Over the last number of years, various parties, including the judiciary and the Government, have sought to promote and encourage the used of alternative dispute resolution as a means of resolving disputes. For example, the UNCITRAL Model Law on International Commercial Arbitration was implemented in Ireland by the Arbitration Act 2010. Additionally, the use of mediation has been encouraged by the introduction of rules in the High Court and the Circuit Court which allow a judge (or a party) to invite the parties to consider alternative dispute resolution processes such as mediation.

Whilst arbitration is commonly used in dealing with insurance claims and disputes in the construction sector, mediation is not as commonly used for resolving insurance disputes in Ireland. If the Mediation Bill 2012 becomes law, however, it may lead to more claimants seeking to mediate disputed claims.

The proposed Bill includes the following notable proposals, which aim to encourage and facilitate the use of mediation:

• The creation of a statutory duty on solicitors and barristers to advise their clients of the possibility of mediation before issuing proceedings
• The suspension of the rules limiting the time during which legal proceedings may be issued and
• Giving the courts the statutory power to recommend that parties consider mediation (and the potential costs implications for not doing so)

Experience in Ireland and the UK (where mediation is commonly used in insurance related disputes) demonstrates that some of the aspects of mediation could prove beneficial to insurers and claims handlers; such as: 

• Cost savings – avoid or reduce the complexity of legal proceedings, particularly in multi-party disputes
• Confidentiality – mediation is a confidential process and can be useful where an insurer does not wish to set a precedent or where an insured’s reputation could be adversely affected
• “Day in court” – mediation can be particularly useful where a party has an emotional attachment to their claim and often the opportunity for a person to ‘say their piece’ at a mediation can be invaluable and may allow the parties to move on and focus on resolving the issue and
• Tactics – even where resolution is not reached, mediation may provide an opportunity for an insurer to obtain a greater knowledge and assessment of the strengths, weaknesses and focus of a claimant’s case

Although the Courts have a power to encourage mediation and impose cost implications for an unreasonable refusal to consider mediation, it should be remembered that an insurer cannot be forced to mediate or settle a dispute. Mediation is a voluntary and confidential process, but one which may hold certain advantages and benefits for an insurer or claims handler.

For further information, please contact Kerrie Glynn or Ruairi Rynn of our Contentious Insurance Group.

Contributed by Ruairi Rynn