Please note that this News item is not maintained, and reflects the law as at the date of publication or update.
The Civil Procedure Rules (“CPR”) (the rules that govern civil court proceedings in England and Wales) have recently been amended to incorporate a key development in case law.
Background: The 2023 Court of Appeal Decision
In 2023 the Court of Appeal addressed the question of whether a court could lawfully order parties to engage in ADR – a process of resolving disputes without the normal trial process. For example, ADR could include mediation, which is the assistance of a neutral third party to facilitate the disputing parties negotiating a resolution themselves.
Courts’ Power to Order ADR
The court stated that such an order is lawful, provided that it is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly, and at reasonable cost. This finding marked a significant development in the law, as it clarified that courts do have the discretion to compel parties to engage in ADR.
Changes to the Overriding Objective (CPR 1.1)
Consequently, the overriding objective in the CPR (CPR Part 1.1), has now been amended to refer to the promotion of ADR methods at CPR 1.1 (f). Judges now have the clear and express power to order ADR in court proceedings and courts are obliged to consider ordering ADR in all fast track, intermediate track and multi-track claims.
New Cost Penalties Under CPR Part 44
Importantly, a penalty has also been added to the CPR at Part 44, which is the rule governing costs. It now states that failure to comply with an order for ADR or unreasonable failure to participate in ADR could have adverse cost consequences.
The Importance of Considering ADR
It is therefore imperative that parties consider ADR during litigation and that they are aware of the consequences of failing to do so. Cost penalties may be imposed on parties who unreasonably refuse to engage in ADR. Additionally, ADR can be a very useful way to avoid the escalation of conflicts and maintain goodwill between parties. Even if the dispute cannot be fully settled via ADR, processes such as mediation can help the parties narrow the issues in a particular dispute, which can potentially save time and costs in subsequent litigation.
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