What happens if I refuse to mediate in a civil law case?

If the other side offers to mediate and you refuse it can potentially have extremely serious costs and consequences. My advice to all my clients is to mediate, because the risk in not doing so is just too huge, even if you do not settle.

The 2017 case of Thakkar v Patel case highlighted the courts’ intention to find that a refusal to mediate or being silent in the face of an invitation to mediate, will generally be found to be unreasonable. This shouldn’t be surprising news for litigators – more and more cases have shown that a refusal to mediate is likely to see sanctions follow. The Thakkar decision followed the decision in PGF II SA v OMFS Co 1 Ltd [2014]. It also referred to the Alternative Dispute Resolution (ADR) Handbook, at section 11.56 (now 11.59) which states: – 

“In PGF II SA v OMFS Co 1 the court extended the Halsey principles and held that, as a rule, silence in the face of an invitation to participate in ADR was itself unreasonable, regardless of whether there was a good reason for the refusal to engage in ADR. The court noted that there might be rare cases where ADR was so obviously inappropriate that to characterise silence as unreasonable would be pure formalism, or where the failure to respond was the result of a mistake, in which the onus would be on the respondent to prove that explanation.”

The handbook also refers, in paragraph 11.60, to the Practice Direction Pre-Action Conduct and Protocols, paragraph 11, which “also provide that – party’s silence in response to an invitation to participate or a refusal to participate in ADR might be considered unreasonable by the court and could lead to the court ordering that party to pay additional costs.”

It is widely accepted now that the courts expect parties to litigation to have explored ADR before reaching trial. It is also now widely accepted that a refusal to mediate is an EXTREMELY RISKY decision to take. Litigation solicitors and their clients must tread very carefully if they have received an offer to mediate or to take part in any other form of ADR.

What Does the Handbook Say?

In paragraph 11.63 the Handbook offers practical steps for parties to take to avoid sanctions. It reads as follows: –

“A party who is faced with a request to engage in ADR, but who believes that they have reasonable grounds for refusing to participate in an ADR process at that stage of the proceedings should consider the following practical steps to avoid a sanction:

Do not ignore an offer to engage in ADR. Failure to respond is likely to be treated as an outright refusal.

Respond promptly, in writing, giving clear and full reasons why ADR is not appropriate at this stage of the dispute or proceedings. The reasons given, where possible, should be justified considering the relevant principles derived from Halsey and subsequent cases which are explained in this chapter. The response should be contained in an open letter or a letter marked ‘without prejudice except as to costs’;

If lack of evidence or information is an obstacle to a successful ADR process being undertaken at that time, this must be canvassed with the other party to the dispute in the correspondence, and consideration should be given to whether that evidence or information can be obtained during the ADR process or in advance of the process. If court proceedings have already commenced, a judge may be prepared to make an order against a recalcitrant party directing further information or evidence to be disclosed before using ADR;

Letters replying to requests to engage in ADR should be written with care. A party may have good reason to refuse ADR then, but the correspondence should not be written in such a way that closes off exploration of ADR processes at a later date. An outright refusal to use ADR at any time is more likely to be construed as unreasonable.”

So, What Next?

Litigation is an extremely difficult process, requiring extraordinary skill, knowledge, and attention to detail. We would recommend that litigation lawyers (& their clients) keep in mind the desire of the courts for parties to attend ADR before reaching trial and to give careful thought to any potential refusal to mediate. Failing to do so could prove very costly!

I once had a builder client about ten years ago, who brought a claim against a crane company after the crane fell over on his land, causing damage. The crane company brought a counterclaim for unpaid invoices. The judge refused both claims, so no one was awarded any money. However, my client had (despite me advising him to) refused to attend a mediation, offered by the crane company. He ended up paying nearly all the other side’s legal costs, even though they had not won, because the Judge found that this was a case that should have been mediated and never been near a court hearing.

Ben Tisdall