Costs Consequences of Refusing to Mediate: The Hard Lessons of Alrubie v Chelsea Football Club Ltd & Anor [2025] EWHC 541 (Comm)

Introduction

The recent High Court decision in Alrubie v Chelsea Football Club Ltd & Anor [2025] EWHC 541 (Comm) serves as a powerful reminder of the financial risks of refusing mediation in litigation. Even where a party ultimately succeeds at trial, an unreasonable refusal to engage in alternative dispute resolution (ADR) can lead to severe costs penalties. This article examines the key takeaways from the case and their implications for commercial litigation strategy.

Background of the Case

The claimant, Mr. Alrubie, brought proceedings against Chelsea Football Club and another defendant over a commercial dispute. During the litigation, the defendants repeatedly proposed mediation, but the claimant refused, maintaining that his case was too strong to warrant settlement discussions.

At trial, the claimant succeeded—but only partially, recovering significantly less than he had claimed. When the court turned to the issue of costs, the claimant’s refusal to mediate became a central issue.

The Court’s Decision on Costs

Despite being the technically “successful” party, the claimant faced significant costs sanctions due to his refusal to mediate:

1. Partial Deprivation of Costs

• The court applied CPR 44.2(4)(a), which allows judges to penalise unreasonable litigation conduct when awarding costs.
• Although the claimant had won, he was denied 30% of his recoverable costs as a direct result of his refusal to mediate.

2. Liability for Defendant’s Costs

• The claimant was also ordered to pay 50% of the defendants’ costs from the date when mediation should reasonably have taken place.
• This was based on the principle that had mediation occurred, the parties might have avoided the expense of a full trial.

3. Judicial Criticism of the Claimant’s Stance

• The court rejected the claimant’s argument that his strong legal position justified refusing mediation.
• The judge emphasised that mediation is not just for weak cases—it can help even confident parties by narrowing issues, reducing costs, or revealing settlement opportunities.

Key Legal Principles Reaffirmed

The judgment reinforces several well-established principles from earlier cases:

1. Halsey v Milton Keynes NHS Trust [2004] EWCA Civ 576

• Courts may impose costs sanctions where a party unreasonably refuses ADR.
• The burden is on the refusing party to justify their stance.

2. Thakkar v Patel [2017] EWCA Civ 117

• Even strong cases can benefit from mediation—certainty of legal victory does not excuse refusing ADR.

3. Lomax v Lomax [2019] EWCA Civ 1467

• Courts now take a stricter approach to enforcing ADR participation.

Practical Lessons for Litigants

1. Mediation is Effectively Mandatory

• Courts expect parties to attempt ADR unless there is a clear, justifiable reason not to.

1. A “Strong Case” is No Defence

• Even if you believe your legal position is unassailable, refusing mediation risks costs penalties.

1. Document Your ADR Decisions

• If you decline mediation, keep a written record explaining why (e.g., evidence of bad faith by the other side).

1. Consider Early Neutral Evaluation (ENE)

• If full mediation seems premature, ENE (a preliminary assessment by a neutral expert) can help assess case strengths.

Conclusion

Alrubie v Chelsea FC confirms that refusing mediation is a gamble with real financial consequences. Even successful litigants can lose a substantial portion of their costs recovery if they unreasonably reject ADR.

Key Takeaway:
In modern litigation, mediation is not optional—it is a necessary step to avoid punitive costs orders. Parties should engage constructively or risk paying a heavy price.

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Need Further Guidance?

For strategic advice on mediation or defending against costs penalties, seek specialist legal input at the earliest opportunity.

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