Adv Jacques Joubert

Independent Mediation Analyst

Commercial Mediator

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Judicial activism and court-annexed mediation required to kickstart mediation in South Africa

Thursday, 30 January 2014

The Minister of Justice has finally signed the new Mediation Rules for Magistrates Courts.  I argue below that it will be litigation as usual at Magistrates Courts, without judicial activism to encourage parties to mediate their disputes.

Courts in the UK impose cost sanctions on parties who unreasonably refuse or fail to mediate. In the US, mediation is more firmly embedded in the litigation process, the courts applying varying degrees of coercion to encourage the parties to mediate. In some US states, disputes that fall in a certain category have to be mediated first. In other states, judges have the discretion to order the parties to mediate. The goal of the UK and US approaches is the same: to encourage the optimal use of mediation by litigants and less reliance on adjudication.

In the US state of Florida, where judges have the discretion to order the parties to attend mediation, more than 100 000 court ordered mediations took place during 2013. Despite the positive trend towards mediation in the UK, the uptake of mediation has been slower. In Halsey v Milton Keynes General NHS Trusti([2004] 1 WLR 3002) the UK Court of Appeal held 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 courts.” Without deciding the point, the court expressed concern that compulsory mediation infringed on the right of access to courts under article 6 of the European Convention on Human Rights. 

The Halsey court had to decide when it is unreasonable for a party to refuse mediation and held that to deprive a successful party of all or part of their costs, the unsuccessful party who requested the mediation, must show the successful party had behaved unreasonably in refusing to mediate. The Halsey court expressed concern that the threat of a cost sanction may indirectly impose an ‘unacceptable obstruction’ on the other party’s right of access to courts. LJ Dyson however called for robust judicial activism to encourage parties to mediate. He set out the following factors that should be taken into consideration to determine if the successful party behaved unreasonably:

* The nature of the dispute and its inherent suitability for ADR. The court stated, “in our view, most cases are not by their very nature unsuitable for ADR.”
* The merits of the case and the reasonableness of the parties’ belief that they have a  strong case.
* Whether other settlement offers have already been made but rejected.
* Whether the costs of mediation would be disproportionately high.
* Whether mediation would result in an unacceptable delay to the trial of the action where   it is suggested late in the day.
* Whether mediation would have had a reasonable prospect of success.

UK case law since Halsey demonstrates some ambivalence towards imposing cost sanctions on successful litigants for refusing to mediate. Some advocates of mediation argue that the without prejudice, confidential and non-binding nature of mediation, makes it always unreasonable to refuse to mediate. Their argument is that the parties have nothing to lose by attending mediation, because mediation pushes the pause and not the delete button on their rights. Some less enthusiastic about mediation, counter this argument with:

* The inconvenience, loss of opportunity and cost factor, including the legal costs of lawyers to prepare and attend an unsuccessful mediation.
* The concern over who pays for mediation, especially in developing countries.
* The concern that reluctant parties may pay lip service to a process foisted on them.
* On a more fundamental level they ask whether direct or indirect coercion does not go against the grain of the consensual nature of mediation.

As stated earlier US courts are less reluctant than the UK courts to compel parties to attend mediation. According to the Boston University Law Review (2006 vol. 86) mediation in the US is used regularly to resolve mega-cases that involve complex legal and technical issues. Commercial disputes such as class actions, mass torts, bankruptcy, intellectual property, anti-trust and financial fraud cases are increasingly being mediated. Examples are the mediation of the multi billion dollar disputes over Microsoft’s Internet Explore and the mediation of the on going dispute between Samsung and Apple. Mediation, in the US at least is no longer the little cousin of litigation.

There are drawbacks to the US approach of making mediation compulsory. A cost sanction is considered (in some states) if one of the parties in a court ordered mediation failed to mediate in good faith. This creates what is known as satellite litigation over whether a participant failed to mediate in good faith, potentially compromising the confidential and without prejudice nature of mediation. On a more fundamental level, compulsory mediation may paint mediation with the same coercive and adversarial brush as litigation - thus creating the risk that mediation may develop into an adversarial process that that is not all that different to litigation.

On 25 August 2009, the South Gauteng High Court in Johannesburg in the case of B v B (2008/25274, unreported) expressed its displeasure at attorneys who failed to advise their clients in family matters to mediate before venturing to court. It limited the costs that the attorneys who failed to mediate could recover from their clients to those that they could tax on the party and party scale and thus deprived them of their full attorney and client fees.

The B court noted that one of the matters that must be considered at a pre-trial (Rule 34) conference is whether the dispute should be referred for possible settlement by mediation. In the case, the attorneys had no hesitation in answering this question in the negative or flat rejection. One of the prevailing myths about mediation is that the more angry and entrenched the parties’ positions are, the less successful “soft” options like mediation tend to be. The attorneys in the B case may have been genuinely ignorant about the potential of mediation.

The secret for a successful court-annexed mediation initiative in South Africa may be found in the UK case of PGF II SA v OMFS Company 1 Ltd. The UK Court of Appeal held that the failure to respond constructively to an invitation to ADR would in most cases constitute an unreasonable refusal to ADR. After summarising the ADR Handbook in the UK, the court held that constructive engagement rather than flat rejection or silence in the face of an invitation to mediate is required. This decision forces the parties and their legal teams to actively apply their minds to the potential of mediation to resolve or narrow the issues in dispute.

In South Africa the new (voluntary) Mediation Rules for the Magistrates Court has no mechanism to ensure the constructive engagement by a party invited to mediation. The flat rejection or silence in the face of an invitation to mediate may therefore not have consequences for a party who fails to attend mediation.But all is not lost and the Rules Board is encouraged to take note of the PGF 11 SA decision and include in the Mediation Rules for the High Court, a mechanism that respects the autonomy of the parties to decide whether or not to mediate, but at the same time expects a party, who turns down an invitation, to provide reasons in writing for his decision. The Halsey court gave UK lawyers the following guidance as to when mediation may not be suitable:

* Where the parties, or a party wishes the court to resolve a point of law to provide a  useful precedent.
*  Where injunctive (interdictory) relief is necessary on an urgent basis.
*  Where one of the parties actually have a watertight case, if the party’s belief that  his case is watertight is reasonable.
* Where a party has no reasonable confidence in the future conduct of the other party as a result of allegations of fraud or dishonesty.
* Where the issues are generally important for those participating in a particular trade, profession or market

Our courts may like the Halsey court give guidance to SA attorneys as to which kind of cases are suited for mediation and when it will be unreasonable to refuse to participate in mediation. This will enable attorneys to advise their clients about the risks of not participating.

If there is one important lesson to be learnt from the US and the UK experiences, it is that judicial activism is necessary to kick start mediation in South Africa.

Perhaps the time has come to train judges and magistrates in the theory and practice of mediation, so that they may become more aware of the potential and of course, the limitations of mediation?

For the full version of the above article with citations go to Articles at Woza Mediation South Africa.


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