Shirayama Shokusan v Danovo Ltd

[2003] EWHC 3006 (Chancery Division)

Does the court have jurisdiction to order mediation, even if one party is unwilling?

Facts

This was a dispute between a landlord and a tenant of the Saatchi Gallery in County Hall, London. The respondent was the tenant under a sublease with the applicant and the dispute concerned rights to displays and signage. As part of negotiations the respondent suggested that some of the issues between the parties could be resolved through mediation. The applicant refused.

Issues

Whether the court had jurisdiction to order the parties to mediate, even though one party was not willing, and if it did, whether it should exercise that jurisdiction in this case, in the light of the inevitable on-going and close relationship between the parties.

Decision

The court did have jurisdiction under its general case management powers. In this case the inevitable on-going and close relationship, coupled with the parties’ shared interest in the profitability of the Saatchi Gallery, meant that the court would order mediation in respect of certain appropriate issues in this case.

Comment

The court does have a power to order mediation even though it is fundamentally supposed to be a consensual process. If a party, contrary to such an order, were to refuse to enter into mediation, it could be exposed to adverse costs decisions or even to orders which might, for instance, debar a defendant from defending the case or which, for a claimant, might lead to the case remaining stayed, unless and until mediation had taken place. Potentially such an order to mediate, if expressed to take place by a given date, could lead to committal proceedings for contempt of court against a party who refuses to comply.