Amendments to the Civil Procedure Rules (CPR) come into effect today (1 October) which confirm the courts’ power to stay civil proceedings for, or order, parties to engage in mediation or some other form of alternative dispute resolution (ADR). These changes reflect the landmark Court of Appeal decision last year in Churchill v Merthyr Tydfil Borough Council [2023] EWCA Civ 1416 which held that the English courts do have this power provided that the order does not impair the very essence of the claimant’s fundamental right to a fair trial, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.

The amendments to the CPR can be seen in three areas as summarised below. None of the changes provide guidance on when the courts’ power to order ADR or stay proceedings to enable ADR should be exercised. This reflects the approach of the Court of Appeal in Merthyr - the Court declined to lay down fixed rules as to when a court should make such an order but did note a number of factors that could be relevant when a judge was exercising their discretion. This flexibility will enable the power to be exercised appropriately for the type of case, including its complexity, value and the sophistication of the parties and their legal representatives (see further here).

There are already good commercial and financial reasons why parties should consider the use of ADR throughout a dispute. The courts’ power to compel ADR and costs sanctions for parties who fail to engage in ADR are further reasons for parties carefully to consider whether and when to engage in ADR as part of their litigation strategy. 

The amendments:

1. Overriding objective – the guiding principle of the CPR is for the courts to deal with cases justly and at proportionate cost. This now includes “promoting or using alternative dispute resolution” (CPR 1.1(f)). Furtherance of the overriding objective by actively managing cases now includes “ordering or encouraging the parties to use, and facilitating the use of, [ADR]” rather than simply encouraging ADR.
2. Courts’ case management powers – the broad list of the courts’ general powers of case management has been expanded to include the power to, “order the parties to engage in alternative dispute resolution” (CPR 3.1(o)). When giving directions, the court should consider, “whether to order or encourage the parties to engage in alternative dispute resolution” (CPR 28.7/28.14/29.2/PD29.4.10(9)).
3. Costs sanctions – when exercising its discretion as to costs, the conduct of the parties that a court may take into account now includes, “whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution” (CPR 44.2(5)).