Alternative Dispute Resolution – From Encouragement to Expectation
Alternative Dispute Resolution (“ADR”) has become an increasingly integral part of civil litigation in England and Wales. Once a voluntary alternative to court proceedings, recent legal developments have shifted the landscape towards a more compulsory and enforceable approach to ADR.
There are many forms of ADR, including arbitration, expert determination and early neutral evaluation, but the most prevalent form of ADR in civil claims is mediation.
The pivotal case of Churchill v Merthyr Tydfil Borough Council [2023] EMCA Civ 1416 (“Churchill) marked a significant turning point for ADR and particularly mediation. The Court of Appeal held that courts have the power to stay proceedings and compel parties to engage in ADR, even without their consent. This decision overturned previous interpretations that mandatory mediation could infringe on the right to a fair trial, a concept which is enshrined under the Human Rights Act 1998.
Following the decision in Churchill, the Civil Procedure Rules (“CPR”) Committee commissioned a consultation on the amendment of the CPR to reflect the decision in Churchill. The outcome resulted in amendments to the CPR in October 2024 which updated the ‘Overriding Objective’ to include an onus on promoting or using ADR (CPR 1.1(2)(f)).
The amended CPR contain a specific obligation on the Court when actively managing cases to order, or encourage, the parties to use, and facilitate the use of, ADR (CPR 1.4(2)(e)).
The parties are also required to help the Court to further the overriding objective (CPR 1.3).
When considering costs awards, the Court is required to have regard to the conduct of the parties, including whether a party has failed to comply with an order for ADR or unreasonably failed to engage in ADR (CPR 44.2(5)(e)).
This in itself is not new. It’s been over 20 years since the Court held in Halsey v Milton Keynes General NHS Trust [2004] EQCA Civ 576 that unreasonable refusal to participate in ADR constitutes a form of unreasonable litigation conduct to which the Court may properly respond by applying costs sanctions. It is also more than a decade since the Court decided, in PDF II SA v OMFS 2 Ltd [2013] EMCA Civ 1288, that silence in the face of an invitation to mediate is, as a general rule, unreasonable even if a refusal to mediate might have been justified.
The risk, is, however, heightened since Churchill and the amendments to the CPR in 2024, and it is now increasingly risky for parties to fail to consider utilising ADR or to ignore or reject reasonable proposals to engage in ADR, whether that be a proposal from an adverse party or an order of the Court. The Courts are showing a distinct willingness to impose cost sanctions on parties who unreasonably refuse to mediate.
A notable example is the case of Conway v Conway & Anor [2024] EW Misc 19 (CC). The Claimant made three offers to mediate throughout the life of the dispute. One offer was made pre-action and two were made post-issue. The Defendants did not acknowledge the first offer and rejected the second and third offers. In his judgment, His Honour Judge Mithani KC made the following comments regarding the Defendants’ conduct:
“One matter that seriously concerns me is why the Defendants did not agree to mediation when it was put to them. The importance of mediation can never be over-emphasised: see, for example, the recent decision of the Court of Appeal in Churchill. The Defendants will have to advance compelling reasons why the offer of mediation was rejected out of hand by them.”
Despite the Defendants being successful in the claim, HHJ Mithani KC reduced their costs by 25% for unreasonably refusing to engage in mediation.
The Court will, however, have regard to the extent of a party’s unreasonable behaviour before making such a significant costs sanction. In Northamber Plc v Genee World Ltd and others [2024] EWCA Civ 428, the Court of Appeal only increased the successful party’s costs recovery by 5%. In that case, the Claimant made what the first instance judge categorised as a “half-hearted” offer to mediate. The Claimant wrote to the Defendants stating a willingness to mediate and asked whether the Defendants were also willing. The Court had ordered the parties to consider ADR at all stages of the litigation and, if a party proposed ADR and the other refused, the refusing party was compelled to file a witness statement within 21 days explaining why. The Second Defendant’s solicitor replied to the proposal to mediate to state they were taking instructions but never replied further and never filed a witness statement as directed by the Court.
The trial judge felt that, as the Claimant’s solicitor had not chased the Second Defendant, the parties’ conduct was not such that it warranted an enhanced costs award against the Second Defendant. The Court of Appeal did not agree and concluded that the Second Defendant’s silence in response to an offer to mediate was in itself unreasonable, which was compounded by the Second Defendant ignoring the Court order requiring a party to file a witness statement if it did not accept an offer to engage in ADR. However, due to a number of factors specific to the case, including the late stage of the litigation that the offer to mediate was made in, as well as the substantial costs which had already been incurred at that point, the Court of Appeal felt that just a 5% increase in the Claimant’s costs recovery was appropriate.
In Appiah v Leeds City Council [2025] EWHC 1537 (KB), the Court made a significant finding regarding non-compliance with an ADR order. The Court had previously ordered that any party not engaging in any proposed ADR was to serve a witness statement giving reasons within 21 days of receipt of that proposal. When the Claimant informed the court that they had proposed mediation and the Defendant had refused without providing the required witness statement, the Defendant argued they had not refused to engage, but had merely indicated they needed sight of the Claimant’s expert evidence for ADR to be effective.
The Court found that the Defendant had failed to comply with the order, noting that the order was clear that any party not engaging in ADR proposed by the other side must file a witness statement, and it did not state that only parties refusing to engage must provide such a statement. Consequently, the Court ordered the Defendant to comply with the order and serve a witness statement giving reasons why they did not comply with the Claimant’s proposal.
In Belson v Belson [2025] EWHC 2989 (Ch), the Court found that the Claimant's refusal to agree to mediate before the Defendant had complied with his obligations as a fiduciary to provide an account for the property and money held by him was reasonable. This demonstrates that the Court will consider the specific circumstances and whether preliminary steps are necessary before meaningful ADR can take place.
The Court also demonstrated flexibility in ensuring access to ADR in Dover Farm Developments Ltd v Smith [2025] EWHC 2862 (KB), where the Court ordered a stay for the parties to engage in a mediation conducted by the Court, as the Defendants were unable to afford the costs of a private mediation. This order represents an innovative approach to ensuring that financial constraints do not prevent parties from accessing ADR processes.
The Courts’ approach of more firmly encouraging parties to engage in ADR is welcomed. Litigation, and particularly trial, is expensive and unpredictable. ADR allows the parties to take control of the outcome of disputes and offers more flexible resolutions than the usual ‘win or lose’ outcome at trial. Even if mediation does not lead to settlement on the day, it often narrows the issues in dispute and affords parties the opportunity to test the strength of their and their opponents’ arguments, which often results in settlements in the days that follow.
In our upcoming webinar, Resolving disputes differently: the future of ADR in England and Wales, Katherine East, a Senior Associate and specialist in ADR, Joanna Gosling, Senior Associate and accredited mediator and Thomas Barnard, a Partner and an expert in arbitration, will explore ADR and its future in more detail. To register for the event, please follow the link above.
