The promotion of dispute resolution through the use of alternative dispute resolution (ADR) methods is relatively recent in the United Kingdom (UK). Since the 1990s, the UK civil justice system has experienced a shift in the courts’ approach to the resolution of disputes. The aim was to make ‘litigation […] less adversarial and more cooperative and […] [for] the courts [to] encourage the use of ADR’[1]. The introduction of various reforms, the development of case law and the introduction of court-based mediation schemes suggested that litigants were encouraged to engage in ADR, most notably mediation, before turning to the courts to resolve their problems.
However, whilst the courts seemed to be gaining momentum in encouraging parties to engage with ADR, the 2004 decision in Halsey[2] dismantled all these efforts. Following this case, the acceptable threshold for refusing to engage in mediation was significantly lowered, and consequently, individuals no longer felt compelled to resort to mediation. Ultimately, the case of Halsey[3]considerably affected parties’ reasonable engagement with ADR and is increasingly viewed as an anomaly in this sector’s jurisprudence.
Lord Woolf’s 'Access to Justice Reforms’ was the first step towards having the courts encourage the use of ADR instead of traditional court litigation.[4] Lord Woolf’s recommendations were subsequently integrated into the Civil Procedure Rules which authorised the courts to push parties to resort to ADR and allowed for litigants to be sanctioned if they refuse to engage in this process.[5] This formed the basis of the ensuing case law which further encouraged litigants to reasonably engage with ADR. The case of Cowl[6] gave Lord Woolf the opportunity to reiterate what he had outlined in his reforms; notably, how important it is to resort to and engage with ADR.[7]
Lord Woolf made clear his disapproval of public bodies failing to use ADR causing public money to be used unreasonably.[8] Shortly after, the case of Dunnett[9]held that where a party refuses mediation out of hand when the court encouraged its use, cost sanctions may result as a consequence.[10] This finding was significant as it solidified the court’s stance on ADR and created a precedent for the imposition of cost sanctions if a party fails to engage with mediation. Subsequently, the case of Hurst[11] reaffirmed the finding in Dunnett[12] regarding cost sanctions, but Judge Lightman went even further and held that ‘the fact that a party believes that he has a watertight case again is no justification for refusing mediation’[13].
This outcome was significant as it found that a party could no longer rely on the potentially strong merits of their case to refuse to engage with ADR.[14] Litigants were reminded that ultimately, the judge has the final say as to when a refusal to mediate is justified or not and, in the case that it is not justified, adverse consequences are to be expected.[15] Overall, a high threshold was constructed for parties to meet to prove that their refusal to mediate was not unreasonable in an attempt to deter parties from immediately resorting to the courts to solve their disputes. However, in 2004, the finding in Halsey[16] disrupted all previous efforts to expand the use of ADR.
In early 2004, a pilot scheme was initiated in the Central London County Court where parties would automatically be referred to mediation;[17] however, parties could object to the referral and easily opt out of the programme[18]. Unfortunately for the scheme, its launch occurred at the same time as the Halsey[19] judgment took place which had found that the courts could not compel parties to mediate.[20] Hence, any determination to continue this scheme was quickly stopped and the persisting efforts of the courts to encourage parties to use mediation before referring to litigation were halted. In this case, Lord Justice Dyson held that the court could not compel a party to engage in mediation as this would breach their Article 6 right to a fair trial of the European Convention on Human Rights (ECHR)[21].[22] Most importantly, this case created the Halsey Guidelines which consists of a set of factors that the court is to consider when deciding whether a party in a particular case is acting unreasonably by refusing to engage in ADR.[23]
Although producing Guidelines to create a common understanding of what amounts to an unreasonable refusal seems to be the best option to achieve legal certainty, some of these factors have been criticised for being too generous towards parties refusing to engage in ADR[24], and that this Guideline created a ‘list of permissible opt-outs’[25] to avoid resorting to ADR. Furthermore, whilst laying down these guidelines, it was also found that there is no presumption in favour of mediation[26] and thus, as stated by Genn ‘Halsey attempted to turn back the tide […] and threw the mediation providers into disarray’[27]. Halsey[28] ultimately relaxed all prior party obligations with regards to ADR, creating a much lower threshold regarding a reasonable engagement with mediation.
