When is it Reasonable to Refuse Mediation in the UK?

What is Mediation?

Mediation has become a cornerstone of the dispute resolution process in the UK. Courts often encourage or even require parties to consider mediation before proceeding to trial. Despite this, there are scenarios where refusing mediation may be justified. In this article, our lawyers examine the circumstances under which it is reasonable to refuse mediation, the potential consequences of such a decision, and relevant case law to illustrate these points.

If you are facing a dispute and are unsure whether to agree to mediation, contact our expert litigation team for a Free Consultation today on 0207 459 4037.

Understanding Mediation: A Key ADR Process

Mediation is a form of Alternative Dispute Resolution (ADR) where a neutral third party, the mediator, assists the disputing parties in reaching a settlement. The process is confidential, flexible, and often quicker and cheaper than going to court. According to the Centre for Effective Dispute Resolution (CEDR), mediation has a high success rate, with 93% of cases settling either on the day or shortly thereafter​​.

Refusing Mediation: What Does the Law Say?

The leading case on refusing mediation is Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576. The Court of Appeal in Halsey established that an unreasonable refusal to mediate could lead to adverse costs orders. The court outlined several factors to consider when assessing whether a refusal is unreasonable​​​​:

1. Nature of the Dispute: Some cases, particularly those requiring a legal precedent or involving injunctive relief, may be unsuitable for mediation.

2. Merits of the Case: If a party has a strong case, they might reasonably refuse to mediate, especially if they believe that mediation would not yield a different outcome.

3. Other Settlement Methods: Previous attempts at settlement can influence the decision. If parties have already tried and failed to settle, further mediation might be seen as futile.

4. Costs and Delays: The costs associated with mediation must be proportionate to the dispute. Additionally, if mediation would significantly delay proceedings, this could be a valid reason to refuse.

5. Prospects of Success: There should be a reasonable prospect that mediation will succeed. If it appears highly unlikely, refusal might be justified.

6. Judicial Encouragement: Courts often encourage ADR, and ignoring such encouragement can lead to costs sanctions​​.

Grounds for Refusing Mediation

Refusing Mediation Due to Non-Compliance with Pre-Action Protocols

Refusal to mediate may be reasonable if the Pre-Action Protocol has not been complied with. The Protocols are designed to encourage early exchange of information and settlement negotiations. Ignoring these steps could justify refusal to mediate.

For Example: A company faced with a breach of contract claim discovers that the claimant has not followed the required Pre-Action Protocols, which include sending a letter before action and attempting to negotiate a settlement. In this scenario, the company might refuse mediation until the claimant complies with these steps, ensuring that all preliminary efforts to resolve the dispute have been made.

Choosing Alternative ADR Methods Over Mediation

Sometimes, ADR methods other than mediation might be more appropriate. For example, Early Neutral Evaluation (ENE) or arbitration might be better suited to the dispute at hand. If another ADR method is more appropriate, this can be a reasonable ground for refusing mediation.

For Example: In a complex construction dispute involving multiple parties and technical issues, the parties might prefer arbitration or early neutral evaluation over mediation. These methods can provide a more structured approach and allow for expert input on technical matters, making them more suitable for the dispute at hand.

Refusing Mediation Due to Disproportionate Costs

If the costs of mediation are disproportionately high compared to the value of the dispute, refusal can be justified.

For Example: In a small claims case where the disputed amount is £1,000, the cost of hiring a mediator could be £500. Here, the costs of mediation are disproportionately high relative to the claim, justifying a refusal to mediate.

Refusing Mediation Due to Timing of the Request

If a request for mediation is made very close to the trial date, and accepting it would cause significant delays, refusal might be considered reasonable. Courts typically frown upon last-minute mediation requests that seem intended to delay proceedings rather than to genuinely resolve the dispute.

For Example: If a mediation request is made a week before the trial date, accepting it could delay the proceedings and incur additional costs. In such cases, the court might find the timing unreasonable, justifying a refusal.

Refusing Mediation When There’s No Reasonable Prospect of Success

If there is a clear and compelling reason to believe that mediation would not succeed, refusal may be justified. This could be if previous negotiations have failed.

For Example: If one party has consistently refused to engage in any form of settlement discussions, the other party might reasonably conclude that mediation would be futile. Previous failed negotiations would support this position.

Consequences of Refusing Mediation

While there are valid grounds for refusing mediation, parties must be cautious. An unreasonable refusal to mediate can lead to significant cost penalties. Courts have increasingly been willing to penalise parties who refuse to engage in mediation without good reason. For example:

• In DSN v Blackpool FC [2020], the defendant was heavily penalised for refusing to engage in ADR, resulting in indemnity costs being awarded against them from the date of refusal​​.

• Similarly, in Thakkar v Patel [2017], the court imposed severe cost sanctions for failing to mediate, noting that mediation was obviously appropriate given the circumstances​​.

Key Case Law on Mediation and Costs: Summary Table

Below is a summary of key case law on mediation and the consequences of refusing it:

FAQs About Refusing Mediation in the UK

1. What are the benefits of mediation?

Mediation offers a confidential, flexible, and cost-effective way to resolve disputes. It allows parties to reach mutually acceptable solutions without the need for a lengthy and expensive court trial.

2. Can a court force parties to mediate?

Courts cannot compel parties to mediate, but they can strongly encourage it. Refusing to mediate without good reason can lead to adverse costs consequences.

3. What happens if one party refuses to mediate?

If a party unreasonably refuses to mediate, they may face costs penalties, even if they win the case. Courts consider various factors to determine the reasonableness of the refusal.

4. How is the cost of mediation determined?

The cost of mediation depends on the mediator’s fees and the complexity of the case. Costs are typically shared between the parties unless agreed otherwise.

5. What is the role of a mediator?

A mediator facilitates discussions between the parties, helping them explore options for settlement. The mediator does not impose a decision but assists in reaching a voluntary agreement.

Free Consultation with Expert Litigation Lawyers & Mediators in London

Refusing mediation in the UK can be reasonable under certain circumstances, such as non-compliance with Pre-Action Protocols, suitability of alternative ADR methods, disproportionate costs, timing issues, and lack of prospects for success. However, parties should carefully consider the potential consequences, as unreasonable refusal can lead to significant cost penalties.

For more detailed guidance on mediation and ADR options, please do not hesitate to contact our team of experienced mediators and litigators at Go Legal. Our team of experienced litigators and mediators are here to help you navigate the complexities of dispute resolution and achieve the best possible outcome for your case. Call us for a Free Consultation today on 0207 459 4037.

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