n South African Law Journal - Costs sanctions : the critical instrument in the development of commercial mediation in South Africa




Costs are a significant issue for commercial disputants, and are often the primary reason that parties are looking to mediation in order to resolve their disputes in a cost-effective manner. The article looks at the approach taken in England in order to equip courts with the powers and authority to use mediation as a costs-containment device. It reviews the changes to the Civil Procedure Rules ('CPR') in England that have revolutionised the approach the judiciary takes in dealing with case management and in encouraging parties to mediate through the use of costs sanctions. The possibility of the CPR having an impact in South Africa, despite the absence of an equivalent South African statute, is also reviewed.

The implications of attempting to assess a party's conduct in order to determine whether a costs sanction is appropriate in the context of mediation confidentiality is also dealt with. The rules proposed in efforts to assess 'good faith' conduct in mediation are reviewed in detail. While it is suggested that the objective criteria developed in seminal cases in England is the correct approach where parties agree to mediate their dispute after it arises, where there is a pre-existing agreement to mediate, it is suggested that the court in a subsequent action dealing with the dispute should be equipped with the necessary power to excuse a party if it can be shown that mediation would have been unreasonable in the circumstances.
Having established the concept of a potential costs sanction in the National Credit Act, it is submitted that the legislature should extend the principle to cover commercial disputes in circumstances where the parties have voluntarily agreed to mediate, and one of the parties subsequently unreasonably refuses. While there is no case law or statute in South Africa dealing with costs sanctions in response to an unreasonable refusal to mediate a commercial dispute, it is suggested that costs sanctions could possibly be awarded under a provision in the Uniform Rules or by analogy with existing case law. It is concluded that it remains to be seen whether the judiciary proves sufficiently proactive to make such a ruling when an appropriate case arises.


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