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Alternative Dispute Resolution – should it be compulsory?

The Civil Procedure Rules (the “CPR”)

The CPR encourages parties to engage in alternative dispute resolution (“ADR”) to resolve disputes. The CPR sets out details of the overriding objective at CPR 1.1, which expressly states that a case must be dealt with justly and at proportionate cost. CPR 1.4 refers to the court’s duties to encourage parties to use ADR and assist parties to settle the whole or part of a case.

The Court has at its disposal case management tools i.e., implementing a stay of proceedings for parties to attempt ADR in accordance with CPR 26.4(2A).

 

The Report

A report was released on 12 July 2021 by the Civil Justice Council (the “Report”) which states that “mandatory (alternative) dispute resolution is lawful and should be encouraged”. This approach differs significantly from the principles established by the Court of Appeal case of Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002 (“Halsey”). In Halsey, Lord Justice Dyson asserted that due to Article 6 of the European Convention on Human Rights (“Article 6”), forcing parties to mediate would infringe their right to a fair trial.

 

ADR

The appeal of ADR to parties involved in disputes is that they can refuse to settle and retain the option of returning to court.

In accordance with the Report, ADR is a collective term referring to all forms of dispute resolution that require a third party to assist in settlement. The different methods of ADR include:

  • Arbitrations;
  • Expert determinations;
  • Evaluative appraisals; and
  • Mediations.

Since Lord Justice Dyson’s judgment in Halsey, the courts have struggled with the issue of how far they are able to go to force parties to engage in ADR.

 

Halsey

In the Judgment of Halsey, Lord Justice Dyson rejected mandatory ADR on two grounds:

  1. It would be unlawful to impose mediation on the basis it is does not allow a party the right to a fair trial in accordance with Article 6, which is the legal argument; and
  2. Ordering parties to engage in a mediation which they objected to would only increase costs and achieve nothing.

A non-exhaustive list of considerations to establish whether mediation had been unreasonably refused was established in the Halsey judgment and are known as the “Halsey Principles”. The courts have relied upon the cost risks associated with the formal court procedure to encourage parties to engage in ADR. There have been a number of significant cases since Halsey including the case of McParland v Whitehead [2020] Bus LR 699 in which it was determined that a court could make an order for mandatory mediation, despite the decision in Halsey. In the absence of a decision from the legislature or an appellate court, Halsey remains the case to which the Court refers.

 

Comments in the Report

It was decided that a party’s access to the court, in accordance with Article 6, will not be fettered by a form of ADR which is not disproportionately onerous. The authors of the Report believe that when an order requiring the parties to engage in ADR is not complied with, strike out of the claim or defence would be an appropriate sanction. It was also suggested that further “compulsory elements of ADR” should be introduced.

 

Conclusion

Parties tend to perceive ADR as an external component to the civil justice system and the Report highlights it as a key feature of dispute resolution. The difficulty will be establishing a procedure whereby all varieties of disputes will be accommodated. Some cases are better suited to particular forms of ADR than others and the timing of ADR will very much be case dependent too.

 

If you would like to discuss anything relating to this article or are considering entering into ADR yourself and would like some advice, please contact Gemma Dreyfuss at [email protected]

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