Proposed rule changes regarding the court's power to compel ADR

The Civil Procedure Rule Committee (CPRC) is consulting on draft amendments to the Civil Procedure Rules regarding the court's power to order litigants to engage in alternative dispute resolution (ADR).  The proposed changes are intended to reflect the landmark Court of Appeal decision late last year in Churchill v Merthyr Tydfil Borough Council [2023] EWCA Civ 1416.

As we previously reported (here and here), the Churchill decision held that the English courts do have the power to stay civil proceedings for, or order, parties to engage in mediation or some other non-court-based dispute resolution process - provided that the order does not impair the very essence of the claimant’s fundamental right to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.  That ruling overturned what had for nearly 20 years been widely accepted as a general prohibition on the English courts compelling ADR, based on Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576.

The rule changes have been proposed by a multijurisdictional CPRC working group set up to consider the impact of Churchill, chaired by Lady Justice Asplin (Court of Appeal).  They are relatively straightforward and unsurprising, amending:

• CPR 1.1 - to add that the overriding objective of dealing with cases justly and at proportionate cost includes, so far as practicable, "using and promoting [ADR]"
• CPR 1.4 and 3.1 - to confirm that the courts' general case management duties and powers include not just encouraging but ordering parties to participate in an [ADR] procedure where the court considers appropriate
• Parts 28 (fast/intermediate tracks) and 29 (multitrack) – to confirm that the matters the court should consider when making case management directions include "whether to order or encourage the parties to participate in [ADR]"
• Part 44 - to add that, when the court is exercising its general costs discretion, its consideration of the parties' conduct may include "..whether a party failed to comply with an order for [ADR], or unreasonably failed to participate in [ADR] proposed by another party".

(NB.  All references to "alternative dispute resolution" link to the definition in the CPR Glossary: "Collective description of methods of resolving disputes otherwise than through the normal trial process". There does not appear to be any proposal to alter that definition).

The consultation closes on 28 May 2024.

What will the changes mean in practice?

The rule changes in themselves are unlikely to be controversial, given that they are limited to acknowledging the court's power to order ADR, rather than addressing the much more nuanced issue of when and how that power should be exercised.

That is consistent with the Churchill judgment itself, where the Court of Appeal deliberately declined to lay down fixed principles as to when such an order should be made.  The court noted several factors that may be relevant but acknowledged that there may be many others, depending on all the circumstances, and that "it would be undesirable to provide a checklist or a score sheet for judges to operate."

That approach is welcome. The power applies to a very broad range of disputes across the civil justice system, and the factors that influence whether and when ADR will be appropriate (under compulsion or otherwise) differ markedly between different types of claims.

With regard to complex commercial litigation, our earlier posts here and here discuss some of the key relevant features. In particular, the parties will generally be both sophisticated and well-advised and will almost invariably decide of their own initiative to undertake mediation, or another form of ADR, at an appropriate stage. However, the important question of timing will be influenced by numerous case-specific factors, and the parties and their representatives are often best placed to assess this - albeit possibly with some judicial prompting to encourage them to undertake that assessment as early as possible and revisit it regularly.  As observed here, it seems unlikely that judges in complex commercial cases will consider it appropriate to use the newly-recognised power of compulsion on a regular basis, instead reserving it for only the most intransigent parties and only as a last resort.

Will there still be costs sanctions for unreasonably refusing an opponent's ADR proposal?

The Churchill decision has naturally prompted questions as to where it leaves the court's longstanding power (confirmed in Halsey) to impose costs sanctions on a party who has unreasonably refused an opponent's proposal to engage in ADR.

As discussed here, the two powers are not identical and there would not appear to be any inherent logical inconsistency in the court imposing such costs sanctions despite not having exercised its powers of compulsion.

The draft amendments to Part 44, above, seem to support that - suggesting that at least the CPRC working group assumes that the costs sanctions power will continue to operate in at least some form alongside the power of compulsion. However, the interrelationship between the two powers is likely to be played out in the courts.