Courts encourage alternative dispute resolution (ADR) to settle litigation

In England and Wales, the Civil Procedure Rules (CPR) is the rule book used by litigants and judges. It governs how litigation is administered, regularising the obligations of litigants and codifying judges' powers.

Following the landmark case of Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ. 141, the courts in England and Wales have amended the CPR to once again give judges power to order parties to engage in ADR (e.g. mediation). This precedent is particularly important as it reverses the two-decade-long prohibition on court powers to require litigants to participate in alternative dispute resolution (ADR).

Background

In Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ. 576, the Court of Appeal affirmed its position on compulsory ADR, stating "to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction to their right of access to the court". Unlike today, the court system at the time had ample resource, with court staff and judges alike being based at regional court houses. Twenty years on, the judicial system is experiencing new challenges.

Following years of austerity, where the justice budget for England and Wales fell, the government has sought to create a centralised civil claims system, where fewer "larger" courts now serve the public. Similar to the effects seen in the national health service, this funnelling effect has resulted in significant delays.

Such delays were further compounded due to coronavirus, where courts shut amid lockdown restrictions. Although the introduction of technological tools, such as online hearings, has sought to address accessibility, the significant backlog hindering the court system is an issue of resources. There simply are not enough court houses or judges to alleviate the ever-growing surplus of cases.

Whilst the re-introduction of enforced ADR may consequently be a welcomed tool for good, it may also add further cost and delay to parties. In addressing this issue, the court has limited its powers to matters where it "it 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".

The amendments

The relevant statutory instrument containing the amendments is the Civil Procedure (Amendment No.3) Rules 2024 (SI 2024 No. 839).

The most prominent alteration is contained within the scope of CPR 1, where the overriding objective of the court is codified. The objective of "enabling the court to deal with cases justly and at proportionate cost" has been extend and now includes "promoting or using alternative dispute resolution".

The court's practical powers in creating obligations of the parties (known as management powers) have also been expanded in CPR 3.1(2) to include the power to "order to parties to participate in ADR".

Notably, CPR 44, the provision detailing the cost implication of parties' conduct (i.e. penalties) has also been expanded to include "whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution".

Exercise of power

Although alternative dispute resolution is not defined, it has purposely been left open to allow parties to decide what medium of ADR is most appropriate for their specific matter. Furthermore, the amendments do not define the specific circumstances in which the court would compel parties to take part in ADR, nor the precise manner.

These omissions reflect the judgement in Churchill, where the Court of Appeal declined to distinguish the "fixed principles as to what will be relevant to determining those questions" as it would be "undesirable to provide a checklist or a score sheet for judges to operate". Nevertheless, the aforementioned factors stipulated in Hasley will "likely have relevance" in ascertaining elements of weight (e.g. the form of ADR considered, whether parties are legally represented, whether implications of declining settlement were considered, costs, etc.).

Impact in practice

Although noteworthy, the new rule changes set out above are really extensions of power, rather than revolutionary changes to litigation practice. It is noted that courts have already obtained the power to require parties to consider ADR. The extension, therefore, indicates the court is ready to bite rather than bark to further the importance and adoption of ADR.

As a result, parties should expect it to become common practice for judges to raise the topic of ADR throughout proceedings, including every case management conference, rather than just at the outset.

Although only just enforceable, the Courts have not been reluctant to incorporate the rules changes in practice, having already laid a place marker on the importance and enforceability of penalties arising from failing to take part in ADR in the case of Northamber v Genee World [2024] EWCA Civ 428.

Contact our litigation solicitors for expert legal advice

If you have questions about ADR, our litigation solicitors are ready to assist. We work to resolve disputes efficiently, with minimal cost and disruption to you or your business.

We offer tailored solutions that prioritise your interests, whether through ADR or, when necessary, court representation.