UK – The judge presiding over the Unilever/Merrill Lynch court case, which was settled out of court today, has warned city firms and commercial entities embarking on such high profile litigation to consider the consequences of putting such cases before the high court without full and proper mediation.

In his closing words after the two sides had agreed the settlement – believed to be in the region of £70m - Mr Justice Colman, suggested that a compromise might have been reached before trial, sparing the cost and aggravation of such a high profile case.

He commented: "When this matter first came before me in July, I made an order in the usual form made in the Commercial Court that the parties should attempt to resolve their dispute by mediation. I understand that attempts were made in this direction but that they were unsuccessful. I am sure that both parties would have approached that mediation in perfectly good faith; but it is worth reflecting on the consequences of that failure. The parties have spent 28 days in court in this case, pursuing issues, which were, for the most part, at least in broad outline, well defined at the time when the mediation took place. Those 28 days have cost the parties many hundreds of thousands of pounds, if not more, in the costs of experts and lawyers, and have involved immense amounts of extremely expensive executive time and indeed assaults in public on the skill and expertise of professionals in the financial services industry."

While congratulating the two parties on having reached a conclusion without the need for judicial ruling, Justice Colman questioned whether either side had been determined and willing enough to find a compromise before the trial:
“I am sure it has taken enormous courage and very focused determination by both sides to achieve common ground. That said, I would like to add one observation, which should be reflected upon by all those in the City, and in the commercial world, who may in future be about to embark upon litigation of this size. While it is true that, at the end of it all, a more detailed view of the facts could be delineated than at the beginning, and slightly more refined experts ‘opinions were to hand, it seems extremely questionable whether, with more determination, and willingness to adopt a more flexible approach at the time of mediation, a mutually acceptable compromise could not then have been achieved.”

The two sides announced this morning that they had “resolved all issues” between them with Merrill agreeing to pay a sum to the Unilever fund without admission of liability.

The UK National Association of Pension Funds (NAPF), said the case would certainly increase scrutiny of the pension fund/manager relationship: "This case will certainly focus the minds of both pension funds and their investment managers on exactly what they expect from their relationships.
"It is likely that there will be greater scrutiny on both sides of the benchmarks set for future investment performance."


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