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Compulsory ADR out of the weeds – will the court order parties to mediate?

Posted on 30 January 2024

The recent judgment handed down by the Court of Appeal in Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416 represents a seismic change in approach for alternative dispute resolution (ADR), casting aside the decision in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 and paving the way for a new regime of compulsory ADR.

The position under Halsey

Halsey concerned a claim under the Fatal Accidents Act 1976 which was unsuccessful at trial. The claimant nevertheless argued that there should be no order as to costs, relying on the fact that the defendant had refused to agree to mediate the dispute before proceedings were issued. Lord Dyson in the Court of Appeal accepted that a successful party may be deprived of their costs if they have acted unreasonably in refusing to agree to ADR, and set out factors which may be relevant to determining that question, although ultimately Lord Dyson concluded that the defendant had not acted unreasonably here.

In so doing Lord Dyson also made broader comments, which have been widely interpreted to mean that the English court cannot lawfully stay proceedings for, or order the parties to engage in, ADR, as to do so would be an unacceptable constraint on the right of access to the court enshrined in Article 6 of the European Convention on Human Rights. The decision has since been used in support of the principle that, while the courts can encourage and facilitate the use of ADR, they cannot compel parties to engage in such processes.

However, the principle has come under increasing criticism in recent years, with academic opinion suggesting that, provided that parties retain the right to proceed to court, participation in ADR can be made compulsory without any breach of Article 6. There have also been various in-roads to the principle, including the decision in Lomax v Lomax (2019) that, in an appropriate case, the court has power to order parties to attend early neutral evaluation without their consent and the requirement in the RTA Small Claims Protocol that, in cases where liability is admitted, the defendant "must make an offer to settle the claim", such that in June 2021 the Civil Justice Council published a report concluding that parties can, in fact, be lawfully compelled to participate in ADR and, more recently, the Ministry of Justice proposed the introduction of automatic referral to mediation for all small claims.

Churchill - the background

The issue in Churchill arose out of a dispute between the claimant and Merthyr Tydfil Council over damage caused by Japanese knotweed encroaching on the claimant's land from the Council property next door. The Council contended that the claimant should have attempted to resolve the issue through its Corporate Complaints Procedure before issuing proceedings against it, and sought a stay. However, although the Deputy District Judge held that the claimant had acted unreasonably by failing to engage with the Complaints Procedure, he considered he was bound to follow Halsey and could not, therefore, accede to the stay application.

Permission was granted to appeal, and the matter was referred directly to the Court of Appeal on the grounds that it raised an important point of principle and practice. Given the continuing controversy arising out of Halsey, a number of third parties, including the Law Society, Bar Council, Civil Mediation Council, Centre for Effective Dispute Resolution and Chartered Institute of Arbitrators intervened in an attempt to overturn the decision.

The Court of Appeal decision

In the end, however, rather than overturning Halsey, the Court of Appeal instead concluded that Lord Dyson's comments 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" were not, in fact, a necessary part of the reasoning that led to the decision in that case. The decision in Halsey was one about costs sanctions, and not whether to order parties to participate in mediation. As a matter of law, the judge in Churchill was not, therefore, bound by those comments.

The Court of Appeal therefore turned to consider afresh whether the English court can lawfully stay proceedings for, or order the parties to engage in, ADR and, having reviewed the relevant authorities, it accepted that English courts do have such a power, provided that any order made:

  1. does not impair the very essence of the claimant’s right to a fair trial;
  2. is made in pursuit of a legitimate aim, and;
  3. is proportionate to achieving that legitimate aim.

Noting that courts regularly adjourn hearings and trials to allow the parties to discuss settlement, the Court commented that it would be absurd if they could not do so, simply because one of the parties resisted the adjournment.

The Court of Appeal emphasised that whether the court should order or facilitate ADR in any particular case is a matter of discretion. Various factors, including the nature of the particular ADR process under consideration, were likely to be relevant, but the Court of Appeal refused to lay down fixed principles, commenting that it would be undesirable to provide a checklist or score sheet for judges to operate. Instead, judges were well qualified to decide whether a particular process is or is not appropriate.

Notwithstanding those conclusions, in this case the Court of Appeal went on to decide that, given that there had been no appeal against the finding that the claimant's failure to engage with the Council's Complaints Procedure was unreasonable, and that the dispute had now moved on considerably, there was nothing to be gained from granting a stay.

Lessons from the case

In the years since Halsey, the support and enthusiasm for ADR has grown exponentially and as pressures on the courts increase, it has come to be seen as a vital tool in the civil justice system. As the Court of Appeal noted in Churchill, experience demonstrates that even with unwilling parties, mediation can often be successful, and that mediation, early neutral evaluation and other non-court based forms of dispute resolution can often be cheaper and quicker than traditional court-based solutions. While parties cannot be compelled to settle their dispute, and there will still be cases where it is clear that ADR will be inappropriate, the decision nevertheless demonstrates this trend.

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