Litigation involving the State: High Court in Ireland comments on Alternative Dispute Resolution
In the context of a public procurement challenge, the High Court in Ireland in the judgment of Sere Holdings Ltd v Health Service Executive said that the State should, at least, consider mediation in every dispute in which it is involved. The Court further concluded that litigation should be the last resort for the resolution of disputes in all cases and particularly in disputes involving State agencies.
The Court set out the following reasons in reaching these conclusions. It noted that:
- court hearings should be a last resort, for the simple reason that litigation is such an expensive way to resolve any dispute;
- it is the taxpayer who will have to pay the legal costs if a State agency loses and even, in some cases, if the State agency wins;
- High Court costs paid by the taxpayer, in the tens/hundreds of thousands of euro, will in many cases not be ‘proportional’ to the value or importance of the dispute;
- if State agencies resolved their disputes without litigation, it would mean that scarce court resources would be available for other citizens of the State to have access to justice; and
- a State agency does not have the financial incentive that most other litigants have to consider mediation. For individual and corporate litigants, the financial consequences of having to pay High Court costs are usually very much to the fore of their minds, since they will feel the effect in their pocket.
The Court also noted the approach in Australia that obliges a State agency to endeavour “to avoid, prevent and limit the scope of legal proceedings wherever possible, including by giving consideration in all cases to alternative dispute resolution processes where appropriate”.
The point of challenge in these proceedings was itself a fairly net point, which we consider in a separate briefing here.
Used appropriately, alternative dispute resolution is a very effective method of arriving at mutually satisfactory solutions potentially more swiftly and at less cost to the parties (and to the public purse).
The Mediation Act 2017 obliges solicitors to advise their clients to consider mediation prior to the issue of proceedings. The Act also provides that a court may, whether on the application of a party to proceedings or of its own accord, invite the parties to the proceedings to consider mediation to resolve the dispute that is the subject of the proceedings.
It is interesting that the Court has taken this opportunity to highlight the reasons the State, in particular, should treat litigation as a last resort.
This is an important judgment not only for citizens involved in asserting rights before the Courts, but also for commercial entities the pursuit of whose business objectives, in many situations, depends on the faithful fulfilment by State agencies of their legal obligations.
It is also a helpful authority for those employed by State agencies who, depending on the circumstances, may feel that they need the endorsement of a Court judgment to take steps to appropriately deal with a contentious issue, particularly where that involves financial expenditure. The Court has now given a strong signal to State agencies, who should be prepared to credibly demonstrate in court proceedings the steps they have taken to consider mediation and indeed other steps to resolve the dispute in which they are involved.