ReSolution Issue 14, August 2017 | Page 35

1. It was a purely commercial dispute.
2. The monetary gap between the parties' respective positions was not that large.
3. The costs were greater than the sum in dispute.
4. Bilateral negotiations had been unsuccessful.
5. Any mediator would have let the parties have their say and point out the gap was narrow whilst costs would escalate.
The Court of Appeal found that the vast majority of the litigation costs would have been saved if there had been a settlement in August 2012.
The Court of Appeal then went on to consider the case of PGF II SA, v OMES Company 1 Limited (2013). In PGF II the Court of Appeal held that silence in the face of an offer to mediate was unreasonable conduct meriting a costs sanction. The Court of Appeal in Thakkar went further and explained its reasoning as follows:
“The message which this court sent out in PGF II was that to remain silent in the face of an offer to mediate is, absent exceptional circumstances, unreasonable conduct meriting a costs sanction, even in cases where mediation is unlikely to succeed. The message which the court sends out in this case is that in a case where bilateral negotiations fail but mediation is obviously appropriate, it behoves both parties to get on with it. If one party frustrates the process by delaying and dragging its feet for no good reason, that will merit a costs sanction. In the present case, the costs sanction was severe, but not so severe that this court should intervene.”
Summary
The clear message is that prevarication will lead to cost sanctions. Parties should be slow to reject attempts at mediation, particularly where the cost to the parties of pursuing a matter to trial is high when compared against the sums at stake, and even if the parties might otherwise be more reluctant to mediate because of the recent case of Savings Advice Limited v EDF Energy Customers PLC (2016) in relation to costs. Whilst not directly relevant to

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