We pick up where Tony Bingham left off, discussing Sir John Dyson's decision in the Halsey vs Milton Keynes NHS Trust case and asking where it leaves mediation
>>Philip Naughton joined the chat Philip Naughton Hi, Chloë, I will wait patiently.

>>Mark Roe joined the chat Mark Roe Well, patience is probably a good quality in a mediator.

Philip Everything can be overdone.

>>Nick Henchie joined the chat Nick Henchie Ready to rumble? Chloë McCulloch Just waiting for Simon.

>>Simon Lewis joined the chat Simon Lewis Here I am. Afternoon everyone.

Chloë Okay, we are all here to discuss mediation. Simon, it was your article (13 February, page 50) that questioned the wisdom of the courts ordering parties to mediate, that sparked a debate about the limits of this form of dispute resolution. I know Nick has expressed his reservations about it (19 March, page 64), Mark's recent article defended it (21 May, page 58) and Philip, as a mediator, I assume you are also a supporter. Simon, perhaps you could start by adding to your argument in the light of last week's judgment by Sir John Dyson in the Halsey vs Milton Keynes General NHS Trust case.

Simon While I think that generally mediation should be actively encouraged whenever possible, I was concerned that the courts were heading towards forcing people to mediate. I don't think that will work. It seems to me that Halsey broadly supports that view, and it is a welcome clarification of the position.

Philip With apologies for starting on a note of harmony, I agree. Indeed some of you will remember my talking to the Society of Construction Law lunch last year warning that court reference of cases to compulsory medieation was a step too far. But the Court of Appeal has preserved the commercial court practice direction route, which is important.

Nick I am afraid that I also have to agree on this occasion. Also the guidelines for when adverse cost orders will be made against those who refuse to mediate are welcome. Hitherto my feeling has been that some disputes were being mediated simply because of the fear of an adverse costs order if one did not.

Mark Boring, I know, but I agree too. The court has, however, made it very clear that it is the responsibility of those advising the parties now to routinely consider with their clients whether their disputes are suitable for alternative dispute resolution. So, never mind whether the court will impose a sanction for refusing to mediate, it is a sensible thing to do (in the vast majority of cases) and the court has indicated its firm support for ADR.

Philip Once upon a time when I was working in the chemical industry, there was a drive to sell to the motor trade the use of plastics. Generally, however, the industry did not want to know. Why? Because the industry had nearly 100 years of experience of using steel and knew just what it would do whereas plastics were new – so the long-term performance of the material was unknown. Litigation is positively ancient. Mediation is new. It really is too early to say that mediation should take over from litigation. But for all that, it does work well. I do not know if anything else presently on the horizon will overtake it – are any of you aware of alternatives to mediation ADM? Sorry, ATM.

Simon I don't think mediation can ever entirely take over from litigation. There will always be cases where the parties require an answer rather than a compromise, as Halsey suggested. I suppose some of the more exotic ATMs may find favour in certain circumstances, such as mini-trials or the like. It seems to me to be a question of fitting the most appropriate dispute resolution mechanism to the type of contract or business relationship in question.

Mark It would be shortsighted to ignore the different sorts of mediation (facilitative vs evaluative) or other sorts of ADR (ATM, if you will) such as expert determination … and so on.

I too regard mediation as one (important, but nevertheless only one) mechanism available to the parties to assist in resolving their disputes. It is not a case of mediation or litigation/arbitration, but at what point and for which disputes should the various techniques be applied.

Nick I think it was me that started this debate and many people managed to misconstrue my comments. I wholeheartedly endorse mediation as one of the best ways of resolving disputes. I am a fan. However, and I am sure Philip will agree, the process is evolving ever so slowly into something different and becoming it seems with each passing day more and more akin to litigation. QCs are getting involved to present cases and the steps taken prior to the day of mediation often run for months and months and cost a fortune. This sort of process is not always suitable and may not even save costs in the long run. There is absolutely no doubt that mediation is also used as a tactical device by parties to delay and to muddy the issues. There are ATMs one of which is mediation as we knew it a few years ago.

Chloë So as mediation has become more complex it has become less effective?

