A look back at mediation
Anita Crozier, Associate, CMS Cameron McKenna Nabarro Olswang
023 saw a continuous drive to integrate mediation as a valuable form of alternative dispute resolution (ADR) in the UK and internationally. In March 2023, the UK government described mediation as being ‘integral’ to the UK justice system, estimating that commercial mediation can save businesses approximately £5.9bn annually in management time and legal fees1. It also estimated that the value of UK mediated cases each year was circa £20bn1.
Within the UK construction industry, mediation has emerged as a transformative force with significant changes to the way disputes and conflicts are handled within the sector, leading to positive outcomes and improvements. During 2023, this transformative change has been significantly influenced by several noteworthy events, which include, but are not limited to:
- The UK signing the Singapore Convention on Mediation;
- Increasing the use of mediation in the civil justice system: Government response to consultation; and
- The landmark judgement in Churchill v Merthyr Tydfil County Borough Council (2023) EWCA CIV 1416.
UK signing of the Singapore Convention
The UK’s signing of the United Nations Convention on International Settlement Agreements Resulting from Mediation (New York 2018) (the Singapore Convention on Mediation)2 on 3 May 2023, marked a significant development for mediation both domestically and internationally. Ratification is planned for 2024, with the Convention coming into force six months later.
The Singapore Convention provides an international framework for enforcing settlement agreements resulting from international mediation, similar to the 1958 New York Convention for foreign arbitral awards. The Singapore Convention allows parties to directly apply to courts of ratifying States to enforce these agreements.
This new international enforcement framework aims to boost business confidence in mediation by giving agreements a stronger legal standing. The UK’s signing is expected to encourage other jurisdictions to follow suit. To date, 56 countries have signed the Singapore Convention, including the US, China, India, and Saudi Arabia.
Compulsory mediation
In 2023, the government outlined its commitment towards integrating mediation into the court process with it being mandatory to implement mediation for all small claims under £10,000 in the county court issued under the part 7 procedure of the Civil Procedure Rules3. These claims will be automatically referred to a free hour-long telephone mediation with a court-appointed mediator, similar to the existing voluntary small claims mediation service.
The success of mediation in construction during 2023 has set a positive precedent for its continued growth and adoption in the years to come.Parties are required to participate in the mediation in good faith, with the only current requirement being attendance. Failure to attend may result in a judge imposing sanctions, such as striking out the action or ordering the non-attending party to pay the other party’s legal expenses.
The government believes that compulsory mediation will save time and costs for both parties and the courts. The current voluntary small claims mediation service has achieved settlement rates above 50%, and it is hoped that similar success rates can be achieved with the mandatory mediations. It is the government’s intention to later integrate mediation within the resolution of higher value claims within the county court.
Churchill V Merthyr Tydfil County Borough Council
The recent appeal case of James Churchill v Merthyr Tydfil County Borough Council addresses the court’s power to order parties to engage in ADR before proceeding with legal action. The case involved a homeowner suing the council over Japanese knotweed damage. The court examined previous case law, particularly Halsey v Milton Keynes General NHS Trust4, which had been an obstacle to increasing ADR use. However, the court found that statements in Halsey about the court’s lack of power to mandate ADR were non-binding comments. It also examined domestic, European, and human rights authorities and concluded that the court has the lawful power to stay proceedings to mandate ADR, provided it does not impair the right to a fair trial and is proportionate to resolving disputes fairly, quickly, and costeffectively.
This judgment significantly advances the use of ADR and emphasises the responsibility of courts to administer litigation proceedings efficiently and effectively. Furthermore, parties could benefit from specialist construction mediators hearing the case, which may anchor resolution in practical solutions versus strict legal interpretation. In light of this judgment, it is suggested that everyone has a look at the DRP clauses in their contracts to ensure the process in place reflects this pro-ADR approach to disputes.
Impact of mediation on the UK construction sector
With the sector facing challenges such as project delays, cost overruns, and contractual disputes, mediation has proven to be a valuable tool for resolving conflicts efficiently and cost-effectively. By fostering open communication and collaboration between parties, mediation has helped to preserve business relationships and maintain project momentum. The construction industry has embraced mediation as a preferred alternative to lengthy and expensive litigation processes. The success of mediation in construction during 2023 has set a positive precedent for its continued growth and adoption in the years to come.
Anita Crozier, Associate, CMS Cameron McKenna Nabarro Olswang
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1 Government response to the Consultation on the United Nations Convention on International Settlement Agreements Resulting from Mediation (New York, 2018) - see https://tinyurl.com/2j8w624y
2 See https://treaties.un.org/doc/Treaties/2019/05/20190501%2004-11%20PM/Ch-XXII-4.pdf
4 https://tinyurl.com/y8nd7xhh
