The Courts are always encouraging parties to attempt to settle disputes instead of incurring costs by fighting their issues out in the Court. One of the most popular forms of ADR is mediation.
Facilitative or evaluative?
There are generally two approaches that a mediator can adopt in order to find common ground between the parties, a facilitative approach or an evaluative one. In the UK, mediation is almost exclusively approached in a facilitative way, where the mediator will act as a communicator between the parties but won’t express a strong view as to the prospects of each party’s case. An evaluative approach sees the mediator offer an opinion as to the strengths or weaknesses of each party’s case.
When should a party mediate?
Mediation can be attempted at any time, and will often narrow the issues between the parties. However, it is likely to be a waste of money to mediate before both parties are genuinely willing to attempt a settlement. Often this will occur once parties have fully pleaded their cases or have become aware of the likely costs of litigation or arbitration.
How does it work?
The process of mediation starts as soon as a mediation is proposed by one of the parties to the dispute (or a third party such as the Court) as this will often adapt the parties’ mind sets towards settlement rather than arguing. The parties will then have to agree on the identity of the mediator.
Following this, the parties will often wish to present their positions using written statements before the mediation, submitting these to the mediator and the other side. It is important for each party to confirm that the attendees at the mediation will have the authority to agree a settlement of the matter. Mediating with a party that cannot settle without additional authority will often cause delays and can derail a settlement.
On the day of the mediation, the parties will sign a confidential mediation agreement, which makes it clear that anything said or handed over at the mediation will be considered confidential and on a without prejudice basis. This allows parties to discuss the dispute freely without being concerned about anything they say being used against them in formal proceedings.
The parties will initially meet the mediator separately, then ordinarily the mediator will hold a plenary session where all of the parties to the dispute sit around the same table with the mediator and summarise their positions. This often helps to identify the issues that are not agreed upon, in turn providing focus for further discussions throughout the day. Those further discussions will be decided on by the mediator based on how they think the time would best be spent. It is most common for a mediator to engage in “shuttle diplomacy”, where the mediator moves back and forth between the parties and narrows differences.
Mediations can be as cheap or as expensive as the parties are willing to accept, and the cost of a mediation will mostly be determined by the mediator that is chosen and their hourly rate.
Unless the parties decide to deal with their own costs of mediating as part of any settlement agreement, the parties would normally bear their own legal and other costs connected to mediation.
It is important to note that a party may suffer costs sanctions if it refuses to mediate and then goes on to fight litigation. In the case of Laporte and another v The Commissioner of Police of the Metropolis, a defendant to litigation refused to engage in ADR and went on to successfully defend the action against it. Despite its success, the Court decided not to award the defendant any of its costs due to its refusal to engage in discussions that had a reasonable prospect of success of concluding a settlement of the matter.
This case demonstrates that failing to engage in alternative dispute resolution can have negative costs consequences, even if you are successful in the ultimate litigation. Offers of ADR should always be considered, even if the other side is uncompromising, and any refusal to engage in ADR requires support of robust reasoning.