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11 January 2024

We can mediate with them! – Churchill case gives encouragement to SMEs

For the past two decades, whilst alternative dispute resolution has been encouraged, the received wisdom was that the Courts in England and Wales would not go as far as mandating that parties mediate. In Halsey v Milton Keynes General NHS Trust,[1] Lord Justice Dyson said that “to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court”[2] and that such would be a breach of the parties’ right to a fair trial under Art. 6 of the European Convention of Human Rights.

However, in the recent case of Churchill v Merthyr Tydfil County Borough Council,[3] the Court of Appeal, comprised of the Lady Chief Justice, the Master of the Rolls, and the eminent IP judge, Lord Justice Birss, departed from Halsey (claiming that Dyson L.J.’s comments were obiter (and therefore not binding), and found that the Court can make an order for (i) the parties to engage in non-court-based dispute resolution (‘NCDR’) (including mediation) and/or, (ii) a stay in proceedings to allow for NCDR to take place.

Sir Geoffrey Vos M.R., cited the Civil Justice Council’s report, which found that

[A]ny form of ADR which is not disproportionately onerous and does not foreclose the parties’ effective access to the court will be compatible with the parties’ article 6 rights’.[4]

Therefore, a Court Order for NCDR must:

[N]ot impair the very essence of the claimant’s right to proceed to a judicial hearing, and [must be] proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.’[5]

This is good news for SMEs. It gives more opportunity to resolve disputes without court hearings, both those looking to enforce their intellectual property rights, and those accused of infringing the intellectual property rights of others should now be more open to mediation. Prior to Churchill, some parties were reluctant to mediate, and they could rely on Halsey to avoid it. Now, following Churchill, parties should be considering the benefits of a mediated settlement, and be more willing to mediate, as if they refuse to, there is a significant risk that they will just waste costs opposing an application, and then be ordered to mediate by the Court in any event. Mediation is a cost and time-efficient method for resolving disputes, so do keep it in mind!

 

[1] [2004] EWCA Civ 576

[2] Ibid. at 9.

[3] [2023] EWCA Civ 1416

[4] Ibid. at 57.

[5] Ibid. at 65.

Authored by James Tumbridge

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