Northrop Grumman Mission Systems Europe Ltd v BAE Systems (Al Diriyah C4I) Ltd (No 2)
2014
TECHNOLOGY AND CONSTRUCTION COURT
UK
CORAM
- MR JUSTICE RAMSEY
Areas of Law
- Civil Procedure
- Alternative Dispute Resolution
2014
TECHNOLOGY AND CONSTRUCTION COURT
UK
CORAM
AI Generated Summary
BAE terminated a License Agreement under the Enabling Agreement. NGM contested the termination and sought a cost reduction due to BAE's refusal to mediate, which BAE justified based on legal advice. The court found BAE’s refusal to mediate unreasonable but insufficient to alter costs recovery, thereby allowing full recovery of costs without reduction. Both parties' conduct during litigation was considered in the court's decision.
Judgment
Judgment (No 2)
MR JUSTICE RAMSEY:
Introduction
In these Part 8 proceedings I gave judgment upholding BAE’s contention that on a true construction of the Licence Agreement, BAE was entitled to terminate that agreement for convenience under the provisions of Clause 10.4 of the Enabling Agreement which governed the Licence Agreement.
In relation to costs NGM accepted the principle that BAE was entitled to its costs to be assessed on a standard basis if not agreed, but contended that those costs should be reduced by 50% by reason of BAE’s unreasonable refusal to mediate the dispute. BAE challenges both the premise and the appropriateness of any reduction in its costs in this case.
Refusal to Mediate
When the court comes to consider costs and to exercise its discretion under CPR 44.2 , it has regard to all the circumstances including the conduct of the parties before as well as during the proceedings: see CPR 44.2 (4) and (5).
That conduct includes conduct by which a party refuses to agree to alternative dispute resolution: see White Book Part 1 at paragraph 44x.3.21, Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 and PGF II SA v OMFS Company 1 Limited [2013] EWCA Civ 1288 .
In Halsey the particular factors which the Court of Appeal identified as being relevant included the nature of the dispute, the merits of the case, the extent to which other settlement methods had been attempted, whether the costs of ADR were disproportionately high, whether any delay in setting up or attending the ADR would have been prejudicial and whether ADR had a reasonable prospect of success.
In PGF II the Court of Appeal referred to the Jackson ADR Handbook where, at paragraph 11.56, it sets out practical steps which a party should take if it considers it has reasonable grounds for refusing to participate in an ADR process following a request from the other party. Briggs LJ, giving the judgment with which the other members of the court agreed, commented on that paragraph and said at [30]:
“ The ADR Handbook, first published in 2013, after the period relevant to these proceedings, sets out at length at para 11.56 the steps which a party faced with a request to engage in ADR, but which believes that it has reasonable grounds for refusing to participate at that stage, should consider in order to avoid a costs sanction. The advice includes: (a) not ignoring an offer to engage in ADR; (b) responding promptly in writing giving clear and full reason