Mediation Is The Future

Gowling WLG


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In January 2024, we reported on the Court of Appeal decision in James Churchill -v- Merthyr Tydfil County Borough Council [2023].
UK Litigation, Mediation & Arbitration
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In January 2024, we reported on the Court of Appeal decision in James Churchill -v- Merthyr Tydfil County Borough Council [2023]. This confirmed that the court has the power to stay proceedings and compel parties to engage in alternative dispute resolution (ADR).

Following this decision, further changes are on the horizon. In this article, we outline the key developments below.

Proposed changes to rules on ADR

In April 2024, the Civil Procedure Rule Committee (CPRC) commissioned a consultation on proposed changes to the Civil Procedure Rules (CPR) on ADR.

The proposed changes flow from the decision in Churchill. The CPRC has explained that one of the key purposes of the proposal is to clarify the position established in Churchill that judges may order, as well as encourage, parties to participate in ADR. This might include mediation, or other forms of ADR such as conciliation, expert determination, or early neutral evaluation.

In summary, the proposed changes are:

  • CPR 1.1: the 'overriding objective' of the Civil Procedure Rules would be revised to add that dealing with a case justly and at proportionate cost includes, so far as practicable, using and promoting ADR methods.
  • CPR 1.4 and 3.1: these would be amended to confirm that the court's case management powers include ordering as well as encouraging parties to participate in ADR.
  • Part 28 and 29: to be amended to add that courts must consider whether to order or encourage parties to participate in ADR for fast-track, intermediate track and multi-track claims.
  • Part 44: to be revised to add that when deciding whether to make a costs order, the court will consider a party's failure to comply with an order for ADR, or unreasonable failure to participate in ADR proposed by another party.

The consultation closes on 28 May 2024 and the CPRC's aim is to finalise the CPR amendments in summer, for implementation in October 2024.

What do the proposed changes mean in practice?

While the outcome of the consultation remains to be seen, the policy direction is clear. The proposed changes underline that considering the use of ADR should be a key part of the court process.

However, whether or not ADR is ordered remains at the discretion of the court, and there are no set guidelines as to how and when the court's power to order ADR should be exercised. This echoes the Court of Appeal's comments that it would be "undesirable to provide a checklist or a score sheet for judges to operate" - judges will be well-qualified to decide whether a particular process is or is not likely or appropriate to bring about a fair, speedy, and cost-effective solution to the dispute.

There are many reasons why parties to a dispute might decide to participate in mediation, including the possibility of saving time and money on legal and management costs, protecting ongoing business relationships, or keeping disputes confidential – as well as hopefully securing a favourable early commercial resolution of the dispute. Equally, mediation can help to inform strategies for settlement and limit risk exposure where it transpires that a party's case is not as robust as initially anticipated.

Furthermore,while it has long been the case that refusal to engage in ADR will likely lead to cost consequences – enshrining this principle in the rules will make this even more clear than before.

Automatic referral to mediation for small claims

On 22 May 2024, new Practice Direction 51ZE – Small Claims Track Automatic Referral to Mediation Pilot Scheme came into force.

This means that mediation is now an integral part of the small claims process: parties will need to attend an appointment to try and resolve their case ahead of having a court hearing.

The pilot scheme, which will run from 22 May 2024 to 21 May 2026:

  • applies to claims which would normally be allocated to the small claims track;
  • provides that once all parties have filed their directions questionnaire, the claim will be referred to the Small Claims Mediation Service;
  • allows the courts to take any failure to attend mediation into account when considering unreasonable behaviour for costs purposes.

For court cases filed from 22 May 2024, attending a mediation session will therefore become a mandatory step in resolving money claims of under £10,000.

In its announcement of the scheme in July 2023, the Government commented that it was expected that up to 20,000 extra cases every year could be settled away from court under these proposals – sparing people the time and cost of litigation.

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