Legal Update: Recent Case Law and The Continued Rise of ADR

ConstructionLitigation & DisputesImportant Updates

28 Oct

Introduction

This note considers recent developments in the law and practice of alternative dispute resolution (ADR), outlining its implications for parties to disputes, and investigates the implications of recent relevant changes to the Civil Procedure Rules (CPR). In this context ADR is taken to mean mediation (although some definitions include negotiation, arbitration, adjudication and expert determination). Case law and the amendments suggest that the courts are placing a greater emphasis on ADR to an extent that is close to making it mandatory in some instances.

Case Law

Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576

The general rule is that a successful party to litigation should be awarded its costs. If a party unreasonably refuses to agree to ADR, it may be refused its costs even if it is successful. However, Dyson LJ stated that nevertheless “if the parties (or at least one of them) remain intransigently opposed to ADR, then it would be wrong for the court to compel them to embrace it”.

James Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416

The Court of Appeal held that proceedings should be stayed and, subsequently, ordered the parties to engage in ADR. In his judgment, Sir Geoffrey Vos, MR, asked “can, despite what Dyson LJ said in Halsey, the court lawfully stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process?” to which he answered himself “In my judgment, that power does indeed exist”. This makes it clear that in what the court considers an appropriate case, it will not hesitate to require the parties to mediate.

Northamber PLC v Genee World Ltd & Ors (Rev1) [2024] EWCA Civ 428

The Second and Third Defendants were both unresponsive to offers of mediation. The Court of Appeal followed Halsey and ordered a 5% costs penalty, increasing the Claimant’s costs recovery to 75%. Reinforcing the above principles, Lord Justice Arnold stated: “I consider that the correct response would be to impose a modest, but not insignificant, costs penalty”.

Amendments to the CPR

The overriding objective, contained in CPR 1 requires the parties to assist the court in its obligation to deal with cases justly and at a proportionate cost. By the Civil Procedure (Amendment No.3) Rules 2024, which came into force on 1st October 2024, the objective has been amended to include so far as practicable “promoting or using alternative dispute resolution”. Additionally, under CPR 1.4, the court’s duty to manage cases now includes “ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution”. This provides the court with additional ammunition to order or encourage parties to engage in ADR.

What it means

New case law illustrates how the courts have, and will sometimes use, the power to sanction parties who choose not to engage in ADR. The recent amendments to the CPR further demonstrate the court’s growing authority to ensure that parties are engaging in ADR.

For advice on disputes, please contact Julian Critchlow.