Despite facing an increase in claims, mediation has failed to catch on with local authorities

Today, sufficient should be known about ADR [alternative dispute resolution] to make failure to adopt it, in particular where public money is involved, indefensible.” This was Lord Woolf’s warning to the parties that failed to mediate a public law matter in Cowl v Plymouth City Council (2002). Three years on, experience suggests that take-up for mediation among local authorities has been limited. Steps are now in place to increase it in the sector, but it is important to understand why local authorities have been uncomfortable about using it where public law considerations were involved.

Local authorities have a fiduciary duty to consider taxpayers in the cost of proceedings. This suggests that authorities should be ahead of the game when it comes to using cost-effective methods of dispute resolution. However, the most recent statistics suggest that local government experience of mediation has fallen significantly behind that of central government and the commercial sector. In December 2002, the ADR Group surveyed 21 local authorities. It reported that 44 per cent had handled more than 200 disputes in the previous year, but only one in four had referred matters to mediation. Furthermore, 86 per cent of respondents had little knowledge or training in mediation skills or techniques.

The survey is in sharp contrast to recent Centre for Effective Dispute Resolution (CEDR) reports, which indicate that the market for mediation in the commercial sector has matured. Also, the Lord Chancellor’s pledge of 23 March 2001 committed all government agencies to utilise mediation where suitable and has enshrined it as a major tenet of government risk management.

It is difficult to be conclusive as to why there has been such a slow take-up by local authorities. However, there must be an appreciation of considerations such as accountability, authority and vires before deciding whether to mediate. These have led to concerns about whether mediation is consistent with public law principles. In particular: the confidentiality of mediation discussions is incompatible with the principle of accountability; the presumption that parties must be able to reach an accommodation is incompatible with proper and lawful decision-making requirements; mediation may be unsuitable for use in public law cases; compromising allegations that an authority exceeded its powers may be ultra vires; the courts are required to settle points of law raised by public law disputes.

Although valid, these concerns do not support the view that mediation is incompatible with public law considerations. The flexibility of mediation enables local authorities to set parameters to meet the needs of their decision-making structures. In particular, it is possible to agree that the fact of a mediation be reported to the council for accountability, while potential settlements can be made subject to the approval of a set committee or the council in line with the principle of proper decision-making.

Furthermore, mediation should be applied to public law matters following Cowl. In fact, local authorities should be encouraged to consider its use in such cases where complex issues of vires have been settled successfully at mediation. Mediation may also be beneficial where a public law dispute would be better served by a resolution which does not involve the court making an order (for example, where the parties wish to avoid creating an adverse precedent).

Local authorities can achieve significant benefits from using mediation to manage and prevent a wide range of public and private law claims – the most obvious benefit being increasingly efficient and cost-effective claims-handling. The ADR Group survey suggests that, if the 44 per cent of authorities surveyed with 200 or more cases referred only 25 per cent to mediation, they would each make savings of approximately £625,000 per year (at an estimated cost of £25,000 per case).

Julian Sladdin, associate, Pinsent Masons