Is Mediation Compulsory? Recent Court Of Appeal Decision

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Is Mediation Compulsory? Recent Court Of Appeal Decision

Key Contact: Aisha Wardell

Author: Rachel McCulloch

The Court of Appeal’s landmark decision in Churchill v Merthyr Tydfil County Borough Council 2023 (“Churchill”) means that courts can lawfully order parties to engage in alternative dispute resolution (“ADR”) and stay proceedings to allow parties to do so. ADR refers to a variety of ways to resolve disputes without a trial, the most common being mediation.

Prior to this recent decision, the courts tended to follow Lord Justice Dyson’s comments in Halsey v Milton Keynes General NHS Trust 2004 (“Halsey”), in which he said ordering parties to engage in mediation could infringe a party’s right to court access, and may also be a breach of Article 6 of the European Convention of Human Rights (the right to a fair trial).

Background to Churchill

The Claimant brought a claim for damages caused by Japanese knotweed encroaching onto his property from the neighbouring property owned by the Defendant, allegedly causing damage, a reduction in his property’s value, and a loss of enjoyment. The Defendant applied for a stay of proceedings on the basis the Claimant should first have used its internal complaints procedure before issuing formal proceedings.

The County Court Judge held he was bound to follow Halsey and to force unwilling parties to refer their dispute to mediation would be to impose an unacceptable obstruction to their right of access to the court. Accordingly, the Judge refused to grant a stay of the proceedings, but he did grant the Defendant permission to appeal to the Court of Appeal as it raised an important point of principle and practice.

Court of Appeal Judgement

 The Court of Appeal considered Lord Justice Dyson’s comments in Halsey and unanimously agreed the comments were obiter dicta and was not the essential reasoning behind the decision. Consequentially, courts are not bound by Lord Justice Dyson’s comments. The Court also referred to the Civil Justice Council’s “Compulsory ADR” Report from June 201 which stated, “…it is compatible with Article 6 for a court or a set of procedural rules to require ADR.”

The Court of Appeal held that courts have the authority to lawfully stay proceedings for ADR, or order the parties to engage in ADR, if it is proportionate to achieving the aim of settling the dispute fairly, quickly, and at reasonable cost, and the parties’ right to a judicial hearing is preserved.

What does this mean?

The Court of Appeal’s decision in Churchill is not an absolute rule that all parties must engage in ADR, such as mediation, but is perhaps a step towards the move to compulsory ADR. The Court of Appeal declined to set fixed principles that would be relevant to determining whether proceedings in a case should be stayed for ADR and so each case will need to be considered on its specific facts.

Regardless, in all cases under the Civil Procedure Rules, parties must consider whether ADR will be appropriate. Litigation and court proceedings should be a last resort and all parties should consider whether ADR may help them settle proceedings, or at least narrow the issues in dispute. ADR can be a cheaper and quicker way to resolve disputes, where it is appropriate, but must not impede a party’s right to a trial.

If you wish to discuss the points raised in this article, please contact our Commercial Litigation Team and we will be happy to help.

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