Everything you need to know about compulsory mediation

There has recently been an interesting line of case law developed in relation to the Courts powers with regards to compelling a party to enter into mediation.

Compelling someone to mediate appears to be an odd concept at first; mediation has historically always been a voluntary process and in many ways having the parties want to attend rather than being forced to attend adds to the power of the process. However, the judiciary recognise that mediation is an effective way of resolving disputes and therefore avoiding costly and potentially risky trails.

This article examines how we got here through three illustrative cases, before setting out some practical guidance for parties considering mediation.

The previous position

In Halsey v Milton Keynes NHS Trust [2004] EWCA Civ 576, the then Master of the Rolls, Lord Dyson, held that whilst the Courts could encourage a party to mediate it could never force them to do so. The reason for this is that forcing a party to mediate potentially fettered their absolute right to have access to a trial, and that was simply not acceptable.

The Court did however observe that it could encourage a party to mediate by using cost sanctions in circumstances where a refusal to mediate was deemed to be unreasonable. That then became the orthodox approach for the subsequent 20 years.

Sir Geoffrey Vos and compulsory mediation

All was turned on its head in Churchill v Merthyr Tydfil (& Others) [2023] EWCA Civ 1416. The case had modest beginnings, being a dispute about who carried the responsibility for the removal of Japanese knotweed from a property. The Defendant had applied in the County Court for a compulsory mediation order, which was refused. The County Court’s order was appealed to the Court of Appeal for further consideration.

By the time this case was heard, the Master of the Rolls was now Sir Geoffrey Vos, and he delivered the lead judgment in the Appellate Court. In that case, he held that the Courts had always had an inherent jurisdiction to stay proceedings to facilitate any form of alternative dispute resolution process but indeed, under its case management powers, the Court could also compel a party to mediate. He indicated that such an approach would not fetter a party’s right to trial, it would simply delay it and in any event, it was in the interests of justice in furtherance of the overriding objective under CPR1.1, to ensure that cases were dealt with expeditiously and economically. He deployed some interesting judicial mental gymnastics to get around this predecessors’ findings in Halsey, by simply classing them all as being obiter (or outside of the core judgment of Lord Dyson), and therefore not binding on him in Churchill.

Churchill mediation in practice

DKH Retail and Others v City Football Group Ltd [2024] EDHW 3231(Ch) demonstrates the application of Sir Geoffrey’s thinking in practice. DKH involved the deployment of the brand “SuperDry”. The Claimant ran the famous fashion brand, and the defendant was the operating company of a football club who was sponsored by Asahi lager. Asahi’s 0% alcohol brand is called “Super Dry”, and those words were printed on the players shirts.

The Claimant issued proceedings against the Defendant alleging brand infringement (on the basis that the wording was used on clothing and therefore could cause confusion in the marketplace). The case was extremely advanced, the parties having exchanged pleadings, witness statements, and all their evidence. At the pre-trial review (immediately before trial) the Claimant applied for the case to be stayed and for a compulsory mediation order to be made following on from Churchill. Despite the lateness of the application, and very robust submissions made on behalf of the Defendant against the application, the application was granted, and the parties were ordered to mediate. Interestingly, between the order being made and judgment being handed down the case was settled, although the judgment is unclear as to what process was deployed.

DKH demonstrates that the Court will be very accommodating if one party makes an application for compulsory mediation and therefore in practice, such applications are going to be extremely difficult to resist.

The interesting thing to consider (not least of all because any guidance is absent from Sir Geoffrey’s judgment in Churchill) is what the Court will do if a party actively refuses to engage in mediation in the face of an order compelling them to do so. Might the Court strike a claim out? There is a tension to this; on the one hand striking out a good claim simply because one party refuses to mediate is an absolute fettering of the party’s right to a fair trial and is offensive to Lord Dyson’s reasoning in Halsey. However, the Courts are required to deploy their case management powers to further the litigation. Is there therefore any difference in striking out a claim where a party refuses to mediate despite being ordered to do so, or a party failing to file their witness statements and therefore causing a significant delay to litigation. The position is far from clear, and we can await some lively litigation once the Court does make a sanctions order against a reluctant party who is subject to a compulsory mediation order.

What does this all mean and when should you mediate?

So, what is sensible advice in light of these recent cases? I would suggest:

1. The parties ought to be open minded to mediation, even if you believe that your case is extremely strong and likely to win at trial. It’s better to engage in mediation consensually than to be forced to do so.
2. Try and mediate as early as possible before the costs become an issue.
3. Be prepared to mediate more than once. In DKH, the Court held that a late-stage mediation was actually constructive, on the basis that the parties will have exchanged a considerable amount of information during litigation, and therefore their positions will be clear to each other, and this might help a settlement discussion.
4. In a case where mediation fails at the early stages, it might be sensible to still try mediation again in the run up to trial.
5. Whilst you should never reveal what has been said at mediation, you might be prepared to reveal a “without prejudice save as to costs” correspondence of the discussions that have been had around convening of mediation and your opponent’s response to any invites. It’s possible that you may achieve a cost advantage if you can demonstrate that your opponent has refused to engage in the mediation process, despite having been invited to do so.

This is a lively and developing area of procedural law and there is likely to be further interesting case law coming down the line as the Court gets to grips with the full extent of the powers it now possesses to compel a party to mediate.