Hetty Gleave writes on when to mediate and what can happen if one fails to do so

Gregor Kleinknecht and Petra Warrington write on “AML for the Art Trade: How Not to Go to Jail under the 5th Directive” in the American Bar Association Section of International Law Art & Cultural Heritage Newsletter.
27 March 2019

When to mediate – the tipping point.

It is often said that mediation is a more effective way of enabling the parties to settle their disputes outside the court process, thereby saving costs, the inevitable stress of litigation and preserving confidentiality in the process. If that is the case then why do people not take the opportunity to mediate at the first sign of a dispute and why do cases ever end up in court at all?

 

There can be various reasons why people turn to the court first. A decision to litigate may be tactical, i.e. a belief that the other party will be “fazed” by litigation or costs implications and just “give in”, or guided by emotional rather than strategic considerations. Parties may have a strong belief in the legal, and moral, merits of their case and simply feel that there is nothing to mediate.

 

What is clear is that the courts now encourage mediation at every step. It is written into the Civil Procedure Rules that mediation must be considered before proceedings are brought and at every stage in proceedings once issued. People who fail to mediate, or at least consider mediation if it is offered, do so at their peril. The courts are frequently making cost Orders against parties who have unreasonably received/failed to consider any form of alternative dispute resolution, even if they then go on to win the main action.

 

Proceedings cost money as documents need to be prepared and filed and there are strict time limits with penalties in default (some of which can be fatal). Parties also fail to factor in the “litigation risk” of their evidence or witnesses failing to measure up (or even show up), last minute evidence coming to light or the matter simply coming before a judge who is not as convinced as the parties are to the merits of their case. Anything can happen from the date of issuing proceedings to the date of a Final Hearing, by which time the costs to the applicant of withdrawing from proceedings, bearing in mind they will have to pay the defendant’s costs to the date of discontinuance if they do get cold feet, can often make it virtually impossible for one party to give up.

 

If a dispute is likely then it is always advisable to consider how a resolution can be achieved before the conflict escalates out of control. Often situational pressures can cause a dispute that could not be resolved by well-meaning attempts, to become hardened over time. What may have started as interests and opinions become fixed and turn from a disagreement into a stand point, from which it is difficult to move away. Testing a party’s resolve by issuing proceedings only to see if they will give in to pressure, is never a risk free strategy. Mediation will inevitably be encouraged by a Judge at some stage in the proceedings and by then there is usually more at stake to argue about as costs are an added consideration.

 

Parties already locked in litigation should consider that a negotiated outcome is always more flexible than a court imposed one, which can operate as a blunt instrument over which they have no control. It is often the case that the risks of full blown litigation only become tangible once a Judge starts making orders for disclosure and statements of costs consequences are a reality. There is nothing to lose by considering mediation at this stage, but everything to gain.

 

Anticipating potential disputes is a skill but knowing how to resolve the dispute before they reach court is an even greater skill. It may be that it is only when the parties are involved in proceedings that they begin to realise the attraction of settlement, but early discussion or negotiation, facilitated by a third party if possible, is rarely a waste of time. It enables emotional issues to be aired in private, rather than through a public court forum, and often clears the way for sensible commercial choices.

 

– Hetty Gleave