On 1 October 2024, the new Civil Procedure Rules (CPR) on alternative dispute resolution (ADR) came into effect to reflect the landmark decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416, in which the Court of Appeal held that the courts could compel disputing parties to engage with ADR.
In this article, we briefly revisit the decision in Churchill, discuss the new ADR rules, and consider the likely impact of the rules on civil litigation.
Churchill
In Churchill, the Court of Appeal considered three points of principle. The first was whether the comments of Dyson LJ in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 were binding.
In Halsey, Dyson LJ said that to compel parties to engage with ADR would undermine their right to a fair trial. In Churchill, the court held that those comments were not binding because the passage on which the judge at first instance relied was not a necessary part of the reasoning that led to the Court of Appeal’s decision in Halsey (ie, Dyson LJ’s comments were obiter, not ratio).
The second issue was this: if Halsey was not binding, can the court lawfully stay proceedings or order the parties to engage in a non-court-based dispute resolution process? The Court of Appeal held that the courts could do this provided that the order:
- does not undermine the parties’ right to a fair trial;
- is made in pursuit of a legitimate aim; and
- is proportionate to achieving that aim.
The third issue of principle was how the court should decide whether parties should be ordered to engage with ADR.
On this, the Court of Appeal refused to give a checklist of factors, but said the factors identified by the Bar Council (for example, the form of ADR, whether the parties were legally advised or represented) and the Halsey factors (for example, the merits of the case) will be relevant.
The new ADR rules
The new ADR rules are as follows:
The overriding objective has been amended to make clear that the court’s obligation to deal with a case justly and at proportionate cost includes ‘promoting or using alternative dispute resolution’ (r1.1(2)(f)).
Active case management by the courts now includes ‘ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution’ (r.1.4(2)(e)).
The court may, as part of its general case management powers, ‘order the parties to engage in alternative dispute resolution’ (r3.1(2)(o)).
The rules on procedural directions for the fast track and the multi-track include the need for the court to consider whether to ‘order or encourage the parties to engage in alternative dispute resolution’ (r28.7(1)(d) and r28.14(f)).
When considering the conduct of the parties for the purposes of costs, the court may take account of ‘whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution’ (r44.2(5)(e)).
Impact
The new ADR rules further enhance and reinforce the role of ADR within the civil justice system. Although it is far too early to report on the courts’ approach to the new rules, it is likely that the courts will, in appropriate cases, order parties to engage with ADR at the first hearing, and this may be the case even though the parties may have engaged with ADR at the pre-action stage (see Francis v Pearson [2024] EWHC 605 (KB)).
The new ADR rules also allow a party to the dispute to request that the court make an ADR order regardless of the wishes of the other party – whether an ADR order is made will be for the court to decide but given the growing importance of ADR it is likely that such orders will be made.
The rules also have the effect of ensuring that the courts and the parties are continuingly revisiting the ADR through the life of the litigation.
Finally, the courts will continue to exercise their powers in costs to penalise any party that has unreasonably refused to engage with ADR. This is clear from a number of post-Churchill decisions but prior to the new rules coming into effect, including Conway v Conway and another [2024] EW Misc. 19 (CC) in which HHJ Methani KC said: ‘The importance of mediation can never be over-emphasised: see, for example, the recent decision of the Court of Appeal in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416. The defendants will have to advance compelling reasons why the offer of mediation was rejected out of hand by them.’
The defendants were later penalised in costs for their failure to engage with mediation (see also Northamber Plc v Genee World Ltd and others [2024] EWCA Civ 428 and Thakkar v Patel [2017] EWCA Civ 117).
Masood Ahmed is an associate professor of law at the University of Leicester, and a member of the Law Society’s Dispute Resolution Committee. Lal Akhter is director of Docket Live and an unregistered barrister
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