The road to compulsory mediation

From 1^st October 2024, a set of changes to the Civil Procedure Rules will expressly provide that, in appropriate cases, the court may give directions “ordering or encouraging the parties to engage in alternative dispute resolution (ADR)”. The previous wording only provided for the court to encourage or require parties to consider ADR. 

This follows the position established by the Court of Appeal in Churchill v Merthyr Tydfil Council [2023] EWCA Civ 1416 in November 2023. In this case, Mr Churchill issued proceedings against his local council after Japanese knotweed encroached from the local authority’s land onto his. The council applied for a stay arguing that Mr Churchill had not considered ADR, such as the local authority’s complaints procedure. 

The court at first instance dismissed the stay application, on account of the principle 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”. 

On appeal from the council, the Court of Appeal decided that the first instance judge had not been bound by the comments in Halsey given the decision related to costs. It held that courts could lawfully order that parties engage in ADR provided that the order was proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.

The Court of Appeal relied on the Civil Justice Council’s June 2021 Report on Compulsory ADR to support the decision that such an order would not violate parties’ Article 6 right to a fair trial. The Report considered that any form of ADR which was not disproportionately onerous and did not impede the parties’ effective access to the court would not violate Article 6 rights – rather, ADR should be considered an integral step in the dispute resolution process.

The Court of Appeal declined to set out a fixed set of rules that would govern when the power to order ADR should be exercised and the appropriateness of such an order is to be considered in all the circumstances of the case.  Factors will include the likelihood of success of the proposed form of ADR and the proportionality of its cost.

It will remain to be seen how often judges choose to exercise this power, but this follows the judicial trend towards intervening in favour of ADR. A 2-year compulsory mediation pilot scheme started in May 2024 for County Court claims that would normally be allocated to the small claims track (being valued at under £10,000, as well as other criteria). Through the HMCTS Small Claims Mediation Service, all parties are invited to a free, one-hour mediation session. The mediator speaks to each side separately and works to find a solution that both parties will agree on. Failure to attend the scheduled mediation call without good reason could lead to sanctions such as costs orders or even strike out.

This is the first stage of the government’s plan to progressively impose mandatory mediation into higher value claims in the County Court, within the fast-track (£10,000-£25,000) then multi-track (above £25,000).

Agreeing to settle (at a mediation or otherwise) of course remains entirely voluntary. Given the high success rates of mediation in settling disputes and the sanctions that could be imposed where parties unreasonably refuse to engage in ADR, parties should consider mediating where appropriate even where it is not ordered or compulsory. 

As for the increasing number of parties who will be required to mediate, they would be well advised to properly engage in the process rather than simply go through the motions.