What happens if you simply ignore an opponent’s offer to mediate?
You run the serious risk of a significant costs penalty. Who says? Lord Justice Briggs and his colleagues in the Court of Appeal case of PGF II SA v OMFS Company 1 Ltd. What happened? The case settled when the claimant accepted a Part 36 offer to settle 8 months after it was made. The judge exercised his discretion and refused to allow the defendant’s costs for that 8 month period (about £250,000). Why? Because the defendants completely ignored the claimant’s repeated offers to mediate. The judge at first instance said that silence amounted to
… the time has now come for this court firmly to endorse the advice given in Chapter 11.56 of the ADR Handbook, that silence in the face of an invitation to participate in ADR is, as a general rule, of itself unreasonable, regardless whether an outright refusal, or a refusal to engage in the type of ADR requested, or to do so at the time requested, might have been justified by the identification of reasonable grounds.
So the case is not saying I always have to agree to mediate?
Correct, the courts are not going to compel you to mediate but they are obliged, under their case management duties, to encourage the use of ADR. You are only likely to face a costs penalty if you unreasonably refuse, or simply ignore, an offer to mediate or use some other form of ADR.
Does the ADR Handbook offer any advice?
As a matter of