The Case for Mediation

The Commercial Court rules have, since its establishment, permitted the judge to adjourn proceedings so that the parties may consider whether the proceedings ought to be referred to a process of mediation, conciliation or arbitration. Although compliance is not mandatory, there can be cost implications if one of the parties adopts an unreasonable or obstructive position.  It may reflect the relative success of mediation in the Commercial Court or the advance of ADR generally that the possibility of adjournment to facilitate participation in ADR subsequently became available in all High Court cases.  While the Irish Courts have not as yet imposed costs penalties for unreasonable refusal to mediate, it is one of the factors which the Court can take into account in dealing with costs awards.

The case for mediation was articulated by MacMenamin J in the Supreme Court (Fitzpatrick -v- Board of Management of St Mary's Touraneena National School & anor [2013] IESC 62) where he said:-

"In any litigation process, inevitably, there will always be “winners” and “losers”. The range of possible outcomes is necessarily limited by the law. Litigation can be stressful, sometimes profoundly so. Lawyers frequently strive to keep their clients out of court, or go to court as a last resort. The parties here were fully legally advised. Their respective interests were fully vindicated by their lawyers in the High Court, and here, on appeal. One is nonetheless left with a regret that some person didn’t shout “stop” and initiate a conciliation process at an earlier time, which could have avoided months of correspondence, days of litigation, the stress such litigation brings to the parties and the risk of substantial legal costs."

In Ryan v Walls Construction Ltd [2015] IECA 214 Kelly J in the Court of Appeal pointed out that

"…mediation is now firmly established as a well respected alternative dispute resolution process.  Whilst it is not a panacea, it has proven to be very beneficial and it has succeeded in bringing about settlements of seemingly intractable disputes.  Experience teaches us that even if the mediation itself is unsuccessful it frequently succeeds in dealing with some of the issues in dispute or creates a climate for continued negotiation."  

Whilst extolling the virtues of mediation, Kelly J pointed out that mediation is a voluntary process, and that the courts should be slow to invoke compulsory mediation where the parties have not themselves attempted to settle the litigation in the normal way and further, little is achieved by way of settlement or saved by way of costs if mediation is sought too late in proceedings.  Kelly J noted that the experience in the Commercial Court has been that mediation had the greatest prospect of success if sought immediately after pleadings are closed and the issues defined, but prior to the commencement of the expensive and time consuming discovery process.

In Atlantic Shellfish Ltd & anor v Cork County Council & ors [2015] IECA 283 the Court of Appeal considered the circumstances in which a court should exercise its discretion in favour of making an order pursuant to Order 56A, Rule 2 of the Rules of the Superior Courts inviting the parties to litigation to engage in ADR.  The Court stated that whilst it was undoubtedly true to say that in very many cases "mediation is a thousand times preferable than litigation" it was clear from the Rules that the Court should only invite the parties to consider mediation if it considered it appropriate having regard to "all of the circumstances of the case".  Firstly the court should be satisfied that the issues in dispute between the parties are amenable to the type of ADR proposed.  Other material factors then would be:-

  1. The manner in which the parties had conducted the litigation up to the date of the application;
  2. The existence of any relevant interlocutory orders;
  3. The nature and potential expense of the proposed ADR;
  4. The likely effect of the making of the order sought on the progress of the litigation should the invitation be accepted and the ADR prove unsuccessful;
  5. The potential saving in time and costs that might result from the acceptance of an invitation;
  6. The extent to which ADR can or might potentially narrow the issues between the parties;
  7. Any proposals made by the applicant concerning the issues that might be dealt with in the course of the ADR; and
  8. Any proposals as to how the costs of such a process might be borne.

On the facts the Court refused to make an order inviting the parties to mediation.

Parties involved in a dispute should always give serious consideration to mediation, or other forms of alternative dispute resolution.  However, as the case law outlined above makes clear timing, the willing engagement of the parties and the factual matrix will all contribute to the success or failure of the process.

For more information please contact Paula Mullooly at pmullooly@algoodbody.com

Date Published: 1 March 2016