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Concerned about Court costs? How to avoid litigation by including a mediation clause in your contracts - Sarah Canning

The High Court in Ohpen Operations UK Ltd v Invesco Fund Managers Ltd [2019] EWHC 2246 (TCC) (16 August 2019) determined that the parties were contractually bound to mediate their dispute before turning to court proceedings. Proceedings had already been issued and were put on hold, or stayed, by the Court to allow mediation to take place.

The key principles established through case law help explain how to put yourself in the best possible position of avoiding court proceedings.

  • There must be an enforceable obligation that makes it mandatory for the parties to use mediation. An example would be to state that any dispute “shall be referred to mediation”.
  • Further, the obligation must state that it is a requirement before court proceedings are issued. This is referred to as a “condition precedent”. It must be clear that the parties are to attempt mediation before resorting to the court.
  • The process itself has to be clear. This includes how the mediator is to be selected and how mediation is to be conducted. In the above case, the relevant clause referred to the Model Mediation Procedure of the Centre for Effective Dispute Resolution.

The court has a discretion to stay the proceedings. With an emphasis now upon Alternative Dispute Resolution (ADR) and the parties being encouraged to settle their differences away from the courtroom, it would be unusual for the Court not to uphold a contractual agreement to mediate when set out in the above terms.

If you would like to learn more about the mediation process, please contact Sarah Canning, Partner, Head of Dispute Resolution on 01604 828282 or sarah.canning@franklins-sols.co.uk.

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