Mediation now an Essential Part of the Litigation Process

A specialist in commercial disputes at Tilly Bailey & Irvine Solicitors is urging North East companies to ensure they always consider mediation as a way of resolving any dispute, saying that recent penalties imposed by judges imply that mediation has become an essential part of the litigation process rather than a voluntary option.

Mrs Debra Burton, an Associate Solicitor with Tilly Bailey & Irvine Solicitors’ Wynyard-based Business Law team, said: “In litigation cases, solicitors have long advised clients to consider mediation. Not only does it have cost benefits, but the courts have for some time expected parties to have attempted mediation. However, a recent case has seen the Courts go so far as to penalise a successful party and not allow them to recover all their legal costs from their opponents because of their refusal to mediate during the process.

“Whereas mediation was considered a way to save time and costs and avoid the courts, it must now be considered part of the litigation process. It seems that attempting mediation is becoming a box that must be ticked before a case is brought before the court.”

One case which Ms Burton refers to is PGF II SA vs OMFS Company in 2013. In this case the defendant failed to respond to two offers by the claimant to refer the matter to mediation. The High Court held that the defendant’s failure to respond amounted to a refusal to mediate, which was considered unreasonable. Usually in such a case the claimant would be liable for the defendant’s costs. However, in this case the court decided each party should bear its own costs incurred after the expiry of the defendant’s mediation offer. Mrs Burton commented: “The court was insistent that if there are reasonable grounds for refusing to mediate, these must be expressed and addressed at the time that mediation is offered.”

In a more recent case of Northrop Grumman Mission Systems Europe Ltd v BAE Systems in October 2014, the Court again emphasised that just because a party (correctly) believes that they have a strong case, this is not reasonable grounds for refusing to mediate.

Mrs Burton commented that “The court has frequently stressed the positive effect that mediation can have in resolving disputes and it may be difficult for a party to be able to justify rejecting an offer of mediation without putting themselves at risk of not recovering all or some of their legal costs. Whilst mediation must now be considered a part of every litigation process, we recommend seeking professional advice on how and when to propose mediation. Mediating too early can be futile if you are not aware of the other party’s case. Equally well, mediate too late and there a few cost savings to be had and the parties’ positions may have become too entrenched.”

Tilly Bailey & Irvine Solicitors is the Tees Valley’s largest full service law firm with offices in Wynyard Park, Stockton on Tees, Hartlepool and Barnard Castle. It has a multi-disciplinary business law team, based at Wynyard Park, offering expertise in fields including commercial property, mergers, acquisitions and disposals, intellectual property, employment law and dispute resolution. For further advice, contact Tilly Bailey & Irvine Solicitors on 01740 646000.

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