Mediation stuff or FAQ

Do I have to mediate?

The short answer is no, but there will almost certainly be costs consequences if you refuse an offer to mediate and the dispute is decided by the court. There have been many reported cases where the courts have considered what costs order should be made if a party refuses to mediate, but probably the best known of these is Halsey v Milton Keynes General NHS Trust [2004] EWHC Civ 576 where in the leading judgment Dyson LJ said

11. The value and importance of ADR have been established within a remarkably short time. All members of the legal profession who conduct litigation should now routinely consider with their clients whether their disputes are suitable for ADR. But we reiterate that the court's role is to encourage, not to compel. The form of encouragement may be robust: see para 30 below.

The judgment in Halsey sets out the circumstance in which it might be acceptable to refuse mediation, but it is clear that it is for the party who declines a mediation to justify doing so.

Is the mediation confidential?

The mediation agreement contains general confidentiality provisions in sections 6 and 7 and if these provisions are not sufficiently detailed they can be modified by the parties (by agreement).

The confidentiality of the mediation process was given detailed consideration in Farm Assist Ltd (in liquidation) v The Secretary of State for the Environment (No 2) [2009] EWHC 1102 when the court confirmed that a mediation was confidential and covered by the without prejudice privilege.

Who pays for the mediation?

The mediator’s fees are usually shared by the parties, and this is the approach taken in my mediation agreement, but the parties can agree a different arrangement if they wish. There is a set fee, the basic fee mentioned in the mediation agreement, which covers the first four hours of the mediation. After that there is an hourly rate. There are no additional charges for preparation or travelling time but you may be asked to cover travelling expenses for journeys of more than 25 miles.

Are mediation costs recoverable?

If proceedings have been issued the costs of a mediation should form part of the costs of the claim if no settlement has been reached, see Costs Practice Direction para 4.6(8) and the mediation agreement at 3.8.
This can be modified by the terms of the mediation agreement or the settlement agreement and for an example of this see National Westminster Bank v Feeney [2006] EWHC 90066.

Are agreements reached at a mediation enforceable?

An agreement reached at a mediation is a compromise of the dispute or litigation being mediated and it is enforceable in the same way as any other compromise agreement. The courts have even been prepared to enforce a mediated compromise when an order could not have been made in the agreed terms at the end of a contested trial, see Thakrar v Ciro Cittero Menswear [2002] EWHC 1975.
The mediation agreement I use follows the format adopted by most mediators and it includes a provision that the negotiations at the mediation are conducted on a without prejudice basis (7.1), but as with all without prejudice negotiations once a concluded agreement is reached the court can be told what was agreed.

Is a written settlement agreement necessary?

My standard mediation agreement provides that the settlement agreement will be written down and signed by the parties (1.3). This reduces the possibility of a misunderstanding and gives the parties an opportunity to reflect on the terms agreed before they sign the settlement agreement. The parties’ solicitors are responsible for preparing the settlement agreement.
It needs to be remembered that the courts have been prepared to hold that there was no concluded agreement until it was reduced into writing when the mediation agreement contains this provision, see Oil and Minerals Development Corporation Ltd v Sajjad and Oasis International LLC [2002] EWHC 1258. See also Brown v Rice and Patel [2007] EWHC 625 for a discussion of the effect of leaving an offer on the table at the end of a mediation.

What if we can’t agree on the interpretation of the settlement agreement?

It goes without saying that settlement agreements should be written in the clearest possible terms to avoid subsequent disputes about their interpretation and it helps achieve this if the terms agreed are kept as simple as the dispute will allow. In the real world this is not always achievable and sometimes the parties are not able to fully document the settlement on the day, for instance if a deed has to be drawn up to put the settlement into effect. When drafting the settlement agreement care needs to be taken to avoid disputes over implementation, for instance by providing that an expert will be appointed to determine a specification if the parties cannot agree.
This issue arose in Oceanbulk Shipping and Trading SA v TMT Asia Ltd and others [2010] UKSC 44. If no agreement is reached neither party can normally refer to without prejudice negotiations in subsequent litigation but the Supreme Court (following Chartbrook v Persimmon Homes [2009] UKHL 38) decided that the negotiations can be referred to as an aid to the construction of the terms of a settlement if the meaning of the agreement is ambiguous.