When Refusing Commercial Mediation Is Reasonable

Can I Refuse to Agree to Commercial Mediation?

When Refusal Is Legally Permissible and When It Is Not

The short answer is that you can always refuse to mediate, but refusing may carry significant legal and commercial consequences. The courts in England and Wales do not generally compel parties to settle, but they do expect parties to engage genuinely with appropriate dispute resolution processes, and they have consistently penalised parties who have refused to mediate without good reason, including by making adverse costs orders against the refusing party even where that party ultimately succeeded in the litigation.

This chapter addresses the circumstances in which refusal is legally permissible, what costs consequences may follow from unreasonable refusal, how courts have historically treated parties who decline to mediate, and whether there are strategic situations where refusal may nonetheless be advisable. This page is part of the Commercial Mediation Knowledge Guide. If you need a commercial mediator see my commercial mediator page.

The Legal Framework: Churchill v Merthyr Tydfil and Beyond

The legal landscape governing refusal to mediate has shifted significantly in recent years. The leading case of Halsey v Milton Keynes General NHS Trust [2004] established that courts could not compel parties to mediate but could penalise unreasonable refusal through adverse costs orders. The more recent Court of Appeal decision in Churchill v Merthyr Tydfil Borough Council [2023] went further, confirming that courts can now order parties to engage in alternative dispute resolution, including mediation, as part of the management of civil proceedings.

This means that refusal to mediate is no longer simply a strategic choice with potential costs consequences. It may be a failure to comply with a court order, with more serious consequences. Parties involved in commercial litigation should take active legal advice on their obligations regarding alternative dispute resolution at each stage of the proceedings.

The Costs Consequences of Unreasonable Refusal

The key question in assessing the costs consequences of refusing mediation is whether the refusal was reasonable. The courts have identified a range of factors relevant to this assessment, including whether the dispute involved questions of law or fact that the courts needed to resolve, whether mediation had a reasonable prospect of success given the nature of the dispute and the relationship between the parties, whether the timing of the proposal to mediate was appropriate, whether the costs of mediation would have been disproportionate, and whether the offering party had itself contributed to the breakdown of the relationship or the escalation of the dispute.

The burden on a party claiming that its refusal was reasonable is significant. Merely believing that one has a strong case, or that the other side is acting in bad faith, is not generally a sufficient reason to refuse mediation. The courts have shown that a party with a strong case can still properly and effectively participate in mediation, because mediation allows a strong party to demonstrate the strength of their position to the other side in a forum that may produce settlement without the cost and risk of trial.

What Reasons Have Been Accepted as Justifying Refusal?

Courts have accepted a number of reasons as justifying refusal to mediate without adverse costs consequences. These include situations where the dispute raises a point of law that needs judicial resolution and on which there is genuine legal uncertainty, where urgent injunctive relief is required and mediation would cause harmful delay, where the other party has a history of acting in bad faith in dispute resolution processes in a way that makes genuine mediation impossible, where the costs of mediation would be disproportionate to the value of the dispute, and where one party lacks the resources to participate meaningfully in the mediation process.

A genuine and unconditional offer to settle the dispute on reasonable terms, without insisting on mediation, may also justify declining a proposal to mediate where the offering party’s position is clear and the dispute is essentially about whether the amount offered is acceptable.

When Refusal May Be Strategically Justifiable

Beyond the purely legal question of costs consequences, there are circumstances where declining mediation may be the right strategic choice even where it is technically permissible. These include where the parties are so far apart in their assessments of the dispute that productive mediation is genuinely impossible at the current stage, where one party needs to gather further evidence before their position is sufficiently clear to make informed settlement decisions, where the power dynamics between the parties are significantly unequal and the weaker party would benefit from the formal protection of court proceedings, and where a party genuinely needs a formal judicial ruling on a matter that will affect multiple other disputes or relationships.

Even in these situations, however, the question should be asked carefully and with legal advice. What appears to justify refusal from one party’s perspective may not appear reasonable to a court assessing the situation with hindsight.

How to Document Reasons for Refusal

Where a party decides to decline a proposal to mediate, the reasons should be documented clearly and promptly in writing. This documentation serves two purposes. First, it puts the offering party on notice of the specific grounds for refusal, which may lead them to address those grounds in a way that makes mediation possible at a later stage. Second, if the matter proceeds to trial and costs are in dispute, the documentation of reasons provides evidence that the refusal was considered and reasoned rather than simply reflexive or tactical.

The documentation should be specific about the reasons for refusal and should not give the impression that the refusing party objects to mediation as a matter of principle. Courts are suspicious of parties who frame objections to mediation in terms that suggest a general unwillingness to engage with dispute resolution rather than specific objections to the particular proposal.

Published Resources

My book Winning in Commercial Mediation: A Business User’s Guide covers the costs consequences of refusing to mediate in detail, including an analysis of the key cases from Halsey through to Churchill and the most important cases on commercial mediation more generally. See also the chapter on the twenty most important English cases about commercial mediation.

See all books.

Frequently Asked Questions

Can a court now order me to mediate?

Yes. Following Churchill v Merthyr Tydfil [2023], courts in England and Wales can order parties to engage in alternative dispute resolution, including mediation, as part of the management of civil proceedings. This represents a significant shift from the previous position under Halsey v Milton Keynes, which held that parties could not be compelled to mediate. Legal advice on the implications for any ongoing proceedings should be obtained promptly.

What if I think the other side is proposing mediation in bad faith?

A suspicion that the other side is proposing mediation tactically rather than genuinely is not a sufficient reason to refuse. Courts expect parties to engage with mediation even where they are sceptical about the other side’s motives. If the other party genuinely engages in the mediation in bad faith, by attending without any real intention to settle, that itself may attract adverse costs consequences for them.

Does refusing mediation mean I will automatically pay the other side’s costs if they win?

Not automatically. The consequences of unreasonably refusing to mediate are assessed by the court in the context of all the circumstances of the case, including both parties’ behaviour throughout the dispute. However, an unreasonable refusal is a significant factor in any adverse costs decision and can result in the refusing party being ordered to pay costs that they would not otherwise have paid, or being deprived of costs they would otherwise have recovered.

Get in Touch

If you are considering refusing a proposal to mediate and need advice on the legal and strategic consequences, I would be glad to discuss your situation.

Call 020 4538 0246, use the contact form below, or book a call directly.

Important disclaimer: This page is provided for general information and educational purposes only and does not constitute legal advice. The content relates to the law of England and Wales only. Always seek independent legal advice from a qualified specialist before making decisions that affect your legal rights or commercial interests. The author accepts no responsibility for any decisions made or outcomes arising from use of this material. If you would like specific advice, contact me here.

Mediation – Can I Refuse to Agree to Commercial Mediation?