Compulsory ADR – What does this really mean for the litigating parties?
On 12 July 2021 the UK Civil Justice Council (CJC), responsible for advising the Lord Chancellor, the Judiciary and the Civil Procedure Rule Committee on civil matters, published a report concluding that Alternative Dispute Resolution (ADR) is compatible with Article 6 of the European Human Rights Convention making it possible for the Courts of England and Wales to lawfully mandate alternative dispute resolution.
The role of ADR
For those unfamiliar with litigation, ADR is an umbrella term for four main avenues to dispute resolution: mediation (or conciliation), negotiation, arbitration and early neutral evaluation. ADR aims to assist parties in exploring settlement, with the freedom to return to the judicial process if ADR is not successful. In some cases, parties will have agreed by contract to attempt ADR before litigation and contravention of that term in the contract allows the Court to stay the proceedings. Alternatively, in cases of family, employment or low value RTA personal injury cases, the use of ADR may already be compulsory to an extent. However, outside of these areas, there is no legal requirement for litigants to adopt ADR methods to resolve commercial disputes, though all pre-action protocols do require parties to consider if ADR is suitable.
Until this report, guidance on the role of ADR in the civil justice system was available via caselaw decisions such as that of LJ Dyson (as he then was) in the 2004 Court of Appeal case of Halsey v Milton Keynes. Lord Dyson was clear about the role of mediation in the civil justice system as an optional tool for parties, stating that mandatory mediation involving unwilling parties would be akin to an “unacceptable obstruction on their right of access to the court”. Secondly, he added that mandatory mediation could cause parties who were unwilling to mediate to incur additional costs, making the concept of compulsory ADR undesirable and contrary to the court’s role which “is to encourage, not to compel”. On the contrary, decisions since Halsey have seen the courts take steps to penalise a party found to have unreasonably refused ADR with a punitive costs order. In fact, the 2019 case of Lomax v Lomax found that the court does have the power under the Civil Procedure Rules to order parties to attend an early neutral evaluation.
The report’s recommendations
The CJC’s report concludes that ADR is in fact both legal and desirable, contrary to the decision in Halsey and sets out the benefits of compulsory ADR. An early review of the reception this report has received should indicate to litigants and their legal representatives that implementation of compulsory ADR is reasonably foreseeable.
It must be accepted that not all matters are suitable for mediation. For this reason, the CJC recommends that when exercising its jurisdiction to compel ADR, the court should consider a number of factors to guide its decision, to name a few, the cost and time-burden on the parties, the stage of the proceedings at which ADR might be required and whether the process is suitable in certain specialist areas of civil justice.
It is clear that what works in one case, will not necessarily work in another. Instead, the report emphasises the need for public legal education on the benefits and suitability of ADR. The creation of resources that clearly explain how to access different types of ADR, and the regulation of ADR providers to help increase confidence in the process.
Introducing compulsory ADR
The CJC’s report suggests that compulsion is not limited to case management, and could be achieved by introducing compulsory ADR as an “automatic requirement” for commencing or proceeding with litigation. But how useful is ADR when parties are unable to understand the claim in full or indeed unable to quantify settlement? It appears the happy medium might be at a point where the parties have exchanged sufficient information and costs incurred are still at a reasonable level.
How much will it cost? The CJC’s report suggests that compulsory ADR should be at “no expense of time or money to the parties” and disproportionately expensive, unreasonably time-consuming or burdensome ADR could be in breach of Article 6. Whilst this may seem desirable, it is also worth considering the level of investment in mediation when a party is not concerned about the cost of doing so. It would defeat the object if compulsory ADR became no more than a box-ticking exercise. A way to by-pass this issue could be ADR orders subject to sanctions, such as strike-out of a claim or defence.
In order to protect a party’s access to justice and prevent a breach of Article 6, it would be imperative that parties retain the right to return to the judicial process at all stages if ADR is not successful.
What are the benefits to ADR?
Overall, compulsory ADR could prove beneficial in saving resources, not just for the court but also the parties by encouraging would-be-litigants to take a realistic view of the case before them from the outset. It may even assist parties to narrow pertinent issues and encourage early disclosure, thus reducing the time and expense of litigation. In order to successfully implement compulsory ADR, the justice system must acknowledge that that application of a mode of ADR and at what stage in the proceedings will depend on the type of case. For example, in some cases it may be useful to implement ADR at the outset before issuing a claim. For other cases, it may be a better use of resources for parties to have fully set out their pleadings and appreciated the likely future costs of the case before a realistic view on settlement can be taken.
The CJC’s report certainly provides some food for thought, and highlights to litigants and their legal representatives alike that the justice system recognises the importance of dispute resolution and how ADR can be utilised to the parties’ advantage, to help save on valuable time and expense during what can often become a costly legal battle.
Malaika Jawed, Associate, BLM
Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to clients of BLM. Specialist legal advice should always be sought in any particular case.