There is increasing evidence that courts and employment tribunals now expect litigants to seriously consider some form of mediation before legal action reaches the courtroom. Paul Trincas and Andrew Egan, corporate lawyers with Wantage solicitors, Charles Lucas & Marshall explain why businesses may soon have very little option but to mediate.
Business disputes can be expensive both from a time and cost perspective. Although the courts and tribunals cannot compel anyone to attempt to resolve their business or employment dispute, they expect the parties involved to at least have considered some form of alternative dispute resolution.
The recent Court of Appeal case, Rolf v De Guerin considered various issues – including the defendant’s refusal to mediate.
Although the defendant won at trial the claimant appealed on a number of grounds including the cost order which the trial judge had made in favour of the defendant. The claimant argued that the defendant’s refusal to take part in mediation amounted to unreasonable behaviour.
On appeal, when asked by the court why he had been unwilling to mediate, the defendant stated that if he had participated in mediation he felt he would have had to accept ‘his guilt’ and that he wanted his ‘day in court.’
Whilst the judge acknowledged that mediation might not have provided a solution, he felt that it was unreasonable on the defendant’s part to spurn offers to enter mediation.
The lesson to be drawn from this is that the courts now expect litigants to seriously consider and enter into some form of mediation. You may succeed in your claim but if you fail to engage in mediation without a legitimate excuse, you are likely to have costs ordered against you.
Employment Tribunal reforms: will employers feel forced to compromise?
The government proposes reforms to Employment Tribunals this year with the aim of reducing the number of claims.
It has been argued this may adversely affect small to medium sized businesses because a form of compulsory early mediation through ACAS will force more cases to be settled out of court on a financial basis, through compromise or settlement agreements.
The concern is that employers may be more tempted to settle this way because of the potential level of costs the government is proposing for employers who might otherwise lose a tribunal case.
Many employers, however, already use compromise agreements to settle actual or potential employee claims anyway. Average settlement figures tend to be less than the full cost to employers of defending a case in the tribunal and will be cheaper than a potential fine of £5,000, plus the cost of reimbursing the employee’s claim fees and having an award of compensation against the employer.
Obviously settlement by way of mediation saves time and money and the inconvenience and hassle of having to attend the tribunal and give evidence rather than being at work and being productive.
What are the advantages of mediation?
Mediation will bring a certainty of outcome. It will avoid either the costs of proceeding to court, or, alternatively, if court proceedings have started, it will avoid having to proceed to trial with all the costs and uncertainties involved.
It is also independent of the court process and is a relatively informal procedure. Although the mediator facilitates settlement, it is actually the parties themselves who come to their own agreement and model the terms of any agreement.
What costs are involved?
These can vary, depending upon the nature of the dispute, the amount involved, the time required and the mediator appointed. The parties will have to share the mediator’s costs equally.
If the parties have a legal representative and wish to have their representative present, then the parties will have to pay their respective legal advisors. It is normally only in more complex or larger claims that parties wish their legal representatives to be present.
If the outcome of mediation is successful, then it may well be time and money well spent.
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