Processes which encourage parties to engage, negotiate and attempt to settle their disputes have been embedded into English litigation for many years. From mediation to early neutral evaluation, in the right circumstances Alternative Dispute Resolution (ADR) methods can help parties to preserve relationships and avoid the stress and expense of the courtroom. On 1 October 2024, the latest round of amendments to the Civil Procedure Rules come into force and ADR will take a further step into the mainstream.
The changes, which include amendments to the "overriding objective" to include "promoting or using alternative dispute resolution" and a new case management power expressly allowing the courts to "order the parties to engage" in ADR, put ADR squarely at the heart of the English court's approach to case management. It is a fundamental shift in approach, and reflects the continuing belief within the judiciary that ADR plays an important role in ensuring that proceedings are dealt with "justly and at proportionate cost", and the courts' willingness to promote its use.
The rise and rise of ADR
The latest changes reflect the increasingly supportive approach to ADR that the English courts have adopted in recent years. Indeed, ADR methods are now so ingrained that the Commercial Court no longer considers them "alternative", having renamed them "Negotiated Dispute Resolution" in the Commercial Court Guide.
However, the courts' approach to ADR has been one of evolution, as two Court of Appeal decisions, separated by twenty years, demonstrate:
In Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, the Court of Appeal considered whether a successful party should be deprived of their costs on the grounds that they unreasonably refused to engage in mediation. Even in 2004 the Court recognised that "ADR had been encouraged by the courts in various ways". However, it also commented that "there are those who believe that the virtues of mediation have not yet been sufficiently demonstrated" and indicated that ADR is only appropriate in "suitable" cases. Famously, Lord Justice Dyson expressed the view that the courts should not be able to compel parties to mediate, on the grounds that "to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court". It also suggested and such an order would likely be a breach of Article 6 of the European Convention on Human Rights.
Almost twenty years later, however, the Court of Appeal in Churchill v Merthyr Tydfil County Borough Council & Ors [2023] EWCA Civ 1416 took a different view. The Court of Appeal noted that Lord Justice Dyson's comments were not a necessary part of the reasoning in Halsey and were therefore not binding on it. Having so decided, the Court held that the English courts do have the power to order parties to mediate, or indeed to participate in another form of ADR. The Court added that "experience has shown that it is extremely beneficial for the parties to disputes to be able to settle their differences cheaply and quickly", and that "even with initially unwilling parties, mediation can often be successful". Read more about the decision in our earlier article.
When should the courts order ADR?
The Court of Appeal went on to address the factors that the courts may take into account when considering such orders, noting that:
"the court should only stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process provided that the order made does not impair the very essence of the claimant's right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly, and at reasonable cost".
While it "would be undesirable to provide a checklist or a score sheet for judges to operate", the following factors were "likely to have some relevance":
- The form of ADR proposed;
- Whether the parties are legally advised or represented;
- Whether ADR is likely to be effective or appropriate without advice or representation;
- Whether it has been made clear to the parties that they can continue the proceedings if they are unable to reach a settlement;
- The urgency of the case and reasonableness of the delay the ADR would cause;
- Whether that delay would undermine the claim or give rise to limitation issues;
- The costs of ADR, including in comparison to the parties' resources and/or the value of the claim;
- Whether there is a realistic prospect that ADR would resolve the dispute;
- Whether there is a significant imbalance between the parties in terms of resource, bargaining power or sophistication;
- The reasons given for wanting to avoid ADR; and
- The reasonableness and proportionality of the sanction if a party declines to participate in ADR in spite of a court order.
What to expect in the future
The English courts are increasingly supportive of ADR, and the changes to the Civil Procedure Rules in many ways merely reflect the approach already being taken.
However, parties that wish to pursue ADR in the face of a reluctant opponent will undoubtedly point to these changes, as well as the decision in Churchill, in support of their position. Moreover, with the approach taken in Churchill now firmly embedded in the rules, judges and parties alike will find it increasingly difficult to resist calls for ADR entirely.
It therefore seems likely that ADR will only become more common in disputes of all types in the future.