Corporate Services Blog

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.

For further information contact Paul Trincas on paul.trincas@clmlaw.co.uk or for employment related issues, contact Andrew Egan on andrew.egan@clmlaw.co.uk or call 01235 771234.

Peter Billyard, a corporate services lawyer with Charles Lucas & Marshall, reports on new legislation which will make business backhanders a thing of the past.

The Bribery Bill is a major piece of new legislation that is currently in the final stages of its passage through Parliament. Its aim is to modernise and consolidate the law on bribery and corruption in the UK which currently consists of common law offences and legislation which dates back to between 1889 and 1916.

The Bill is designed to raise the awareness of bribery by all types of businesses although it is expected to have greatest impact on large companies in ‘high risk’ areas such as defence and construction. It will, however, cover not only payments made in multi-billion international defence contracts but also smaller companies where informal ‘backhanders’ or gifts might be offered by existing or potential suppliers.

The current law on bribery is commonly considered to be unsatisfactory. This is illustrated by the fact that the UK has so far failed successfully to prosecute any bribery case against a company.

The respected international think-tank, the Organisation of Economic Co-operation and Development (OECD), has been a particular critic. It heavily criticised the judicial handling of the recent investigation into bribery allegations against BAE Systems.

For some years the Law Commission has been working on proposals for reforming the existing law on bribery. Its first report in 1998 was eventually followed by a full report and draft bill in November 2008. This has formed the basis for the Bribery Bill which received its first reading in the House of Lords in November 2009.

The Bill creates two general offences of bribing and being bribed, together with a specific offence of bribing a foreign public official.

Significantly for companies (and partnerships), the Bill also introduces a new, corporate-only offence of failing to prevent bribery.

However there is a defence for a company if it can show that it had implemented adequate procedures to prevent such conduct taking place. The government has said that it intends to publish non-statutory guidance on ‘adequate procedures’, which are not defined in the Bill. It is expected that the majority of cases brought before the courts will be under the corporate-only offence.

The Bill covers offences which take place in the UK or by British individuals or corporates abroad. Maximum penalties for individuals are 10 years’ imprisonment and an unlimited fine. Companies will be liable for unlimited fines. The practical implications of the Bill, when passed, for all commercial and public sector organisations is that they should specifically prohibit bribery in any form within the organisation.

Larger companies will be advised to additionally implement systems to counter bribery, to include codes of conduct, training and guidance together with risk management and auditing of compliance and also consider introducing such clauses into their commercial contracts.

For smaller companies and owner-managed businesses in ‘low risk’ sectors it is to be hoped a correspondingly low key, proportionate response to the Bill will suffice.

For more information contact Peter Billyard on 01635 521212 or peter.billyard@clmlaw.co.uk