A New Dawn for Alternative Dispute Resolution?

Last year, we looked at what Alternative Dispute Resolution (“ADR”) is and the options available to parties to potential and ongoing litigation.  In summary, ADR is the umbrella term for the methods used to attempt to resolve a dispute without the need for court intervention. This includes mediation and settlement negotiations between the parties.

Even though ADR has been a cornerstone of litigation in England and Wales for a very long time, as a result of the below consultations and case law, the concept might be entering into a new dawn.

Compulsory Mediation for Small Claims (Under £10,000)

In 2023, as discussed in our previous article, the Ministry of Justice confirmed its commitment to making mediation a compulsory step for civil and commercial claims valued at up to £10,000.

This commitment has now come into force and from 22 May 2024, all new money claims for a quantified sum (save for those commenced through the Online Civil Money Claims platform, which will be included later in 2024) will be subject to the mandatory mediation requirement. It is estimated that such claims constitute around 80% of all small claims. It has also been confirmed that the mandatory requirement will be extended to the remaining Part 7 claims, including personal injury claims, at a later stage.

It will be interesting to see how this new requirement will play out in practice and how many small claims will ultimately settle at the very early stages and potentially in the pre-action stages. Such results may in turn place a big factor in whether compulsory mediation (or ADR generally) is extended to those claims valued over £10,000.

Churchill v Merthyr Tydfil Borough Council (Court of Appeal 2023)

In late 2023, the Court of Appeal handed down its eagerly anticipated judgment in the case of Churchill v Merthyr Tydfil Borough Council [2023] EWCA Civ 1416 (“Churchill”).

In its judgment, the Court of Appeal held that the courts of England and Wales do have the power to stay civil proceedings for, or order, parties to engage in out-of-court ADR, such as mediation. However, this is subject to the order not impairing the claimant’s fundamental right to a hearing before the court, and that such an order is proportionate to settling the dispute fairly, quickly, and at a reasonable cost.

The reason for the Churchill judgment being so eagerly anticipated was the potential impact it could – and ultimately did – have on the long-standing general prohibition of court-ordered ADR following the case of Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 some twenty years prior.

Civil Procedure Rules Committee (the “CPRC”) Consultation

Following the judgment in Churchill, the CPRC recently published a consultation on draft proposed amendments to the Civil Procedure Rules (the “CPR”) regarding compulsory ADR and in particular the Court’s power to order parties to engage in out-of-court ADR.

The proposed changes themselves are not overly complicated or complex. In the main, they represent amendments to current provisions of the CPR rather than introducing anything new. This includes:

·      CPR 1.1: one of the most important amendments is an addition to the overriding objective. The proposed addition is “using and promoting [ADR]” in relation to dealing with cases justly and at a proportionate cost.

·      CPR 1.4 and 3.1: confirmation that the court’s case management duties and powers extend beyond encouraging parties to participate in ADR but to also ordering parties to participate where the court deems it appropriate to do so.

·      CPR 28 and 29: here, the amendments make it clear that the court should consider whether to order or encourage parties to participate in ADR when making its case management directions.

·      CPR 44: as practitioners will be aware, in practice, unreasonably refusing to engage in ADR, at the outset in particular, is a consideration for the parties and the court when looking at the question of costs. Now, the proposed amendments include an addition to CPR 44 to include considerations around the parties’ conduct in relation to engaging in ADR when the court exercises its costs discretion.

The consultation period ended on 28 May 2024 and, as such, the results and feedback should hopefully be known in the not-so-distant future.

The possible implications of the proposed changes in practice, will not only depend on the final amendments but also on how they are applied. The proposed changes are consistent with the Churchill judgment and the approach and thinking already adopted by many, so there should not be a seismic shift needed there. Additionally, the application of the proposed changes will still be subject to the court’s discretion and will likely be applied and considered on a case-by-case basis depending on the facts of a particular case. Therefore, the implication in practice will likely be influenced by the case law and will likely not be known for some time.

Notwithstanding the above, the proposed changes demonstrate a formal shift towards trying to deal with matters outside of the courtroom, which in turn will hopefully lead to a reduction of the ongoing court backlogs seen across the country.

Civil Mediation Committee (the “CMC”) Standards Board

In May 2024, the CMC announced its intention to establish a mediation standards board (the “MSB”), which would be independent to the CMC and will have its own chairperson.

The proposed role of the MSB will be to advise and develop standards for mediators, trainers, and organisations under its remit alike. Additionally, it will take over the current work of the CMC registration and standards committee, including its complaints process. The MSB will also be involved in setting standards for those persons and organisations within its remit.

It has also been suggested that the CMC will further consider setting up additional boards and committees with one eye on the potential expansion of compulsory mediation to claims valued over £10,000.

The setting up of the MSB should be a welcome step for many reasons, including the introduction of further impartiality and accountability for mediators, trainers, and organisations. This is in turn will hopefully foster more confidence in mediation and the practice generally, which should lead to more parties considering it as a viable option to settle their disputes.

What does this mean in practice?

The concept of compulsory ADR and potential changes to ADR have been hot topics within the legal profession for quite some time. However, until recent times, they have only been topics of discussion and debate.

With these new changes coming into practice and further proposed changes on the horizon, the ADR landscape may well be entering, at least on paper, into a new dawn and practitioners and parties to litigation will have to take these into consideration when considering their tactics and strategies for disputes from now on.

However, overall, it would seem that the changes (actual and proposed) are mainly reflecting the long-standing discussions and debates and enshrine many of the approaches already being taken in practice. As such, the actual practical implications may not be as great as they seem on paper.

Conclusion

Should you or your business encounter a problem that might escalate to a legal dispute, it is always prudent to act quickly and consider all of the potential options from the outset. This includes ADR. As mentioned in our previous guide, ADR has a lot of potential advantages including saving the parties time and money should the dispute be resolved at an early stage.

With that being said, if you or your business finds itself in such a situation, always take professional legal advice as soon as possible. Here at Geldards LLP our specialist Commercial Dispute Resolution teams can assist with all your ADR and litigation queries and needs, so do not hesitate to reach out.