Compulsory Alternative Dispute Resolution (ADR) on The Horizon

By Sam Cook

Partner

The Civil Justice Council has concluded that parties to civil litigation can lawfully be compelled to participate in ADR (alternative dispute resolution). In their June 2021 report the CJC considered that compulsion would be compatible with the Article 6 right to a fair trial, as set out in the European Convention on Human Rights. According to the Master of the Rolls this marks a “significant shift towards earlier resolution”.

ADR refers to any means of resolving disputes other than through the courts, from negotiation through to more formal processes. It often involves an independent third party (eg a mediator, expert or judge) whose role is typically to assist the parties in reaching their own solution, though the parties may agree that any decision made by the third party is binding on them. It differs from litigation in that it is an essentially voluntary process. Examples of ADR include mediation, expert appraisal, expert determination and early neutral evaluation.

The CJC were asked to report on the legality and desirability of compulsory ADR e.g. either giving Judges the power to force parties to attempt ADR, or ADR being an automatic requirement before commencing litigation.

In relation to “legality”, the CJC considered the decision in Halsey v Milton Keynes [2004] 1 WLR 3002. The court’s view in Halsey was that compulsory mediation would be an “unacceptable obstruction” on the parties right of access to the court. By contrast, the CJC considered that where a return to a normal court process remains available, appropriate forms of compulsory ADR could be introduced.

In relation to “desirability”, the court in Halsey told us that compulsion “would achieve nothing except to add to the costs to be borne by the parties, possibly postpone the time when the court determines the dispute and damage the perceived effectiveness of the ADR process”.  Against this, the CJC has now suggested certain factors could point towards compulsory ADR being appropriate. For example, it might be in circumstances where there is a minimal cost and time burden on the parties; where there is a high level of confidence in the neutral person / ADR provider; and where both parties have access to legal representation.

Parties to civil litigation might therefore anticipate changes to the procedural rules to be made in due course, expanding the circumstances in which a court may compel ADR. It is worth noting that the courts already have limited powers in this regard. Rule 3.1(m) of the Civil Procedural Rules empower the court to take steps or make orders for an Early Neutral Evaluation hearing, with the aim of helping the parties to settle the case. Similarly, procedural rules relating to family financial disputes, the Small Claims Protocol for low value personal injury claims arising from road traffic accidents, and the Employment Tribunal can require the parties to engage in ADR. But these rules are not universally applicable. They do not, for example, extend to compulsory mediation in other contexts, a form of ADR which can be a highly effective, though relatively expensive.

The CJC’s report does not set out any reform proposals. However, the authors observe that judge-led ADR processes, often being highly effective, might be applied to a wider range of cases. And they suggest that better-regulated compulsory mediation in “shorter, cheaper formats” should also be considered. Now, they suggest, an appellate court and/or Parliament should consider the views expressed in Halsey afresh to enable procedural reform in this area.

So, unless or until an appellate court and/or Parliament takes the matter forward, the CJC’s conclusions will perhaps prove to be little more than a catalyst for further judicial encouragement of ADR.

In any case, if a settlement is likely to be reached, we would advise clients that it is usually better to do so at the earliest opportunity, perhaps by means of ADR, to avoid further legal costs or to maximise cost recovery. The case of Dunnett v Railtrack plc [2002] 1 WLR 2434 established the principle that victorious parties in litigation could still be penalized on costs if they had unreasonably refused to mediate.

Where an opposing party to litigation is reluctant to engage, clients may therefore welcome additional compulsory ADR for the chance to minimise legal costs. But other clients, perhaps claimants facing a weak or opaque defence, will not relish the prospect of the additional cost burden of ADR, especially if it might postpone the time when the court determines the dispute. In such circumstances it may be appropriate for clients to delay or even avoid ADR. Whilst this currently remains an option, it may become more problematic if/when reform arrives in this area.

Nockolds regularly advises clients on the appropriate form of ADR suitable for their case and offers a range of skills in ADR.

For more information and to find out how we can help you, please contact us on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.