Court-Ordered Mediation Has Broken Down
If court-ordered or court-directed mediation has failed, you must notify the court and continue with case management. Unreasonable refusal to mediate can attract adverse costs sanctions.
Quick Answer
A breakdown in mediation does not end your case — you must notify the court and the case will continue through normal case management. However, the court will scrutinise each party's conduct in the mediation process. Under the principle in Halsey v Milton Keynes NHS Trust [2004] and refined in Churchill v Merthyr Tydfil CBC [2023], a party who unreasonably refuses or sabotages mediation risks being penalised in costs even if they ultimately win.
Full Explanation
Court-ordered mediation — or mediation strongly encouraged by the court under its active case management powers in CPR r.1.4(2)(e) — is increasingly common in civil litigation. When mediation breaks down, the immediate practical step is to inform the court in writing, explain that mediation has concluded without settlement, and ask for the next case management directions to be confirmed or reissued.
The landmark case of Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 established that while courts cannot compel parties to mediate against their will, a party who unreasonably refuses to mediate may be deprived of their costs even if they succeed at trial. The court identified factors relevant to 'unreasonableness', including the nature of the dispute, the merits, the costs of mediation, and whether mediation had a reasonable prospect of success.
In Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416, the Court of Appeal confirmed that courts do have the power to order parties to engage in a non-court-based dispute resolution process — and that doing so does not violate Article 6 ECHR (right to a fair trial) provided it does not prevent access to the court entirely. This significantly strengthened the court's hand in managing mediation.
To protect your costs position after a failed mediation, you should document carefully why mediation failed and, in particular, why your conduct throughout the process was reasonable. If the other party was obstructive, unreasonable in their demands, or refused to engage meaningfully, record this in contemporaneous notes. At the costs stage after trial, you may rely on this evidence.
Also consider whether a further attempt at mediation might be productive at a later stage — for example, after disclosure and exchange of witness statements, when both parties have a clearer view of the evidence. Courts look favourably on parties who make genuine, repeated efforts to resolve disputes before trial.
Legal Basis
- §CPR r.1.4(2)(e) — Active case management includes encouraging ADR
- §Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576
- §Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416
- §CPR r.44.2 — Court's discretion as to costs
What To Do
Notify the Court That Mediation Has Failed
Write to the court promptly, confirming that the mediation concluded without settlement and requesting that the case management timetable continues. Copy the other party on the communication.
Continue With Case Management Directions
Proceed with any directions that were in place before mediation — disclosure, witness statements, expert reports. Do not treat the failed mediation as causing a stay unless the court has ordered one.
Record the Reasonableness of Your Conduct
Create a contemporaneous written record of your conduct during the mediation — your attendance, proposals made, and reasons why no agreement was reached. Note any obstructive or unreasonable behaviour by the other side. This evidence will be relevant at the costs stage.
Guard Against a Costs Sanction at Trial
If you rejected a reasonable offer during mediation or refused to engage meaningfully, acknowledge this risk and adjust your settlement strategy accordingly. Proactively making or renewing a Part 36 offer after the failed mediation demonstrates good faith.
Consider Whether a Further Round of Mediation Is Worthwhile
After disclosure and evidence exchange, the parties' respective positions are often clearer. Consider proposing a second mediation — courts look favourably on repeated efforts to settle, and a renewed attempt further protects your costs position.
Important Deadlines
Important Warnings
Do not treat a failed mediation as licence to stop engaging — courts expect good-faith settlement attempts throughout the proceedings.
A winning party who unreasonably refused to mediate may be deprived of some or all of their costs at trial under the Halsey principle.
Anything said in mediation is confidential and without prejudice — do not refer to it in open correspondence or court documents.