Mediation in the public sector: challenges and opportunities

By Mark Shaw K.C., barrister and mediator

About 75% of my work involves litigating (as a barrister specialising in public/regulatory law), and about 25% involves mediating: three parts warrior, one part healer.  When I began mediating in 2008, I supposed I’d spied a gap in the market for a public law mediator.  A naïve mistake.  I’ve now mediated several hundred times yet can count the public law disputes on the fingers of one hand.

So why are public bodies slow to mediate?  Well, there are some good reasons.  But there are more bad reasons.

Public bodies act in two distinct capacities.  Often, they exercise the same private powers as companies and individuals: buying goods, selling property, employing staff, resisting tort claims.  Those contexts usually and primarily concern damages, and here public bodies tend to be as open to mediation as their private counterparts.  Government contracts, for example, feature mandatory mediation clauses; recognising that mediation is much quicker and cheaper than litigation.  All the better if it’s saving public money.

But public bodies also enjoy distinct statutory powers: granting licences, withholding privileges, and regulating activities.  Those functions usually and primarily concern rights and interests (rather than money) and are governed by different legal principles and special court procedures.  Here, mediation is very rare.  Sometimes that’s right and appropriate.  Sometimes it’s wrong and unfortunate.

A binding statutory scheme dictates to both the regulator and the regulated what can and cannot be done.  It can’t be ducked or diluted by any mediated settlement.  The British Nationality Acts, for example, lay down the requirements for entitlement to British citizenship.  It would be unlawful for the Home Office to modify those requirements in any settlement agreement.

Then there are public law disputes examining points of national principle or public policy; often affecting multiple people, organisations, and areas.  Parties to private disputes almost always need just a one-off solution to a particular issue affecting only themselves.  But public bodies must have a broader perspective, taking into account the wider public interest.  They should be seen to regulate, not negotiate or capitulate.  And they need a resolution which acts as a precedent, capable of application to many lookalike disputes.  Such disputes are often better argued in public, with third parties and special interest groups represented, and determined by a judgment pronounced in open court; not privately, through an invisible process and an unexplained deal.  Sometimes, frankly, public bodies prefer to be seen to fight to the death (even if they lose).

Structural and mechanical obstacles can also hamper public bodies’ recourse to mediation.  Getting authority to settle can be tricky if several layers of (slow) decision-making are involved.  First the officials need to consider, agree, and recommend.  Then the lawyers have to advise.  Finally, political approval is required, perhaps from a large committee holding disparate views.  Decision-making by private individuals, and even by large public corporations, is more agile.

So, yes, there are occasions when mediation is not apt, or just a bit cumbersome.  Conversely, though, there are plenty of occasions when mediation is suitable (even preferable) to resolve judicial review claims and statutory appeals.

First, remember that over half of judicial review claims do settle.  This usually happens after the Administrative Court has granted permission, marking the claim as arguable.  The defendant must then take advice and (re)consider the (de)merits of its case before the substantive hearing.  At this juncture defendants commonly make a tactical retreat.  They agree to withdraw and retake the challenged decision.  There’s nothing grubby or improper about that, provided it takes account of relevant third-party interests.  The Administrative Court then endorses an agreed consent order, with no public pronouncement.  As in a private dispute, mediation can facilitate that settlement process.

Second, many suppose that public law cases can’t settle, because they turn on points of law with only one right answer (which can emerge only after legal argument, between learned friends, before a judge).  Often, though, judicial review claims and statutory appeals arise in much greyer areas, turning on the way a challenged decision was made.  Then the issue concerns not vires (legality) but the exercise of discretion (rationality) and/or the choice of process (procedural impropriety).  Has the public body considered all and only relevant considerations, and stepped outside the range of reasonable decisions?  Has it consulted fairly?  Here, there’s room for not one but various right (lawful) answers, all compatible with the statutory scheme.  Even HMRC, for example, is willing to negotiate the amount of tax due.  Wherever there’s scope for that sort of dialogue and compromise, there’s room for mediation.

Third, mediation is too often regarded as all or nothing.  The dispute either settles, or it doesn’t.  And if it doesn’t, there’s a waste of time, energy, and money.  Actually, however, mediation is much quicker and more flexible than litigation.  It need not aim for a full and final settlement.  Only certain issues might be tackled, thereby narrowing the points left for litigation.  The informality and adaptability of mediation is also more likely to calm than to enflame a relationship.  This can be especially handy in the public sector, where (unlike in the private sector) relationships sometimes cannot be escaped: a landowner wanting planning permission is obliged to deal with the local planning authority.  Litigation involves public combat (victory or defeat) and raises the temperature.  It’s high profile and high risk.  And it distracts public officials from more constructive work.  Mediation is far less burdensome, offering confidentiality and conciliation.  For complainants, this includes remedies more varied and versatile than those available in court: such as words of apology, regret, recognition, and explanation.  While defendants can avoid washing their dirty laundry in public, side-stepping sensitive media disclosures or embarrassing criticisms.

Far too often, in my experience, those benefits are overlooked by public bodies: by politicians, officials and lawyers alike.  The culture and habit is to drift passively towards full hearings without even considering mediation (or other forms of ADR) as part of the toolkit.

How ironic, then, that it’s public sector disputes which have provided the landmark jurisprudence promoting mediation.  The first came in December 2001, in Cowl v Plymouth City Council, where the Court of Appeal headed by Lord Woolf LCJ issued an impassioned plea for lawyers to mediate more and litigate less, especially in judicial review claims.  Sufficient should be known about ADR, said the court, to make the failure to adopt it “indefensible”, particularly when public money is involved.  More recently, that exhortation has become a direction.  In November 2023 in Churchill v Merthyr Tydfil County Borough Council the Court of Appeal headed by Lady Carr LCJ concluded that a court has power to stay proceedings and order parties to attend a form of ADR (usually mediation).  In overruling another Court of Appeal public sector case, Halsey v Milton Keynes General NHS Trust (May 2004), the Court of Appeal gave guidance on the circumstances in which that power should be exercised, compatibly with article 6 of the ECHR.  The Civil Procedure Rules Committee is already consulting on consequential changes to CPR 1.1, 1.4, 28 and 44.  If those changes are adopted, the case management function will include an explicit power to direct (not merely to encourage) the use of ADR, and to impose an adverse costs order for unreasonable failure to participate in ADR (whether directed by a court or proposed by another party).  This would go far beyond the 2023 policy of the Ministry of Justice regarding integrated mediation, which would apply ADR to all small claims in the County Court valued at under £10,000.  Times are changing, thanks to the public sector.