Following this finding, an impressive decline in mediation cases for both court-referral schemes[29] and mediation in general[30] was observed. Originally, following Dunnett[31], demands for mediation grew exponentially due to the threat of cost sanctions being imposed if ADR was disregarded.[32] Although Halsey[33] never removed the ability of the court to impose cost-sanctions, the merits factor in the Halsey Guidelines made it virtually impossible for a failure to engage with ADR to be considered unreasonable.
The merits factor holds that if a party can show that they had a reasonable belief in the merits of their case, their refusal to engage with ADR will not be deemed as being unreasonable.[34] This factor is problematic, however. In the majority of instances, when a party decides to go through with litigation, they will have a reasonable belief that their case is indeed watertight.[35] If this were not the case, why would a party be willing to go through the hardships of the litigation system?[36] As a result, the merits factor sets a low threshold which virtually all parties coming to court can meet, which in turn means that parties can escape cost penalties[37] and ultimately can avoid engaging with mediation.
Further, the underlying reason for this factor’s existence is to protect parties from unmeritorious claims.[38] However, as Masood correctly pointed out, this ‘gives the misleading impression that a party proposing ADR will, in all cases, be seeking a financial settlement’[39]. Yet, this is not always the case. As was stated in Dunnett,[40] an apology may be all that a party is seeking.[41] Thus, the merits factor subsequently negatively affected how the courts have had to assess whether a party has reasonably engaged with mediation.
As a result of these Guidelines, the judiciary has used caselaw to make more stringent what is considered to be a reasonable engagement in mediation. PGF[42] was significant as it held that silence to an invitation to mediate amounted to an unreasonable refusal.[43] This finding signified an important step back to the thinking which was adopted in the case-law pre-Halsey[44] as it requires parties ‘to engage with a serious invitation to participate in ADR’[45]. Hence, this finding extended the Halsey Guidelines by imposing a stringent onus on parties to engage with a proposition to refer to ADR in order to avoid an unreasonable refusal.[46] This case re-established the idea that parties are under a duty to engage with an ADR process.[47] This phenomenon was also seen in Thakkar[48] where it was held that where a party frustrates the mediation process without a valid reason, the conduct will be viewed as being unreasonable and cost sanctions will be applied.[49]
Ultimately, we are progressively seeing the courts trying to bypass Lord Justice Dyson’s decision as they are trying to revert the unreasonableness threshold back to a higher standard as litigants are increasingly being pushed to reasonably engage with ADR. Furthermore, the judgment of Alassini[50] by the European Court of Justice (ECJ) was significant as the Court found that an obligation in law to engage in ADR before resorting to the court is indeed compatible with Article 6 of the ECHR[51].[52] Thus, on this basis, the Article 6 conclusion in Halsey[53]was deemed irrational and this European finding more generally affirmed Judge Lightman’s statement that mediation is only a temporary delay which allows parties the opportunity to settle before resorting to the courts.[54] Consequently, with the courts reverting the law back to reflect pre-Halsey[55] jurisprudence where parties had to positively engage in mediation if they wished to avoid cost sanctions, we see that the courts view Halsey[56] as an anomaly in this sector’s jurisprudence.
As a result of having litigation as the norm, when presented with these ‘alternative’ forms of dispute resolution methods, people may often believe that this is a waste of time, as litigation is the ‘real deal’. It is therefore imperative to change this mentality in order to increase the reasonable engagement of parties with mediation. Lord Justice Dyson argues, however, that it is not the role of the courts to force people who are unwilling to settle to try and find a compromise.[57] But, what other institution is better placed than the courts to encourage people seek other avenues of dispute settlement? Consequently, the Civil Justice Council (CJC) has recognised that the rules established by Halsey[58] have been far too generous for those dismissing ADR and that consequently, parties often under-estimate the positive effects that ADR may have.[59]
Furthermore, the CJC understands that the merits factor in the Halsey Guidelines is outdated[60] and acknowledges that the Guidelines need to be reviewed.[61] As a result of the CJC’s results and advice, the courts should therefore consider to either remove the merits factor from the Guidelines,[62] or to increase the threshold of reasonable belief to that of a ‘strong belief’ in the merits of one’s case[63] to re-establish greater party engagement with mediation. This would result in more individuals having to consider turning to ADR before referring to the court, and additionally, people would also become more knowledgeable as to the benefits that mediation and other forms of dispute resolution methods may bring and would rectify the damage that Halsey[64] has caused.
