In an important decision, the Court of Appeal held in Churchill v Merthyr Tydfil County Borough Council, that courts can order unwilling parties to participate in alternative dispute resolution (ADR) or stay (pause) the proceedings to allow them to engage in ADR. However, it also noted that such an order or stay should not restrict the claimant’s right to proceed to a judicial hearing. Furthermore, it must be proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at a reasonable cost.
Alternate Dispute Resolution
Alternate Dispute Resolution (ADR) includes several out-of-court dispute resolution processes, which are often quicker and certainly less costly than full-blown court proceedings. One example is mediation, where the parties appoint an independent third party to help resolve the issues between them. The process does not prevent court proceedings from being brought; it simply delays the parties’ participation in such proceedings while attempts first to resolve the issues at mediation are undertaken.
Courts have generally taken the approach that following the Court of Appeal’s decision in 2002 in Halsey v Milton Keynes General NHS Trust (Halsey), they can encourage but not compel parties to engage in ADR. In this case, Lord Justice Dyson said that ordering unwilling parties to mediate was likely a breach of the right to a fair trial under Article 6 of the European Convention on Human Rights.
In 2021, however, the Civil Justice Council (CJC) published its report on ‘Compulsory ADR’, in which it concluded that compulsion to use ADR is lawful and should be encouraged. In July 2023, it was also announced that all civil disputes up to the value of £10,000 would have mediation as a compulsory part of their county court litigation process.
The Facts
The claimant started proceedings against the local authority for damages of up to £43,000 to his property caused by Japanese knotweed, which had spread to his property from neighbouring land owned by the local authority. On receiving the claimant’s pre-action letter of claim, the authority invited the claimant to use its internal complaints procedure to resolve the matter. It made it clear that if he decided to issue proceedings without engaging in this procedure, it would apply to the courts for a stay and would also seek its costs. Nevertheless, the claimant did not engage with the internal complaints procedure and continued to issue proceedings against the local authority, who in turn, then applied for a stay.
The First Instance Decision
The deputy district judge found that the claimant had acted unreasonably by failing to engage with the defendant’s internal complaints procedure and behaved contrary to the general pre-action protocol. However, he nonetheless concluded that he was bound by comments made by the Halsey case, in which Dyson LJ’s remarks were perceived as suggesting that compelling unwilling parties to mediate would constitute a breach of the right to a fair trial under Article 6 of the ECHR. The deputy district judge therefore dismissed the local authority’s application to stay the proceedings.
Given that the case raised important issues, it was transferred directly to the Court of Appeal, where three leading commercial mediation organisations – Civil Mediation Council (CMC), the Chartered Institute of Arbitrators (CIArb) and the Centre for Effective Dispute Resolution (CEDR) as well as the Law Society intervened intending to have the Halsey decision reviewed and possibly overturned.
The Court of Appeal’s Decision
The Court of Appeal allowed the appeal in part, finding that the courts can stay proceedings to order parties to participate in ADR, such as mediation. Giving the unanimous decision on behalf of the Court of Appeal, Master of the Rolls, Sir Geoffrey Vos, said that the comments made in Halsey that the compulsion of ADR would be regarded as an unacceptable constraint on the right of access to the court, and therefore a violation of Article 6 was obiter (comments made in passing) and not part of the main judgment in that case. Therefore Dyson LJ’s comments in Halsey, while influential, were not binding on the lower courts.
As a result, Vos MR went on to say that the courts do have the authority to stay proceedings for, or to order, the parties to participate in a non-court-based dispute resolution process. In his view, this approach was supported by the Civil Justice Council’s June 2021 Report on Compulsory ADR. This report concluded that any form of compulsory ADR that was not ‘disproportionately onerous and does not foreclose the parties’ effective access to the court’ was lawful. Vos MR also noted that experience has shown that it is extremely helpful for the parties to be able to resolve their differences cheaply and quickly. Even with initially disinclined parties, mediation can often be effective.
However, the Court of Appeal did note that any order to stay proceedings to oblige the parties to engage in ADR must:
- ‘not impair the claimant’s right to proceed to a judicial hearing and
- be proportionate to settling the dispute fairly, quickly and at a reasonable cost’
It did not, nevertheless, set out any guidance as to how or at what stage in the litigation it should decide to make such orders. In this regard, Vos MR commented that it ‘would be undesirable to provide a checklist or score sheet for judges to operate’. It would not be the case that some form of ADR will be ordered in every case; instead, mediation and other forms of ADR are available to the court ‘as part of the toolbox of case management options’. It will then be up to the individual judge to decide, based on the circumstances of each case, whether it would be appropriate to order parties to take part in some form of settlement process.
Our View of Mandatory ADR
This important judgment comes at an appropriate time and is unsurprising given the recent commitment from both the judiciary and the government to dispute resolution.
ADR can be a highly effective way of resolving a dispute which, if successful, can avoid the expense, stress, time and publicity of litigation. As a result, the Court of Appeal’s decision in this case is a positive development that allows individual judges to insist that parties attend mediation if they feel that it would benefit the parties to engage in such settlement discussions.
It is important to note that while the decision in Churchill gives mediation a more important role in dispute resolution, it does not go as far as making it a mandatory step in all court cases. Furthermore, it makes it clear that even if the court does make an order that mediation should take place, this does not make it compulsory to settle at or after the mediation. Nor does it deny parties the right to continue with the court process to trial if they are unable to settle.
At Witan Solicitors, we have years of experience in both commercial litigation and mediation. If you are considering litigation to resolve a dispute or wish to explore alternatives to it, contact our expert dispute resolution team at info@witansolicitors.co.uk.
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