Philip Nick may have missed the point. Years ago, construction disputes referred to mediation were referred late, at a time when all the hard work had been done. Mediation did not cost a lot because everyone used the litigation materials. But since then people have tried to push the time of a mediation back and back, to the point where there is no litigation at all. At this time the dispute is just as complex but has no structure - yet senior executive decision makers will be expected to resolve the whole dispute between four or five parties. In the result, the dispute has to be given a structure and this takes time and costs money. It is not necessarily wasted, however, as either the case settles or the work can be employed in the preparation of litigation.

Simon On the point about costs escalating and mediation becoming more complex, if one of its purposes is to save time and costs, then arguably it does become less effective as it gets more complicated. Certainly if the amount in dispute is relatively small, the costs of the mediation may outweigh the amount at stake. That's one of the grounds Halsey suggests would enable a party to refuse to mediate. I think that must be right.

Never mind whether the court will impose a sanction for refusing to mediate, it is a sensible thing to do (in the vast majority of cases) and the court has indicated its firm support

But isn't this process almost inevitable? Isn't adjudication going the same way?

Mark And Philip's analysis seems to be borne out by the statistics. Of course, statistics can be used to support virtually any argument, but it is worth remembering that between 1996 and 2003 the settlement rate of the Centre for Effective Dispute Resolution (CEDR) was about 74% while at the same time, the number of Technology and Construction court actions reduced by about 68% and the number of mediations through CEDR alone rose by about 600%.

Chloë Isn't some of the success of mediation cases down to the skill of the individual mediator? What makes a good mediator?

Nick I think the key to mediation is the will of the parties. It doesn't matter how good the mediator is without a genuine desire on the parties to make the process work. If you have that, then a good mediator is the icing on the cake and gives them every chance of achieving a resolution.

Simon I agree. It's crucial that the parties actually want to try to reach a settlement. If one of them doesn't (let alone both), the chances of success reduce dramatically.

Mark Well, sort of… isn't one of the skills of a good mediator the ability to persuade reluctant parties to participate in the process? I accept, that you can bring a horse to water and all that, but one aspect of the mediator's job is to encourage that horse to drink.

Philip It is not uncomon for parties to come to mediation unwillingly, but gradually they get involved and at some point they have to want to settle. At a recent conference of senior mediators it was apparent that different mediators had very different ways of working. Some prepared in detail, some hardly at all, no matter what the case was. Yet the success rate of all was about the same. Perhaps it ought to be said that bad mediators can really foul things up and stop there.

Returning to an earlier point, perhaps what should also be born in mind is the pragmatic nature of the mediation process. It is non-binding so it is unfettered by contractual ties. In the construction industry disputes have a nasty habit of involving everyone – designer, engineer, developer, main contractor, subcontractor and so on – all with different contracts. But you can put them all together in a mediation (if they agree) and work out the resolution of the whole dispute in a couple of days – hard work but effective.

Chloë Any other thoughts on when or how mediation can go wrong?

Simon Trying to mediate too soon. You can't mediate if you don't know enough about your position and the other party's to be able to negotiate meaningfully.

Nick I agree that mediation is particularly effective in multiparty disputes but I do come back to my previous comments that once litigation has commenced it seems that often the first time the parties really attempt to resolve the case is at the mediation because that is what they have been working to. I believe defendants particularly work out their positions and potential exposure well before then and parties should give thought to settling cases earlier than they do and prior to incurring the huge expenses that go with claim and mediation preparation. You can't but think that somewhere people (lawyers) string things along for their own ends.

Philip Absent decision-maker. Unreasonable perception of merits – possibly fuelled by inaccurate legal advice (a QC mediator can be useful). Inadequate preparation. Use of mediation as a means of intimidation, and so on. Yet eight out of 10 cases settle, most on the day of the hearing.

Mark How can mediation go wrong? Well, how long have you got? Mediation could go wrong at any and every stage. One example – where the people who really have the authority to settle aren't in the room.

Chloë Actually, we don't have much longer. Any parting comments?

Nick Would be please edit my appalling typing. Also, I find QC's presenting arguments in mediation as if the parties were in court particularly unhelpful in mediation.

Simon A final comment? Let's hope Halsey really has clarified the position and not just created a whole new set of tests for lawyers to argue about.

Philip It is time that mediation advocacy was taught seriously as part of vocational training.

Mark It seems we are all agreed again.

Chloë What good mediators you would all make! Thank you very much everyone, that wraps it up for today.