Alternative Dispute Resolution refers to any method of resolving a civil dispute. Often, in pre-action correspondence, there will be discussions about whether ADR is appropriate, who will pay for it, and what form it should take.
Mediation, which is quite common in small-claims cases, is a process by which a neutral person acts as mediator to help the parties negotiate a settlement. Before a court claim is issued, there was no compulsory requirement for the parties to enter into any form of ADR, despite its usefulness in resolving complaints.
Mediation is, however, becoming strongly encouraged as a means to avoid civil litigation, which can be an unpleasant process despite the great work of lawyers in this area.
Many disputes have been amicably resolved before litigation, with the parties achieving mediation around a table to everyone’s benefit. The overriding objective under the CPR encourages parties to consider settlement throughout the process, and it therefore comes as no surprise that, following Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416, the CPR were amended in October 2024. Courts can now order parties to engage in ADR, sanction those who unreasonably refuse, and treat ADR as part of the overriding objective.
This marks a significant shift, often called the “Churchill revolution”, which embeds the promotion of ADR into CPR 1.1. Under active case management, courts may now encourage ADR and, using their powers under CPR 3, order it to take place.
Therefore, ADR is no longer optional. All parties must consider it and may be ordered to participate.
It has yet to be established what sanctions might follow if a party refuses to take part in ADR. However, the prospect of a claim or defence being struck out feels increasingly likely. This will inevitably lead to an influx of Denton-type applications for relief.
If your business is grappling with compulsory mediation or any other dispute-resolution hurdles, the Lawgistics legal helpline is only a phone call away for practical, tailored guidance.
It will be worth keeping a close eye on how this develops.
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