by Matthew Austin August-09-2016 in Litigation & Dispute Resolution
Since 2004, the Commercial Court has had the power to adjourn proceedings so the parties can engage in Alternative Dispute Resolution (ADR). This power to refer matters to ADR, with the consent of both parties, was extended to all High Court cases. The courts have taken the view that ADR should be explored by the parties as a suitable alternative to litigation where appropriate.
MacMenamin J, in the Supreme Court case of Fitzpatrick v Board of Management of St. Mary’s Touraneena National School & Anor [2013], said that there are always “winners” and “losers” in any litigation process. In the context of that case he stated: “The parties here were fully legally advised. Their respective interests were fully vindicated by their lawyers in the High Court, and here, on appeal. One is nonetheless left with a regret that some person didn’t shout ‘stop’ and initiate a conciliation process at an earlier time, which could have avoided months of correspondence, days of litigation, the stress such litigation brings to the parties and the risk of substantial legal costs.”
Similarly, in Ryan v Walls Construction Ltd [2015], the now President of the High Court Kelly J. indicated the Court’s willingness to invite parties to mediation. Kelly J reiterated the principle that mediation is a voluntary process and the courts shouldn’t force parties into compulsory mediation. Kelly J found that there isn’t much to be gained from mediation and/or settlement meetings if sought at a late stage in the court proceedings with a high portion of costs already incurred. Kelly J stated that even if mediation is ultimately unsuccessful, it can narrow issues in dispute and facilitate ongoing negotiations.
The Rules of the Superior Courts
Order 56A of the Rules of the Superior Courts allows the court to adjourn proceedings so that the parties can use ADR to resolve the dispute. An ADR process includes mediation, conciliation or another dispute resolution approved by the court, but does not include arbitration. This article will focus on the court’s willingness to adjourn proceedings in order to facilitate mediation.
The court, by request from one of the parties to the proceedings or on its own volition, may, if it considers it appropriate, order that the proceedings or any issue therein be adjourned for such a time as the court considers just and convenient. The court may 1) invite the parties to use an ADR process to settle or determine the proceedings or issue, or 2) where the parties consent, refer the proceedings or issue to such process. Neither party can be forced to mediate the issue or proceedings; however, there may be cost implications if one party unreasonably refuses to mediate, even if that party is the ultimate winner in the dispute.
The Atlantic Shellfish case
In Atlantic Shellfish Ltd. & Anor v. The County Council of the County of Cork & Ors [2015] the plaintiffs contended that the defendants had failed to respond to requests by the plaintiffs to mediate the matter. The plaintiffs brought an application before the High Court asking the High Court to formally invoke its powers to invite the parties to mediate the dispute. The High Court judge, Gilligan J, refused the plaintiffs’ application and concluded that the plaintiffs’ application was artificial. Gilligan J found that the purpose of the application was seeking to “copper fasten its position with regard to a future application for costs” as they knew the defendants would refuse any invitation to mediate.
The Court of Appeal, in Atlantic Shellfish, considered the circumstances when a court should exercise its discretion in making an order inviting the parties to engage in ADR and more specifically mediation in this case. The Court of Appeal found that, before any other circumstances are taken into consideration, it must be first satisfied that the issues in dispute between the parties are amenable to mediation. Mediation would need to provide a “realistic prospect of resolving or substantially narrowing the issues in dispute”. Irvine J held that the court should not make an order if the application is brought by a party who knows that an “invitation from the Court will be for good reason refused and/or where satisfied that the applicant has no real interest in the ADR proposed”but is rather motivated by improving the applicant’s negotiating position given that the order will set in motion the costs provisions risk that are associated with rejecting an invitation to mediate.
The Court of Appeal made it clear that the court should only refer a matter to mediation if the issues are amenable to mediation and the parties enter into the process with bona fide intentions. A refusal to mediate can incur a costs risk at the conclusion of a case if the refusal is considered unreasonable. The Court of Appeal found other material factors that could potentially influence the court’s discretion on ADR applications:
i. The manner in which the parties had conducted the litigation up to the date of the application
ii. The existence of any relevant interlocutory orders
iii. The nature and potential expense of the proposed ADR
iv. The likely effect of the making of the order sought on the progress of the litigation should the invitation be accepted and the ADR prove unsuccessful
v. The potential saving in time and costs that might result from the acceptance of an invitation
vi. The extent to which ADR can or might potentially narrow the issues between the parties
vii. Any proposals made by the applicant concerning the issues that might be dealt with in the course of the ADR
viii. Any proposals as to how costs of such a process might be borne.
In Atlantic Shellfish, the Court of Appeal dismissed the plaintiffs’ application to have the Court invite the parties to mediation.
Conclusion
The courts generally pro-actively encourage parties to resolve their dispute through ADR processes when suitable. An application under Order 56A is a useful tool for parties to resolve disputes. When considering an application, the court will first ask- is this a case that is amenable to resolution by ADR? If the answer is “Yes” then the Court will go on to examine a series of factors including: the willingness of parties; the potential cost implications; and the extent to which ADR might operate to narrow the issues in dispute.
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About the Author
Matthew Austin
Matthew is a partner in the Commercial & Business team and has considerable expertise in a range of practice areas, having acted for Irish and International clients in domestic and multi-jurisdictional issues. Matthew has advised in civil and administrative law disputes and in regulatory and advisory matters including insolvency/restructuring, IP, defamation and media law, competition and consumer protection and data protection.