Mandatory ADR in Action: Ringing the Changes

17 Feb

Introduction

The role of alternative dispute resolution (ADR) in England and Wales has grown in importance since the door to mandatory ADR was opened in Churchill v Merthyr Tydfil Borough Council [2023] EWCA Civ 1416.

The courts’ powers to promote the use of ADR have been bolstered by recent amendments to the Civil Procedure Rules (CPR) effective from 1 October 2024. The amendments expressly empower the courts to “order the parties to engage in alternative dispute resolution” (ADR) (CPR 3.1(2)(o)) and consider “whether to order or encourage the parties to engage in [ADR]” (CPR 28 and 29).

Two recent cases illustrate the way in which courts are using these powers to bring the benefits of ADR to bear at different stages of court proceedings and facilitate efficient dispute resolution.

Elphicke v Times Media Ltd [2024] EWHC 2595 (KB)

A former Member of Parliament discontinued his claim for defamation against a publisher prior to trial. The defendant had incurred costs of approximately £500,000 and successfully defended its right to payment of its costs, with a discount to reflect its conduct, following discontinuance.

In her judgment, the Master took the notable step of ordering the parties to engage in mandatory pre-detailed assessment ADR in respect of the defendant’s costs. She also extended the time to commence detailed assessment proceedings to give the parties sufficient time for engage in ADR.

In making this order, the Master recognised that the significant costs had been incurred and the parties now faced the prospect of long, expensive satellite proceedings to determine what costs would be payable to the defendant. To encourage pragmatism, the Master indicated that a mediation with input from costs lawyers would be the minimum level of engagement expected.

This judgment has implications for the handling of future proceedings, with the Master indicating that “I fully expect such an order to (need to) become the norm when a judge directs detailed assessment unless costs are agreed”.

Why does it matter?

Litigants should be mindful of the court’s power to make a mandatory ADR order when considering how to approach detailed assessment proceedings. This is likely to be particularly relevant when the underlying proceedings are complex, significant costs have been incurred, and detailed assessment is likely to be time-consuming and expensive.

Parties should be prepared to either propose or be directed to engage in ADR in relation to detailed assessment of costs and will be expected to justify a failure to engage in ADR to the Costs Judge.

DKH Retail and Others v City Football Group Ltd [2024] EWHC 3231 (Ch)

A trademark dispute between the owners of the Superdry brand and the company that runs Manchester City Football Club’s commercial operations was settled following the making of an order for mediation made at the Pre-Trial Review (PTR).

At the PTR, the claimant asked the court to exercise its power to order the parties to engage in mediation. It considered the dispute to be self-contained and capable of resolution despite the failure of settlement discussions, highlighting the potential for creative solutions to be found, the significant costs that both parties would be incurred if the case continued to trial and the potential to save court time and resources.

The defendant submitted that the court should only order mediation when it had a realistic prospect of success, which it did not consider to be the case here because both parties sought and required a judicial determination of a key issue in the case. It also raised practical concerns about its limited availability to mediate and the imminent trial date.

In his judgment, Mr Justice Miles noted that “[e]xperience shows that mediation is capable of cracking even the hardest nuts”. Although the trial date was close, the parties’ positions had crystallised and a “short and sharp” mediation, which would not significantly disrupt trial preparations, might succeed.

This decision illustrates the judiciary's willingness to incorporate ADR at various stages of litigation, over party reservations, reaffirming that it is never too late to seek a mediated settlement.

Why does it matter?

Litigants must continue to consider whether it might be possible to reach a settlement throughout legal proceedings, and complying with this continuing obligation should form part of every party’s ADR strategy. Early consideration of ADR and demonstrating willingness to engage in mediation or another form of ADR can be advantageous.

ADR can help parties to resolve disputes fairly, expediently, and cost-effectively – benefits that are not extinguished as a case approaches trial. Litigants should be prepared for the possibility that a court might order ADR at any stage of the proceedings, including as a trial approaches.

Conclusion

These recent judgments signify a clear judicial endorsement of the role of ADR as a valuable tool to facilitate efficient and expedient dispute resolution. Parties are encouraged to embrace ADR not only to resolve disputes amicably but also as a strategic tool to meet judicial expectations and achieve cost-effective resolutions.

For bespoke disputes advice, contact Amanda Lee.