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Refuse to mediate at your peril

24 October 2013

In a judgment handed down today the Court of Appeal has taken the opportunity to broaden the principles in Halsey, in relation to awarding costs sanctions against a party who did not ‘beat’ a part 36 offer in court, on the basis of a refusal to mediate.

In the case of PGF II SA v OMFS Company 1 Limited, which centred on a dispute over three dilapidations claims, the judge was persuaded by the argument that not only was the defendant’s silence tantamount to a refusal to mediate, but that the silence itself was unreasonable. He went on to endorse the advice given in the recently published ADR Handbook encouraging parties to consider ADR before taking a case to trial.

This case is of importance to all who embark on litigation. It demonstrates a clear and unequivocal endorsement by the Court of Appeal as to the value of ADR, (including but not limited to mediation) and highlights the fact that a party who refuses to engage in the process of ADR can, and will, face costs sanctions.

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