Judicial encouragement in litigation should not be taken lightly

Pour encourager les autres (to encourage the others), which perhaps means 'tough love', is now an ever-enveloping theme in judicial pronouncements, the decision in Mitchell v News International [2013] EWCA Civ 1537 being an example of this growing trend in litigation. When settling disputes by alternative means, however, ?the cold wind of judicial control ?has blown the hardest and the longest, all the way back to the Woolf reforms and Halsey v Milton Keynes General NHS Trust. Where are we now? And what ?is the practical effect of ?this 'encouragement'?

The ruling in PGF II SA v OMFS Co I Ltd [2013] EWCA Civ 1288 appeared to strengthen the court's resolve to press parties to enter into negotiation. The case facts are well known: an offer to enter into mediation by one party received no response from the other. Briggs LJ thought this was unacceptable conduct and penalised the other party in costs pour encourager les autres. This represents a culmination of authority dating back to the Woolf reforms in which the courts sought to encourage resolution without trial, as ?noted in Lord Justice Jackson's final report.

Jackson LJ recognised that mediation is not a universal panacea. If anything, there seems to be a shift away from its popularity. The expense and ?time is a major disincentive. Further, like all litigation processes, some use mediation tactically as an information-gathering exercise, with no intention of settling a dispute.

Resolution without trial

Many experienced litigators, particularly on the claimant side, will suggest that they are capable of negotiating a settlement and do not need to consider a reasonable offer in the presence of a facilitator. But after PGF, are we all required to tick the mediation box as a defensive mechanism? If not, how do we ensure the court does not condemn the failure to resolve a dispute without trial?

If there's an offer to mediate that you believe can be refused reasonably, how should you proceed? In PGF, the court relied on The Jackson ADR Handbook, section N, chapter 11, as follows:

Do not ignore an offer to engage in alternative dispute resolution (ADR). Failure to respond is likely to be treated as an outright but irrational refusal.

• Respond promptly, giving clear and full reasons why ADR is not appropriate at this stage of proceedings.
• Raise, with the opposing party, any shortage of information or evidence that may hinder resolution, and consider how that could be overcome.
• Do not close off the exploration of ADR processes ?at a later date.

The handbook suggests that if this guidance is followed, no adverse costs consequences need to flow from refusing to engage in ADR.

If you tick the mediation box and attend, you should be secure. If mediation fails, the court cannot ask why (Wethered Estate Ltd v Davis [2005] EWHC 1903 (Ch), unless the privilege attached to the process is waived, as in Carleton (Earl of Malmesbury) v Strutt and Parker). Similarly, there is no penalty if parties do not propose ADR (Vale of Glamorgan Council v Roberts [2008] EWHC 2911 (Ch)). But there may be a penalty if you agree to mediate then pull out before it happens (McMillan Williams v Range [2004] EWCA ?Civ 294).

Defendants may have an additional burden when entering into negotiations. Occasionally, the court has penalised defendants for failing to make a reasonable offer in settlement (Fox v Foundation Piling Ltd [2010] EWHC 98).

Therefore, it's important that practitioners do not ignore offers whether to mediate or settle. I suggest following the handbook's guidance and ?you should be safe. SJ