Beyond Churchill: Compulsory ADR is in Full Swing
It is well-reported that Judges have been showing great enthusiasm for alternative dispute resolution (ADR) in recent years. This encouragement for parties to resolve their disputes outside of Court was largely spurred from the landmark decision in Churchill v Merthyr Tydfil County Borough Council [2023] (see our previous article).
This support for ADR did not stop at Churchill. In the space of a matter of months following Churchill, there were key developments on multiple fronts, ranging from how the Courts approached mandatory ADR to automatic referral to the Small Claims Mediation Service. We explored these developments back in June 2024 in our previous article.
Unsurprisingly, there have since been further changes that has proven to have great impact, and there will undoubtedly be more to come in the not-too-distant future.
Amendments to the CPR and Pre-Action Protocols
Effective from 1 October 2024, the Civil Procedure Rules 1998 (CPR) were amended to reflect this push for ADR and were consistent with the spirit of Churchill. These key changes included:
- The Overriding Objective of the CPR was updated from ensuring the Court actively manage cases by (inter alia) “encouraging the parties to use an alternative dispute resolution procedure” to “ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution”.
- CPR Rule 44 was amended to emphasise the real impact it can have on costs if a party unreasonably fails to participate in ADR or comply with an order for ADR participation.
- Specific to multi-track cases, CPR Rule 29 provides that when giving directions, the Court must consider whether to order or encourage the parties to engage in ADR.
More recently, the Civil Justice Council published its Phase Two Report on Pre-Action Protocols which set out its recommendations to amend the Pre-Action Protocols, many of which concerning the promotion of ADR. Whilst still being early doors, we are yet to see such recommendations be taken forward – watch this space.
The Approach of the Courts
Turning away from changes to rules and protocols, but towards how they are implemented by the Courts, we have seen a number of key decisions where the Courts have ordered mandatory ADR upon parties in so far as sanctioning those for refusing mediation.
In DHK Retail Ltd and others v City Football Group Ltd [2024] EWHC 3231 (Ch), the High Court ordered that the parties attend mediation irrespective of an imminent trial date, and despite the Defendant’s arguments against mediation suggesting that there was no real prospect of success.
Here, the High Court observed:
“Experience shows that mediation is capable of cracking even the hardest nuts. The process sometimes succeeds in cases where the parties appear at first to have intractable differences.”
The High Court ultimately ruled in favour of the Claimant’s application for compulsory mediation prior to trial.
By reference to the postscript of the judgment in DHK, the parties’ participation in ADR would later prove successful as “on 13 January 2025 the parties notified the court that they had settled their dispute.”
Comments
Churchill has and will continue to have considerable impact on the use of ADR by parties and the Courts in ensuring that disputes are dealt with in a swift and cost proportionate manner. Indeed, as demonstrated by DHK, even where one or all parties are sceptical as to the benefit of ADR, parties may often find themselves surprised in how effective ADR can prove to be, at any stage of litigation.
In any event, these recent developments (and recommended future developments) suggest that parties to a dispute may not have much of a choice – and must get with the program – when it comes to participating in ADR. Otherwise, recent case law proves that any unreasonable refusal to participate in ADR and mediate can result in the Court imposing penalty and sanction on the party.
However, most of these post-Churchill changes have impacted parties involved in the latter stages of a dispute, and less so to those who have not reached issuing of the claim – hence the Civil Justice Council’s recent recommendations to amend the Pre-Action Protocols. Perhaps soon in the near future, we will see an increased use of ADR at all stages of a dispute, including from the outset to potentially avoid unnecessary costs incurred in litigating matters beyond pre-action.
How can Ellis Jones help?
If you would like to discuss how Ellis Jones can assist with your dispute, and perhaps explore methods of dispute resolution alternative to Court, please get in touch with our team of experienced solicitors on 01202 525333 or by emailing resolution@ellisjones.co.uk.
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