Courts can compel parties to engage in ADR: Court of Appeal finds comments to the contrary in Halsey not binding

In a landmark decision handed down today, the Court of Appeal has held that the court can order the parties to engage in ADR, or stay the proceedings to enable them to engage in ADR, provided that the order does not impair the essence of the claimant’s right to a fair trial, and it is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost: Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416.

The Court of Appeal's decision does not, however, lay down fixed principles as to when such an order should be made. The court noted that many factors may be relevant, depending on all the circumstances, and it would not be desirable to provide a checklist or score sheet for judges to operate.

The court's decision is consistent with the general direction of travel on the part of the government and the civil judiciary in recent years, which has been toward embedding ADR into the litigation process including by compulsion if necessary (as illustrated by the recent announcement of new powers to compel ADR in County Court Small Claims and the Employment Tribunals).

In the context of complex commercial litigation, however, the Civil Justice Council recently recognised a concern that an attempt to mandate when the parties should mediate, particularly at the pre-action stage, could be counterproductive. It is therefore welcome that the Court of Appeal has not, in the present case, sought to lay down any set rules as to when the courts will order parties to engage in ADR. No doubt judges in such cases will take into account the nature of the dispute and the sophistication of parties in determining whether it is appropriate to compel the parties to mediate, or whether they should be allowed the flexibility to determine for themselves when the time is right.

For more information see this post on our ADR Notes blog.