Mediation Act Compliance Affirmed

The High Court has recently reviewed the obligations imposed by the Mediation Act 2017. In stressing the mandatory nature of the obligations, the Court affirmed how important it is that there is compliance with the Act. Our Commercial Disputes team examines the decision.

The High Court has recently reviewed the changes brought about to the Irish litigation landscape by the Mediation Act 2017. The case involved non-compliance with the Act’s obligations.[1] Specifically, the provision that stated that a legal practitioner is obliged to advise a potential plaintiff about mediating, rather than litigating, the dispute.[2]

As well as commenting on the changes the Act has brought about, the Court took the opportunity to outline the benefits of mediation. It also highlighted the importance of complying with the obligations of the Act, from the perspective of practitioners, litigants themselves, as well as wider society more generally. Prospective litigants and practitioners should pay close attention to the obligations set out in the Act, as these are mandatory in nature and can have serious consequences if not followed.[3]

Background

The case involved an Irish defendant company, Techads. Techads’ business essentially disappeared when it was blacklisted by its two main clients. Techads blamed a number of parties, including the plaintiffs, for the fact that, by the time of the litigation, it existed only to pursue its claim. Techads’ business involved sourcing website traffic which it would drive to the websites of its two main clients. Techads would use agents, including the plaintiff companies, to procure individuals to access the websites of Techads’ clients.

Under the terms of relevant agreements, Techads would pay the agents a percentage of the revenue it received from the clients for driving that traffic. In the proceedings, the plaintiffs sought payment of unpaid invoices in the sum of $2.5 million. Techads counterclaimed for $1.8 million arising from clawbacks it had to give its clients due to the ‘unusual’ traffic to the clients’ websites generated by the plaintiffs. From the judgment, it appeared that there had been no compliance with the Act. Also, it was conceded that the proceedings had been issued without the necessary accompanying declaration.[4] This declaration is sworn by the legal representatives confirming compliance with the Act’s obligations.

Decision

The observations made by the Court regarding compliance with the Mediation Act are significant. The case was identified as a clear example of a scenario where advice regarding mediation may have benefitted the parties. Tellingly, the observations made were addressed at the outset of the judgment, even before addressing the relevant facts of the case or considering the applicable contractual principles.

Mr Justice Twomey began by noting that the Mediation Act had introduced significant changes regarding the constitutional right of access to the courts. Section 14(1) imposed a duty on a solicitor to provide mediation advice before commencing a claim. It also provides that proceedings may only issue where this advice had been provided. Also, Section 14(2) provides that if proceedings are issued, the advice given must be evidenced by way of a mediation statutory declaration. This declaration must accompany the proceedings.

Finally, Section 14(3) provides that a court must adjourn a hearing if the proceedings are issued without the mediation statutory declaration. Considering all of these provisions, Mr Justice Twomey noted that a court must seek evidence that the plaintiff was adequately advised to consider mediation before the court will hear the claim. He relied on the mandatory nature of Section 14(3), and that the court ‘shall’ adjourn if the declaration does not accompany the filed document which commences the proceedings.

He then referred to the objective of the Mediation Act, and specifically Section 14, which is to:

“protect clients by ensuring they are fully informed as to options which may, inter alia, reduce their exposure to cost and risk. The provision also advances the public interest, discouraging unnecessary recourse to the courts (and legal expense) and promoting alternatives which may lead to outcomes which can be in the interests of all parties.”[5]

He then addressed how far the Oireachtas had gone to protect potential litigants from the costs and delay of litigation by interfering:

• In the lawyer-client relationship by dictating the nature of the advice which must be given to the client, e.g. the benefits of mediation and the advantages of not litigating a matter
• In the discretion of the court by giving no discretion regarding whether to adjourn if the proceedings were issued without the accompanying mediation statutory declaration, and
• In the constitutional right of access to the court by restricting it only to litigants who have been advised comprehensively to consider mediation rather than litigation.

Mr Justice Twomey then went on to address a variety of observations in detail, including that:

• The execution of the mediation declaration is not a “box ticking” exercise, as it is sufficiently serious enough for the court to be obliged to halt the hearing, and
• There is a heavy onus on a solicitor to advise the plaintiff to consider mediation rather than litigation. This obligation from the legislature should not be under-estimated.

However, he placed greatest reliance on mediation being an opportunity for reality-checking a plaintiff’s claims. He particularly stressed how human nature leads to a tendency for a party to look at issues only from their own perspective and with the benefit of hindsight, and usually with the partisan lens of their advisers. What the Act tries to ensure is the opportunity for an independent assessment by an objective mediator to reality check a case before it is too late.

In the case before him, Mr Justice Twomey noted that there was no mediation and, therefore, no reality check of either side’s claims. Given the quantum involved in the respective claims, this was a case which he said would have benefitted from reality checking as, in circumstances where neither party ultimately prevailed in their case, the only winners were the lawyers. As a result, it was a case which was a “salutary lesson for all plaintiffs” as the Act makes clear “litigation should be the option of last resort”.

Conclusion

Despite Mr Justice Twomey’s observations, the non-compliance in this case had no immediate consequences as the case was ultimately heard. However, as is clear from cases such as Byrne v Arnold[6] non-compliance can have real consequences. This decision should be considered as somewhat of a warning to litigants in future cases. It highlights:

• The mandatory nature of the statutory obligations
• How early compliance with the obligations of the Act is critical, and
• That retrospective correction is not possible.

Practitioners and litigants should pay particular attention and ensure these obligations are always met. The possibility of real consequences being imposed for non-compliance cannot be discounted and seems all the more likely in future cases.

For more information and expert advice on commercial disputes, contact a member of our Commercial Disputes team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] V Media DOO & First Click Marketing Operations Management Ltd. v Techads Media Ltd [2025] IEHC 430

[2] Although the Court’s focus was on Section 14 and the duties on a practising solicitor, Section 15 imposes similar obligations on a practising barrister in the limited circumstances where they may issue proceedings on behalf of a client.

[3] Especially in light of cases such as Byrne v Arnold [2024] IEHC308 where the recoverable costs of a successful party were reduced where there was no compliance with the Act – see https://www.mhc.ie/latest/insights/mediation-act-non-compliance-has-cost-consequences

[4] Mr Justice Twomey noted that the failure to meet that requirement could not be retrospectively remedied as the proceedings had already been issued without the declaration.

[5] Citing Kennedy J. in Byrne v Arnold [2024] IEHC 308.

[6] See https://www.mhc.ie/latest/insights/mediation-act-non-compliance-has-cost-consequences