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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> PGF II SA v OMFS Company 1 Ltd  EWCA Civ 1288 (23 October 2013)
Cite as:  1 WLR 1386,  6 Costs LR 973, 152 Con LR 72,  CP Rep 6,  BLR 1,  3 EGLR 16,  WLR(D) 405,  44 EG 98,  WLR 1386,  EWCA Civ 1288,  1 All ER 970
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ON APPEAL FROM THE HIGH COURT
Mr Recorder Furst QC
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE BEATSON
LORD JUSTICE BRIGGS
| PGF II SA
|- and -
|OMFS Company 1 Limited
WordWave International Limited
A Merrill Communications Company
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Jonathan Seitler QC (instructed by Browne Jacobson) for the Respondent
Hearing dates : Wednesday 2nd October
Crown Copyright ©
Lord Justice Briggs :
"Please confirm whether your client is willing to attend a mediation and, if so, provide us with your dates of availability. If you are not prepared to attend a mediation, please could you let us know why."
After a chasing letter on 1st August the defendant's solicitors promised a "full response" on 3rd August. On 15th August they responded in some detail in relation to one of the matters raised. Again, nothing whatsoever was said by way of response to the invitation to mediate.
Law and Practice
i) The court should not compel parties to mediate even were it within its power to do so. This would risk contravening article 6 of the Human Rights Convention, and would conflict with a perception that the voluntary nature of most ADR procedures is a key to their effectiveness.
ii) Nonetheless the court may need to encourage the parties to embark upon ADR in appropriate cases, and that encouragement may be robust.
iii) The court's power to have regard to the parties' conduct when deciding whether to depart from the general rule that the unsuccessful party should pay the successful party's costs includes power to deprive the successful party of some or all of its costs on the grounds of its unreasonable refusal to agree to ADR.
iv) For that purpose the burden is on the unsuccessful party to show that the successful party's refusal is unreasonable. There is no presumption in favour of ADR.
Supplementing those statements of principle, the Court of Appeal adopted and explained a non-exclusive list of factors likely to be relevant to the question whether a party had unreasonably refused ADR proffered by the Law Society (which had intervened):
a. The nature of the dispute;
b. The merits of the case;
c. The extent to which other settlement methods have been attempted;
d. Whether the costs of the ADR would be disproportionately high;
e. Whether any delay in setting up and attending the ADR would have been prejudicial;
f. Whether the ADR had any reasonable prospect of success.
Again, none of these guidelines was significantly in dispute on this appeal, although their applicability to the particular facts of this case was hotly debated, both before the judge and on appeal.
"The parties cannot ignore a proper request to mediate simply because it was made before the claim was issued…"
In Rolf v De Guerin  EWCA Civ 78, at paragraph 46, Rix LJ described successive offers of mediation as having been "spurned" by the party's failure to reply.
a.) Not ignoring an offer to engage in ADR;
b.) Responding promptly in writing, giving clear and full reasons why ADR is not appropriate at the stage, based if possible on the Halsey guidelines;
c.) Raising with the opposing party any shortage of information or evidence believed to be an obstacle to successful ADR, together with consideration of how that shortage might be overcome;
d.) Not closing off ADR of any kind, and for all time, in case some other method than that proposed, or ADR at some later date, might prove to be worth pursuing.
That advice may fairly be summarised as calling for constructive engagement in ADR rather than flat rejection, or silence. It is apparent from the footnotes that the authors drew heavily on the first instance decision in the present case, to which I now turn.
The Judgment Below
"In general it would seem to me that… the court should be wary of arguments only raised in retrospect as to why a party refused to mediate or as to why it cannot be demonstrated that a mediation would have had a reasonable prospect of success. First, such assertions are easy to put forward and difficult to prove or disprove but in this case unsupported by evidence. Secondly, and in any event, it is clear that the courts wish to encourage mediation and whilst there may be legitimate difficulties in mediating or successfully mediating, these can only be overcome if those difficulties are addressed at the time. It would seem to me consistent with the policy which encourages mediation by depriving the successful party of its costs in appropriate circumstances that it should also deprive such a party of costs where there are real obstacles to mediation which might reasonably be overcome but are not addressed because that party does not raise them at the time."
Was there a refusal?
Was the refusal unreasonable?
Lord Justice McFarlane
Lord Justice Maurice Kay