October Litigation Update: Mandatory ‘Alternative Dispute Resolution’

October Litigation Update: Mandatory ‘Alternative Dispute Resolution’

Author: Emily John

Key Contact: Aisha Wardell

The Civil Procedure (Amendment No 3) Rules 2024 (‘CPR’), came into force on 1 October 2024. The changes to the CPR reflect the decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ. 141.

The Courts in England and Wales can now order parties to engage in Alternative dispute resolution (“ADR”) where such an order is proportionate and does not undermine the parties’ right to a judicial hearing.

What is ADR?

ADR is any method used to settle a case that is not proceeding to Court. Forms of ADR include:

1. Without Prejudice meetings between parties
2. Mediation

Mediation is often a successful form of  ADR. It is attended  by a 'mediator', which is a neutral person. The mediator is impartial, which means they do not take sides. They are there to try and encourage the parties   involved find a solution  which they can all agree upon.

Mediation is a great way to  seek to mend the relationship of the parties, agree on a settlement that each party can live with whilst avoiding incurring the costs of defending/pursuing proceedings. It can often provide outcomes which a Court could not order.

ADR: the Decision in Churchill

In November 2023, the Court of appeal unanimously held that Courts have the power to stay proceedings and order the parties to engage in out-of-court ADR processes, provided it does not restrict the claimant’s right to a judicial hearing and is “proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost”.

Key changes to the CPR due to this decision include:

1. The overriding objective of enabling the Court to deal with cases justly and at proportionate cost now includes “promoting or using alternative dispute resolution”.
2. The Court’s duty to actively manage cases now includes “ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution”.
3. The Court’s general powers of management now include the power to “order the parties to engage in alternative dispute resolution”.
4. When the Court exercises its discretion as to whether to make an order as to costs, in considering the conduct of the parties, the court must have regard to “whether a party failed to comply with an order for ADR or unreasonably failed to engage in ADR”.

For help understanding the impacts of the amendments to the CPR, please contact our Litigation Team.