Overall, Halsey[65] should be considered an anomaly and the courts should work together to bring the civil justice system back to reflect the jurisprudence which existed prior to Halsey[66]. If society is to engage more reasonably with ADR, there must be a push coming from the courts to educate the public about what options are open to them to settle their disputes. As the ECJ has confirmed that obligatory recourse to ADR before going to the courts does not contravene Article 6 ECHR[67], Lord Dyson’s concerns on this issue should be disregarded.
Furthermore, the merits factor should be revisited in order to increase the threshold of party engagement with mediation to ensure that the public changes its views regarding the benefits of engaging with ADR. In conclusion, the judgment of Halsey[68] negatively affected the courts’ approach to encouraging individuals to engage with ADR and consequently, it is now the courts’ duty to reverse this finding in order to educate society about what mediation has to offer.
Endnotes
[1] Hazel Genn, Judging Civil Justice (Cambridge University Press 2010), 94. [2] Halsey v Milton Keynes General NHS Trust [2004] EWCA (Civ) 576. [3] Ibid. [4] Jacqueline Nolan-Haley, ‘Consent in Mediation’ (2008) 14 Dispute Resolution Magazine 4, 6. [5] Jacqueline Nolan-Haley, ‘Mediation Exceptionality’ (2009) 78 Fordham Law Review 1247, 1257. [6] Regina (Cowl and others) v Plymouth City Council [2001] EWCA Civ 1935. [7] Thomas S. Woods, ‘Costs Sanctions for Unreasonable Refusal to Mediate: Coming to a Courthouse Near You’ (2006) 31 The Advocates’ Quarterly 393, 403. [8] Nolan-Haley (n6), [25]. [9] Dunnett v Railtrack PLC [2002] EWCA Civ 303. [10] Ibid. [15]. [11] Hurst v Leeming [2001] EWHC 1051 (Ch). [12] Dunnet (n9). [13] Hurst (n11), [14]. [14] Ahmed Masood, ‘The merits factor in assessing an unreasonable refusal of ADR: a critique and a proposal’ (2016) 8 Journal of Business Law, 648, 654. [15] Ibid. 657. [16] Ibid. [17] Genn (n1), 107. [18] Dorcas Quek, ‘Mandatory Mediation: An Oxymoron – Examining the Feasibility of Implementing a Court-Mandated Mediation Program’ (2010) 11 Cardozo Journal of Conflict Resolution 479, 501. [19] Halsey (n2). [20] Genn (n1), 107-108. [21] European Convention for the Protection of Human Rights and Fundamental Freedoms (European Convention on Human Rights, as amended) Article 6. [22] Halsey (n2) [9]. [23] Halsey (n2) [16]. [24] Civil Justice Council ADR Working Group Final Report, ADR and Civil Justice, November 2018, [8.23(2)]. [25] Ibid. [8.22(6)]. [26] Halsey (n2). [27] (n1), 101. [28] Halsey (n2). [29] Nolan Haley (n5), 1260. [30] Ibid., 1261. [31] Dunnett (n9). [32] Nolan-Haley (n5), 1261. [33] Halsey (n2). [34] Masood (n14), 648. [35] Ibid. 655. [36] Ibid. [37] Ibid. [38] Ibid. 658. [39] Ibid. [40] Dunnett (n9). [41] Ibid. [14]. [42] PGF II SA v OMFS Company 1 Limited [2013] EWCA Civ 1288. [43] Ibid. [32]. [44] Halsey (n2). [45] PGF II SA (n42), [56]. [46] Masood (n14), 657. [47] Hong-Lin Yu, ‘Carrot and Stick Approach in English Mediation – There Must Be Another Way’ (2015) 8 Contemporary Asia Arbitration Journal 81, 93. [48] Thakkar & ANR v Patel & ANR [2017] WL 11884. [49] Ibid. [31]. [50] (Joined cases C-317-320/08) Alassini v Telecom Italia SpA [2010] ECR I-02213. [51] ECHR (n21). [52] Masood (n14), 650-651. [53] Halsey (n2). [54] Yu (n47), 97. [55] Halsey (n2). [56] Halsey (n2). [57] Lord Dyson, ‘A Word on Halsey v Milton Keynes’ (2011) 77.3 Arbitration: The International Journal of Arbitration, Mediation and Dispute Management 337, 340. [58] Halsey (n2). [59] Civil Justice Council (n24), [2.6]. [60] Ibid [4.26]. [61] Ibid [8.23(2)]. [62] Masood (n14), 667. [63] Ibid. [64] Halsey (n2). [65] Ibid. [66] Ibid. [67] Masood (n14) 650-651. [68] Halsey (n2).