Taking the “alternative” out of ADR

There is no doubt that Sir Geoffrey Vos, the Head of Civil Justice, Master of the Rolls and chair of the CJC, is determined that ADR methods such as mediation should cease to be alternative and become an integral part of the process of dispute resolution – hence the references to (A)DR you may have seen in the media. He endorsed the CJC’s report in Ralph v Ralph, saying:

“… this was a case that cried out for the parties to reach a mediated settlement … I do not wish to suggest that one or other party was at fault in failing to attempt mediation, but the case demonstrates how important it is for the courts to be able to direct mediation in appropriate cases”.

But what does this really mean in practice? We take a look at the various options for court-ordered mediation and offer practical guidance on the immediate effect of the report on litigants and their lawyers.  

What has changed?

The CJC report concludes that the Court of Appeal decision in Halsey v Milton Keynes General NHS Trust in 2004 is not an obstacle to the courts ordering parties to mediate against their will. The rather technical and intricate reasons why Halsey is not a binding precedent on this point have been ventilated by many commentators since the report was published. Put simply, as long as the parties are not compelled to settle their dispute, and the form of ADR ordered by the court is proportionate to the claim both in time and cost, there will be no breach of their right to a fair trial under Article 6 of the European Convention on Human Rights.

Various senior judges, including even Lord Dyson who gave the judgment in Halsey, had already said that Halsey was not an authority preventing parties from being compelled to mediate. But many of the same judges (Jackson and Briggs LJJ for example) were not keen on compelling parties to mediate. 

The Court of Appeal’s decision in Lomax v Lomax in 2019 was an important turning point where Halsey is concerned. The court held that it could order the parties to submit to Early Neutral Evaluation (ENE) against their will under CPR 3.1(2)(m). Moylan LJ also noted that “the court’s engagement with mediation has progressed significantly since Halsey v Milton Keynes was decided”. 

What could mandatory mediation look like?

The CJC report deals at length with Halsey and why it is no longer an obstacle to compelling parties to mediate or to submit to some other type of ADR. It then looks at some of the options with reference to the practices of other countries.  Focussing on mediation, we look below at some of the important questions that have to be addressed.

The trigger for mediation

Should it be pre-action?

Not at the moment. The CJC report does not press for the introduction of a general requirement to mediate pre-action in the near future: this would require a statutory basis because of the limits on the court’s pre-action jurisdiction and will need “jurisdiction-by-jurisdiction analysis”. The CJC has now published its Review of Pre-Action Protocols. The terms of reference included asking whether PAPs should be a mechanism for de facto compulsory ADR prior to commencement of litigation. The CJC has rejected this option and favours a good faith obligation to try and resolve or narrow the dispute without using a particular form of ADR.

Should there be a trigger at a particular stage of proceedings?

In Ontario parties in most kinds of civil disputes are required to mediate within a specific period after the defence is filed. The CJC report accepts that in legally and factually complex claims ADR may only make sense at a later point, even perhaps after the exchange of witness statements.  It concludes that a rule of this kind may work in some areas; in others it may be better to leave it up to the court to decide when is appropriate.  It may sometimes be necessary to direct the parties towards ADR more than once.

Should different rules apply to different types of claim?

It sounds as though the CJC inclines towards this conclusion.  In some types of lower value claims dealt with via an online portal, ADR is likely to be built into the process as a requirement at an early stage. We could require mediation in some types of claim or court and not others. We could also, or alternatively, adopt a value-based scheme as in Greece where it is compulsory to attend a session with a mediator in any claim with a value of more than EUR 30,000, and to some types of dispute irrespective of value.

Judge-led ADR or private mediators?

ADR provided by judges at no cost to the parties is generally well-received and effective. However, the problem with longer judicial mediation hearings is that this is expensive for the Ministry of Justice, we are critically short of judges and a judge-mediator cannot then be involved in the case if it fails to settle. Realistically mandatory mediation in more complex cases will have to be dealt with by private mediators, perhaps with capped costs. This is the case in Ontario where the parties can choose a mediator on the roster or another mediator. If the parties fail to agree, a mediator is appointed for them. The CJC report acknowledges that if mediation is to be compulsory, more systematic regulation of mediators will be required.

Sanctions

Since Halsey, we have become used to the imposition of costs sanctions at the end of a case where a party has unreasonably refused to mediate or merely failed to respond to an invitation to mediate (see our briefing here).  The CJC report endorses an immediate sanction following non-compliance with an order to mediate, the obvious one being striking out the claim or defence. A costs sanction could be substituted where the party has a good excuse for their breach.

Comment

Introducing mandatory mediation is not going to be a simple matter.  However, amending CPR 3.1(2)(m) to include the power to order the parties to mediate is not difficult, as long as the Civil Procedure Rule Committee is not deterred by the fact that Halsey has not been overruled. This is the current wording:

“the court may … take any other step or make any other order for the purpose of managing the case and furthering the overriding objective, including hearing an Early Neutral Evaluation with the aim of helping the parties settle the case”.

Similarly, deleting this wording in the Clinical Negligence Pre-Action Protocol will help to counter the Halsey effect: “It is expressly recognised that no party can or should be forced to mediate or enter into any form of ADR”. 

The recent case of Philip Warren and Son Ltd v Lidl demonstrates why mediation needs a boost if it is to become DR and not ADR.  There are many judges (or deputy judges in this instance) who incline instinctively towards a Halsey position.  The judge refused to penalise Lidl for refusing to mediate.  He relied, as others have done, on Northrupp Grumman Mission Systems Europe Ltd v BAE Systems (Al Diriyah C41) Ltd (No 2) to justify the conclusion that “even if a successful party’s conduct in refusing mediation is unreasonable but the party has made a Part 36 offer which has not been beaten, these can effectively cancel each other out or more strictly, the conduct of the parties in this respect is treated as a neutral factor”.

As noted recently by the Civil Mediation Council in their response to the Ministry of Justice’s Call for Evidence on Dispute Resolution, compulsory gateways and judge mandated mediation hearings prevent any fears that suggesting mediation will be interpreted as a sign of weakness.  The current debate is likely to mean that more judges will be amenable to making Ungley (or Fontaine) orders requiring a party to file a witness statement giving reasons for their refusal to mediate.  There is also likely to be a greater willingness to order ENE and to penalise parties in costs if they refuse to mediate.

Make no mistake, change is on its way.  The civil justice system is struggling to cope with its case-load.  Compelling parties to mediate is now an essential element in the plan to ensure the effective running of the courts.