Alternative Dispute Resolution in Civil Litigation

Introduction

Alternative dispute resolution (ADR) encompasses a range of processes for resolving disputes without litigation. The Civil Procedure Rules (CPR) actively encourage the use of ADR, and the courts have power to impose costs sanctions on parties who unreasonably refuse to engage in ADR. The principal forms of ADR in civil litigation include mediation, early neutral evaluation, judicial mediation, and arbitration. The court’s approach to ADR reflects the overriding objective of dealing with cases justly and at proportionate cost.

Mediation

Mediation is a voluntary, confidential process in which an independent third party — the mediator — helps the parties to reach a negotiated settlement. The mediator does not impose a decision but facilitates communication and negotiation between the parties.

The mediation process typically begins with a mediation agreement setting out the terms on which the mediation will be conducted, including confidentiality. The mediator holds plenary sessions with all parties present and private sessions with each party individually, exploring the strengths and weaknesses of each party’s case and exploring options for settlement.

Mediation is particularly effective in disputes where the parties have an ongoing relationship, where there are multiple issues to be resolved, and where the parties want to retain control over the outcome. The settlement reached at mediation is recorded in a settlement agreement, which is a legally binding contract.

Early Neutral Evaluation

Early neutral evaluation (ENE) is a process in which an independent evaluator provides an assessment of the merits of the case at an early stage. The evaluator — typically a judge, a barrister, or a solicitor — considers the parties’ submissions and provides a non-binding opinion on the likely outcome of the case.

ENE helps the parties to assess the strengths and weaknesses of their positions and to make informed decisions about settlement. The CPR provides for ENE as a case management tool, and the court may direct that ENE be undertaken in appropriate cases.

Judicial Mediation

Judicial mediation is a form of mediation conducted by a judge who is not the trial judge. The judicial mediator uses the authority and expertise of the judiciary to facilitate settlement, while ensuring that the process remains voluntary and confidential.

The Court of Appeal operates a judicial mediation scheme for suitable appeals, in which a Lord or Lady Justice of Appeal conducts the mediation. The scheme has been successful in resolving a significant proportion of referred appeals.

Costs Sanctions for Refusal to Mediate

The courts have power to impose costs sanctions on parties who unreasonably refuse to engage in ADR. In Halsey v Milton Keynes General NHS Trust (2004), the Court of Appeal held that the court may deprive a successful party of all or part of their costs if they unreasonably refused to mediate.

The court considers a range of factors in determining whether a refusal was unreasonable: the nature of the dispute; the merits of the case; the extent to which other settlement methods have been attempted; whether the costs of ADR would be disproportionately high; whether any delay in the ADR process would have been detrimental; and whether the ADR process had a reasonable prospect of success.

In Dunnett v Railtrack plc (2002), the Court of Appeal refused to order the unsuccessful party to pay the successful party’s costs because the successful party had refused to consider mediation, despite being advised by the court to do so.

Other Forms of ADR

Adjudication is a statutory dispute resolution process for construction contracts under the Housing Grants, Construction and Regeneration Act 1996. The adjudicator makes a binding interim decision that is enforceable pending final determination by arbitration or litigation.

Expert determination is a process in which an independent expert decides a specific issue, typically a technical or valuation issue. The expert’s decision is binding on the parties.

Ombudsman schemes provide dispute resolution for specific sectors, including financial services, legal services, energy, and public services.

The Court’s Approach to ADR

The CPR requires the parties to consider ADR before commencing proceedings and throughout the litigation. The Pre-Action Protocols require the parties to exchange information and to consider ADR. The court may stay proceedings to enable the parties to pursue ADR, and may direct that the parties attend a Mediation Information and Assessment Meeting (MIAM) .

The court’s approach to ADR is robust: in MBE v BNP Paribas (2023), the High Court held that the parties had a duty to engage meaningfully with ADR and that a failure to do so could result in adverse costs consequences.

Conclusion

Alternative dispute resolution is an integral part of the civil justice system in England and Wales, encouraged by the CPR and enforced through costs sanctions. Mediation, early neutral evaluation, and judicial mediation provide flexible and confidential processes for resolving disputes without litigation, reducing costs, and preserving relationships between the parties.