It is not unusual for the courts to promote the use of Alternative Dispute Resolution (‘ADR’) as a means of encouraging parties to a dispute to resolve their differences in an efficient and cost-effective manner. Since changes to the Civil Procedure Rules made in October 2024, the courts now have the power to compel parties to engage in ADR.
Mediation is the most common form of ADR used to resolve commercial disputes. Mediation provides a confidential and non-confrontational forum in which parties gain a better understanding of each other’s positions and work together to explore options for resolution. The mediation process enables parties far more flexibility over settlement options than traditional litigation.
In the recent case of DKH Retail Limited v City Football Group Limited [2024], Mr Justice Miles was faced with an application from the claimants for an order for compulsory mediation before the trial.
The Claimants’ arguments for mediation were as follows:
- It would ensure that the court’s resources are properly allocated to the parties and other court users.
- Mediation has worked in complex and entrenched disputes.
- The case was not overly complex, and mediation would allow an out of court compromise which may not be achievable in a standard court setting.
- There had been unsuccessful negotiations and the costs of proceeding to trial would be high.
- Time benefits- the trial was listed for several days, and a 1-day mediation may allow for a swifter and cheaper resolution for all parties.
The Defendant opposed the mediation of the following grounds:
- Whilst there was no dispute as to the court’s power to order mediation, the court should only do so where there are prospects of success, and it argued there were none here.
- Both parties wanted final judicial determination of the dispute which it argued could not be achieved by mediation.
- It was too late for a mediation, as the parties were trial ready.
Mr Justice Miles considered all the arguments presented by both parties but, ultimately, found in favour of the applicant and ordered the mediation. He said:
‘Experience shows that mediation is capable of cracking even the hardest nuts. The process sometimes succeeds in cases where the parties appear at first to have intractable differences…I am unable to accept the submissions of the defendant that a mediation here has low prospects of success and that adjudication by a court is necessarily required. The range of options available to the parties to resolve the dispute through mediation goes beyond the binary answer a court could provide. There may be solutions other than yes or no.’
Incidentally, despite the defendant’s objection to mediation, the case settled at the 1-day mediation ordered by the court. This represents a significant change in the approach of the courts to ADR. It will incentivise parties to settle disputes outside the courtroom, thereby avoiding lengthy and expensive litigation with all the risks that brings with it.
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