration to confirm that their client has been advised in respect of the above matters and the availability of mediation as an alternative to court proceedings. A failure by a solicitor to comply with this requirement will result in any proceedings issued being automatically adjourned until such time as the statutory declaration has been sworn and filed.
Elsewhere under the 2017 Act, mediation will continue to function as a voluntary process and (barring unreasonable refusal) no party will be penalised for refusing to participate in mediation. While no guidance is offered as to the circumstances in which a party might be found to have unreasonably refused to participate, it seems likely that courts will be reluctant to impose any costs penalty on a party for refusing to take part in mediation, particularly since the legislation provides that it is a voluntary process from which the parties are free to withdraw at any time.
The Act also recognises that mediation (including all communications, documents, notes and records prepared for it) is completely confidential and that no details of the mediation may be disclosed either in subsequent court proceedings or for any other purpose. The confidential nature of mediation is one of its key attractions for parties with concerns about having to disclose commercially sensitive information and serves as a welcome alternative to the resolution of disputes in public through the courts system.
Parties to mediation will retain full control over the process and are free to agree among themselves a form of mediation which suits their particular requirements. It is a matter for the parties to determine if and when a mediation settlement has been reached and whether it is intended to be enforceable as between them. However, as a default, the Act provides that any mediation settlement will be binding unless agreed otherwise and it will be open to either party to apply to court to enforce its terms.
The Act also introduces a statutory duty which obligates both the parties and the mediator to make every reasonable effort to conclude the mediation expeditiously and in a manner which is likely to keep costs at a minimum. For the purposes of the Statute of Limitations, the Act provides that time will not run against a claimant from the date on which an agreement to mediate has been signed and while the mediation is in being. Claimants will not therefore suffer any prejudice by attempting to initially resolve a dispute by mediation before resorting to court action.
Forms of alternative dispute resolution, particularly arbitration and mediation, have become increasingly popular over the past decade and are now seen as efficient, cost-effective alternatives to pursuing litigation through the courts system. The movement towards mediation in particular is likely to continue following the commencement of the Act which is designed to both incentivise and encourage parties to resolve disputes without having to go through an expensive court process. By placing parties under a statutory obligation to consider mediation from the outset, the Act should also assist with removing any perception that a proposal to mediate might somehow be seen as a sign of weakness on the part of one of the parties.