Is mandatory mediation the future?

Background

Mediation is a voluntary and confidential process in which an impartial mediator will help facilate discussions between individuals or businesses to help them come to a mutually beneficial decision.

As mediation is a voluntary process the concept of the court requiring parties to mediate is not compatible with the principle of voluntary participation. Research indicates that compulsion may result in a lack of investment in the process of mediation as clients may simply turn up for mediation because they must and not fully integrate themselves in process and work on resolving the issues.

In the UK we have situation where the courts are at a tipping point and cannot cope with more disputes. The restrictions placed on legal aid as part of the The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) in 2012 meant that many families had to start to represent themselves as they could not afford legal support which meant the courts were faced will an avalanche of litigants in person applying to the court with no legal experience.  

Manchester Circuit Courts now estimate that to reach a final hearing it now takes between 12 to 18 months. In November 2021 the then Justice Secretary Dominic Rabb stated that many of the cases in court should not be there. (1) Mediation is very seen as the go to option for family cases and with the introduction of the mediation voucher scheme which allows couples with a dispute over child arrangements to claim £500 towards their legal costs. The voucher scheme has been an incredible success in the UK in deflecting cases away from court. Sir Andrew MacFarlane attending the Family Mediation Association AGM on the 28/10/2022 expressed a determination to look further at mediation options. The Ministry of Justice has thus far invested 5.4 million in the scheme. (2)

Civil disputes are on the increase also because of changes in UK civil law, an increase of the small claims limit up to £10,000 and the covid 19 crisis. During 2021, the Master of the Rolls, Sir Geoffrey Vos, set out his vision for the future of dispute resolution and that mediation should be fully integrated into the legal system and should no longer be seen as an alternative. (3)

The annual costs to the taxpayer of family disputes were estimated at 51 billion in 2020 up from £37 million ten years ago so there is a need to come up solutions. (4) CEDR Ninth Audit published in 2021 concluded that mediation has saved the economy over 40 billion since 1990.

Current Legal Position

Practice direction 3(d) of civil procedure rules states that the parties are to consider a form of Alternative Dispute Resolution (ADR) to assist with settlements (5). This is not a compulsory step however the courts have discretion under its management powers under civil procedure rule 44.2 to consider the conduct of the parties before proceedings are issued and whether they have should have engaged (ADR) and then penalise them accordingly.

One of the leading civil cases in relation to ADR was The Court of Appeal’s 2004 decision in Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002. This was the first case to address how the court may use its powers to encourage parties to civil litigation to resolve their disputes outside trial. The case addressed three main issues. Firstly, the court should not compel parties to engage in ADR but may encourage them to do so. Secondly, the court’s power to have regard to the parties conduct when exercising its discretion as to costs includes the power to deprive the successful party of some or all of its costs on the grounds of its unreasonable refusal to engage in ADR. Finally, for that purpose, the burden is on the unsuccessful party to show that its opponent’s refusal was unreasonable.

The court in Halsey identified a list of factors that would be relevant to determining whether a refusal to mediate was unreasonable. Those factors include the nature of the dispute, the merits of the case and whether the ADR had any reasonable prospects of success, the extent to which other settlement methods had been attempted and the impact of the costs and any delay likely to be incurred in embarking on ADR. (6)

More recently in Richards & Anor v Speechly Bircham LLP & Anor [2022] EWHC 1512 (Comm) HHJ Russen QC (sitting as a judge of the High Court) considered the most appropriate costs order to be imposed on the unsuccessful defendant law firm for refusing to engage in mediation. In this case the court found that failure to engage mediation amounted to unreasonable conduct. The defendant refused to mediate on no less than four occasions and was therefore penalised with a costs order. (7)

What is clear is that courts will when they feel its appropriate penalise unreasonable conduct with a costs order. In fact, Lord Justice Jackson in March 2018 stated that ADR is an effective method of resolving civil disputes with modest costs and to the satisfaction of both parties (8). The problem is does a refusal to engage in ADR or mediation mean that one side is automatically penalised in costs? Well, the answer is the court has discretion to consider all the circumstances of the cases before making such an order. Also, what if a refusal to mediate and seeking the courts judgment vindicates or proves a point of law as in Gore v Naheed & Anor (2017) EWCA Civ 369

Practice direction 3.3 (1) of the family procedures states that the court must consider at every stage in proceedings whether non-court dispute resolution is appropriate (9). In family law there is requirement for the applicant to attend a mandatory mediation information assessment meeting (MIAM) pre court with a mediator to discuss their options. The idea with the miam is to help provide more information about how mediation can help an applicant with their dispute. If the case is suitable for mediation the mediator will invite the responding party to attend a miam with a view to organising a mediation. If the responding person refuses to attend their own MIAM then the mediator will certify on the court form that the respondent was unwilling to engage in mediation. In family cases the unwillingness of one person to engage in mediation has been the source of much frustration for mediators. Given the huge pressure the court system is under many courts have introduced tighter gate keeping protocols and are now requesting clients attend mediation.

Family law tends to be less transactional than civil claims as it often involves so much emotion as the issues been discussed are so personal and potentially life changing issues as dealing with the complexity of children’s welfare.  To make matters more complicated there are many cases where there is risk of harm to an individual or a child needs to be urgently dealt with by the court. Currently these types are cases are exempt from mediation and rightly so in my opinion.

