Insights Alternative Dispute Resolution: Consultation launched by Rules Committee

The Civil Procedure Rules Committee has published a consultation about proposed changes to rules governing alternative dispute resolution (“ADR”). In particular, the proposed changes would empower courts to order parties to engage in ADR in certain circumstances.

The consultation is a response to the decision of the Court of Appeal last year in Churchill v Merthyr Tydfil [2023] EWCA Civ 1416. There, the court was asked to consider whether, and if so in what circumstances, judges may order parties to attend ADR. At first instance, it was held that courts did not have that power, relying on a longstanding precedent in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 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”.

The Court of Appeal in Churchill held that the lower court was wrong to conclude that it was bound by these comments from Dyson LJ in Halsey as they were “not part of the essential reasoning in that case” (or were so-called ‘obiter dicta’). That being the case, the Court went on to consider whether a court could indeed lawfully stay proceedings for, or order that, the parties engage in ADR. In doing so, the Court analysed both domestic and European case law concerning a party’s right to a fair trial in the light of arguments that forcing parties to pursue ADR would prevent the claimant from having its day in court.

The Court ultimately concluded that a court can lawfully stay proceedings for, or order, the parties to engage in ADR so long as the order made: (a) does not impair “the very essence of the claimant’s right to proceed to a judicial hearing”; and (b) is proportionate to achieving “the legitimate aim of settling the dispute fairly, quickly and at reasonable cost”. Whilst the Court was not prepared to set out a checklist of relevant factors that might be taken into account when determining whether to make such an order (“many factors would be relevant” and much would turn on the facts of the individual case), the exercise of a judge’s discretion would be guided by whether ADR would be “likely or appropriate for the purposes of achieving the important objective of bringing about a fair, speedy, and cost-effective solution to the dispute and the proceedings, in accordance with the overriding objective”.

The Civil Procedure Rules Committee’s consultation seeks to reflect the Court’s judgment by including provisions that clarify that courts may not just ‘encourage’, but also order parties to use ADR.

The consultation is open until 28 May 2024 and can be read in full here.