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Time to be reasonable in a dispute

The need for businesses to consider alternative ways of resolving a dispute has hit the headlines again recently following a recent court case.

Where it all began

Since the landmark case of Halsey v Milton Keynes (2004), the Court has taken the view that mediation, the most common form of Alternative Dispute Resolution (ADR), should at least be attempted before going down the traditional Court route.

Since the Halsey case, which went all the way to the Court of Appeal, an “unreasonable refusal” to participate in ADR has been identified as a form of “unreasonable conduct” which could result in financial penalties.  More specific details of the Halsey case can be found by clicking here.

An extension of Halsey

The Halsey guidelines were considered again in BAE Systems who had refused to take part in mediation but later went on to win at trial.  The Court had to decide if BAE had “unreasonably refused” to take part in mediation, and what the financial penalty should be.

The Judge decided that although BAE had a strong case, their refusal to mediate was “unreasonable”.  However, in this instance, the Judge did not penalise BAE financially as they had previously offered the other side a settlement which was rejected, and not beaten at Court.  For more specific details of this case, please click here.

What does this mean for future disputes?

The BAE case clearly shows that the Courts still take the notion of mediation/ADR very seriously and that even in strong cases, you should still be attempting ADR.

If you’re involved in a dispute and you refuse to mediate, it may prove to be at a considerable expense.

Some important points to consider:

  • Simply keeping quiet in response to a serious invitation to mediation/ADR will now be treated as an “unreasonable refusal”.
  • If you have good grounds to refuse to mediate at a particular time, those grounds should be set out very carefully.
  • If the Court has encouraged ADR (for example at an interim hearing), do not ignore it.  Thoroughly explore with the other side whether any ADR process could be effective.

Posted on August 3, 2015

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