The Government’s much publicised pledge to settling its disputes by ADR was seen by some as a cost saving exercise and by others as more words. The threat of costs sanctions for the recalcitrant litigant appeared to be largely ignored.

Cynics could be forgiven for believing that ADR – the non-confrontational settling of disputes – is creating more disputes. When Lord Woolf’s approach to access to justice later embodied in CPR seemed to be advocating the use of ADR rather than litigation many lawyers were concerned at the impending erosion of the citizen’s right to have his disputes settled by the court. The possibility that this might have a knock-on effect for the legal professions probably did not even occur to those earning their daily crust in the courts and at arbitration. Nevertheless in the years since the introduction of CPR, ADR and mediation in particular, has been paraded as the panacea. The Government’s much publicised pledge to settling its disputes by ADR was seen by some as a cost saving exercise and by others as more words. The threat of costs sanctions for the recalcitrant litigant appeared to be largely ignored.

And then came Dunnett –v- Railtrack plc. This when coupled with Cowl –v- Plymouth City Council made litigators stop and think (or rethink). Depriving a party of costs for the failure to mediate was a whole new ballpark. ‘Reasonableness’ became rather more important. Not unreasonably the bar recognised the potential value of this new tactical weapon. A new culture started to emerge – “… if you do not accede to our demonstrably reasonable request for mediation, we reserve the right to show this letter to the court at trial on the question of costs.” Mediation started to become used more frequently and it often succeeded when the lawyers predicted that it would not.

This then is the backdrop for the Court of Appeal in Halsey –v- Milton Keynes General NHS Trust; Steel –v- Joy and another [2004] EWCA Civ 576. In the first case the Defendant, Milton Keynes General NHS Trust, were successful at trial and the question for the court was whether their refusal to mediate should deprive them of costs that had been allowed at first instance. In the second case the dispute was essentially between the First and Second Defendants the latter having rejected the formers offer of mediation, about the effect of this refusal on costs. As with Halsey the court at first instance applied the normal costs follow the event principle.

Using the normal author’s licence, the simple question for the Court of Appeal was should a party be punished for its refusal (obviously unreasonably!) to mediate. As might be expected their lordships took the opportunity to give their guidance on this and related maters. They were no doubt given considerable assistance by the formidable array of counsel. In addition to 3 silks and 3 counsel for the parties, there were Lord Lester of Herne Hill QC for The Law Society and Mr Michel Kallipetis QC and Mr Philip Bartle QC for The ADR Group both as Interested Parties, prompting a fleeting thought about the cost benefits of ADR!

In a nutshell the court decided that the principle of costs follow the event should be applied in these cases. In other words despite refusing to mediate the successful party was able to recover costs in the normal manner. This does not sound like good news to those attempting to increase the use of mediation and other forms of ADR. Indeed many think it may well bring about a reversal of the laborious task of educating and persuading litigants and their legal advisers that the parties interests (and the courts’ targets for mediation) would be best served by them adopting ADR.

The court continued by giving general guidance on the subject of costs. The thrust of this is that the costs principle applies to litigation whether or not mediation is offered, rejected or attempted. They went on to explain the principles that would be used to deprive a successful party of their ‘entitlement’ to costs. This deprivation should be regarded as an exception to the rule, which hardly seems to be encouraging the pressure to try mediation.

To make matters worse the burden is on the unsuccessful party to demonstrate that the successful party acted unreasonably in refusing to mediate (or use an ADR process). What the effect will be of this negative approach to ‘persuasion to mediate’ remains to be seen although it should make those lawyers who are positively anti ADR more resolute even if it is their client who has to pay the priCe of the dogma.

Had this have been the sum total of Halsey it might have been regarded as unfortunate and possibly not in keeping with what we now call the spirit of Woolf.

However the court also took the opportunity to consider what we might term ‘compulsory mediation’. Rather than paraphrase such an important concept I use the words of the court on the old fashioned basis that res ipsa loquiter.

“We heard argument on the question whether the court has power to order parties to submit their disputes to mediation against their will. It is one thing to encourage the parties to agree to mediation, even to encourage them in the strongest terms. It is another to order them to do so. It seems to us that to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court.

The court in Strasbourg has said in relation to article 6 of the European Convention on Human Rights that the right of access to a court may be waived, for example by means of an arbitration agreement, but such waiver should be subjected to "particularly careful review" to ensure that the claimant is not subject to "constraint": see Deweer v Belgium (1980) 2 EHRR 439, para 49. If that is the approach of the ECtHR to an agreement to arbitrate, it seems to us likely that compulsion of ADR would be regarded as an unacceptable constraint on the right of access to the court and, therefore, a violation of article 6. Even if (contrary to our view) the court does have jurisdiction to order unwilling parties to refer their disputes to mediation, we find it difficult to conceive of circumstances in which it would be appropriate to exercise it.”

Be the Court of Appeal right or wrong, this article would have not have been written if it were not for the new Practice Direction 26b which includes:
“This practice direction enables the Central London County Court to –
(1) require the parties … to attend a mediation appointment or to give reasons for objecting to doing so; and
(2) stay the claim until such appointment takes place.”It continues:
“If one …of the parties …objects to mediation, the case will be referred to a district judge who may …direct that a mediation appointment should proceed”

Somehow the fact that a district judge may “direct that a mediation appointment should proceed” despite objections, looks uncannily like
‘obliging a truly unwilling party to refer their dispute to mediation’ which in the words of Dyson LJ “… would be to impose an unacceptable obstruction on their right of access to the court.”

Could this I wonder be an A P Herbert type situation where the Court of Appeal hear the cases on 30th and 31st March which resulted in the ‘no compulsion to use ADR’ headlines and when on the very next day (unfortunately designated 1st April) the Practice Direction comes into force giving the court the right to compel the unwilling party to mediate.

Psychologists tell us this is ‘mixed messages’. But where does it leave the poor lawyer having to advise his unfortunate client on his choices? Possibly he should remind his client of the wonderful attractions including excellent food and fine wine that are on offer in Strasbourg.