Tom Bailey writes: On 1 October 2024, the Civil Procedure Rules (“the CPR”) were updated to include the Court’s power to order litigants to engage in Alternative Dispute Resolution (“ADR”) e.g. mediation, arbitration and without prejudice negotiations. Before 1 October, the CPR merely referred to robust encouragement toward ADR.
We have had various cases relating to whether a Court could order ADR:
In Halsey -v- Milton Keynes General Trust [2004] EWCA Civ 576 the Court stated that to “oblige unwilling parties to refer their disputes to mediation would unacceptably obstruct their right of access to the Court” (pursuant to the Human Rights Act 1998, Article 6).
In the case of Lomax -v- Lomax [2019] EWCA Civ 1467, the Court of Appeal held that an Early Neutral Evaluation (“ENE”) was an express part of the Court process (it was specifically referred to in CPR 3.1(2)(m)) and could, therefore, order (without the parties’ consent) that they enter into ENE.
Most recently, the Court of Appeal Judgment in Churchill -v- Merthyr Tydfil Borough Council [2023] EWCA Civ 1416 (‘Churchill’), which was handed down in late 2023, held that the Court could order a stay to allow for ADR. The Court set down guidance on when and how judges should intervene to encourage ADR:
- Whether parties were legally advised or represented, and, if not, whether ADR was likely to be appropriate without it;
- The form of ADR being considered;
- Whether it was made clear to the parties that, if they did not settle, they were free to pursue their claim or defence;
- The urgency of the case and the reasonableness of the delay caused by ADR and whether that would vitiate the claim or give rise to or exacerbate limitation issues;
- The cost of ADR, which includes taking into account the parties’ resources and the value of the claim;
- Whether there was a realistic prospect of resolution through ADR;
- Whether there is any significant imbalance in the parties’ resources, bargaining power or sophistication;
- Reasons given by a party for not wishing to engage in ADR; and
- Reasonableness and proportionality of the sanction in the event that a party declined ADR in the face of a court order.
The amendments made to the CPR reflect these changes and are a ‘catch-up’ of the Churchill case. Set out below are the amendments as of 1 October 2024 which deal with the Court’s management powers:
- The Overriding Objective (setting out the guiding principles of the CPR) has been amended so that CPR 1.1(f) now reads “promoting or using [ADR]…”;
- CPR Part 1.4(2)(e), now reads that ‘active case management’ includes “ordering or encouraging the parties to use, and facilitating the use of, [ADR]”;
- CPR 3.1(2) includes a new sub-section (o) that allows the Court to “order the parties to engage in [ADR]”;
Other amendments to the CPR include:
- CPR 28.7(1) (which deals with directions on the fast track) includes a new sub-section (d), to provide that case management directions include “whether to order or encourage the parties to engage in [ADR]”. An equivalent provision has been added as a new CPR 28.14(1)(f) (directions on the intermediate track);
- PD 29.4.10(9) (Multi-track PD) has been amended to provide that the Court may give case management directions “ordering or encouraging the parties to engage in [ADR]”; and
- CPR 44.2(5)(e) – When the Court is exercising its general costs discretion, its consideration of the parties’ conduct may include “whether a party failed to comply with an order for [ADR], or unreasonably failed to engage in [ADR]”.
However, these amendments, whilst useful, do not provide any guidance as to how the Court is to exercise this discretion. It is therefore likely that Judges will apply the guidance in Churchill when deciding whether to exercise their discretion to compel ADR.
Before the changes in the CPR, most litigants were willing to enter into some form of ADR due to the possibility of an earlier resolution of the dispute and potential cost savings. The changes to the CPR will likely continue to encourage the parties to enter into ADR both before and during the course of any litigation. However, whether the Courts will use their “new” case management powers to order parties to enter into ADR is to be seen as there has been no significant case law yet. It may likely be used in instances such as where one party wishes to enter into ADR, but the other party does not yet and the Court feels that ADR would be appropriate, such as in Lomax.