Why your settlement strategy is (at least) as important as your litigation strategy

Written on 23 Oct 2019

Two recent cases highlight where the courts will, and will not, intervene when it comes to alternative dispute resolution (ADR). What is clear is that a clear ADR strategy is an essential part of any litigation.

Early Neutral Evaluation can be ordered without parties’ consent

In the recent case of Lomax v Lomax, the Court of Appeal ruled that Early Neutral Evaluation – a form of ADR where an independent and impartial evaluator gives the parties an assessment of the merits of their case (but cannot force a settlement) – can be ordered by the court without the parties’ consent.

In reaching this conclusion, the Court of Appeal distinguished a previous decision (Halsey v Milton Keynes), in which the Court of Appeal concluded that the court has no jurisdiction to force the parties to mediate.  The difference was that Halsey was a case on mediation, whereas ENE is part of the court process.

As a result, the Court of Appeal said that it did not need to consider to what extent Halsey remained good law, but it did comment that: “the court’s engagement with mediation has progressed significantly since Halsey was decided“.

This is not the first time that the Court of Appeal has cast some doubt on Halsey. In Wright v Michael Wright, the Court of Appeal suggested that it may be time for the court to review the decision in Halsey in the light of the case law since the case was decided. However, there does not appear to currently be any concerted push for court-ordered mediations.

Failing to respond to an offer to negotiate

In another recent decision, MR v Commissioner for Police, the claimant failed to respond to the defendant’s offer of without prejudice negotiations. At first instance, it was held that it would therefore be unfair for the claimant to get his costs.

That part of the judgment was overturned by McGowan J on appeal. Although the claimant had been “remiss” in failing to respond, no adverse costs consequences should follow because the judge held that: “it does not seem to me to have had, or be capable of having, any direct effect on the course of the litigation. The [defendant] was not going to make the admission sought; there was no realistic prospect of such a resolution“.

Although there was no reference to PGF II v OMFS, in which it was held that a failure to respond to a request to mediate (rather than a refusal to mediate), could in itself justify a costs sanction, it seems the judge in MR based this decision on the view in PGF II that an exception could be made where ADR was “so obviously inappropriate”. Nevertheless, it remains a risky strategy to fail to respond at all to an offer to negotiate.

Get your ADR strategy right

The vast majority of disputes settle out of court, usually following some sort of ADR process, which could involve anything from a “without prejudice” telephone call to more formal mechanisms such as mediation or ENE.

Recognising this, and making ADR a core part of your litigation strategy, can help you to achieve a successful resolution and limit the time and cost expended in pursuing the dispute. The MR case illustrates that parties do not always need to agree to ADR processes – premature or ill-conceived attempts at ADR may only serve to increase costs and can even make settlement less likely.  But it is sensible to at least consider, and respond to, any offer of ADR, as part of a pro-active settlement strategy.