Article 6 of the European Convention on Human Rights (ECHR) statesyou have the right to a fair and public trial or hearing if: you are charged with a criminal offence and have to go to court, or. a public authority is making a decision that has an impact upon your civil rights or obligations. This is something UK law has struggled with and probably the reason mediation is still not mandatory across the board. UK courts tend to prefer imposing costs sanctions on the party that refuses to mediate rather than to compel them to attend mediation. But the argument is that by imposing costs sanctions on a person or party is tantamount to compelling them attend mediation.

The government currently has a consultation proposal on the automatic referral to medication for civil disputes valued up to £10,000. The proposal will be that any disputes that fall into this category will be passed to a court appointment mediator for a one-hour free mediation session. A mediation scheme has been piloted across several courts in the UK on a non-compulsory basis with a take up of only 21% of small claims. Of those cases that did go to mediation 55% resulted in a successful outcome.

The success rates of mediation are impressive the CEDR Mediation Audit recorded a settlement rate of 93% for commercial cases in 2020. The Family Mediation Council recorded that 70% of cases on the voucher scheme resulted in whole or partial settlement.

Mediation around the World

The European Mediation directive endorses the use of mediation on border disputes to ensure agreements are enforceable but does nothing to compel mediation. Italy does have an automatic referral system for mediation on civil and commercial cases since 2011. This introduced a mandatory mediation as first step before going to court. This has had limited success over the last 10 years. The process involves a free mediation meeting with an option to leave policy. Since COVID 19 Italy is strengthening its commitment to mediation and ADR and increasing the scope of mediation and the orders the judges can make.

Mediation in New Zealand is still voluntary however, participation in mediation can be seen as part of the good-faith duties of an employment relationship. If you choose not to take part, the other party might be able to take their complaint to the Employment Relations Authority (ERA) which can require you to attend mediation.

Most Australian courts have statutory power to refer cases to mediation and other forms of ADR. In some instances, with the consent of the parties and in others without consent. Some legislation requires mediation to be undertaken or offered before a claim is filed. The statistics are exceptional good and Australian research stated 80% of cases are resolved in mediation. In Toronto, Windsor, and Ottawa there is mandatory mediation on most civil cases but not on family matters. There are exemptions for the use of mandatory mediation such as commercial cases, bankruptcy, and trust claims among others. Recent statistics demonstrated that 90% of cases taken to mediation resulted in full or partial settlement.

Conclusion

I support the view that mandatory mediation should apply to small claims cases (12). This makes sense to me as most of these cases will be by nature are not massively complex and given the disproportionate costs that can be incurred running these cases mandatory mediation seems absolutely the right step. My view is smalls claims mediation will eventually happen as thousands of these low value cases can be dealt at mediation successfully. This will reduce the court backlogs significantly and save the courts time and costs. Its clear other countries that have adopted forms of mandatory mediation like Australia have found a way to make this work.

On the higher value or more complex commercial claims it seems the UK law and the courts are reluctant to force mediation on the parties but are very keen to penalise unreasonable conduct with costs orders as a sort of warning to engage in ADR. I disagree with this approach as I believe mediation should be a mandatory step on most civil cases and the success achieved in other countries clearly proves this can work. I think mediation may work on most multi track and commercial cases up to £100,000 as these cases could be mediated in a day. At the very least the court should have the power to make an order that parties engage in mediation. The cost orders I have seen over the years in my role as a lawyer in the UK for unreasonable conduct in my opinion are nowhere near severe enough to encourage parties to engage in mediation.

High value commercial cases over £100,000 in my opinion are problematic for mandatory mediation. These cases require substantial disclosures of documents and expert evidence, but my belief is there could still be a pretrial referral to mediation much like a joint settlement meeting (JSM) on civil claims in personal injury. At that point all the parties to the dispute will have their evidence so mediation could be effective at this point. That is not to say meditation is not appropriate at any stage. (10)

In relation to family cases compulsory mediation is more complicated as we must assess safeguarding and domestic violence so these cases would have to remain exempt from any compulsory step. My personal view is that mediation should be a mandatory post issue step as recommend in the What About Me report (4) so noncomplex family disputes can be fast tracked to mediation if they are suitable. Stronger gate keeping should also be maintained to ensure the mandatory miam has taken place K v K 2021. (11) I would be mindful that on family cases pre proceedings it wouldn’t be right to force mediation on families or parents as they are likely not to invest in the process and may treat mediation as a tick box exercise. I do believe the voluntariness of mediation promotes communication and improves relationships. I also firmly believe that a failure to voluntarily engage in mediation pre-court proceedings means you lose that right post proceedings and the court should order you to attend a mediation.

There must be in my opinion an ideological change in how society sees disputes and we need to somehow change the culture away from the view of having your day in court. These disputes are costing the taxpayer billions. The UK Access to Justice Act 1999 paved the way for reform allowing funding for the most vulnerable in society to enable them to have legal representation. The issue of access to justice is firmly at the heart of the debate and compulsory mediation conflicts with the spirit of the reforms and ECHR 6. I believe there should be access to justice and the court system but limited access for those cases that really need it.