The UK moves steadily towards greater integration of ADR

Julius Nkafu FCIArb considers the evolving landscape of Alternative

Dispute Resolution (ADR) in the UK. 

As the winds of change sweep through the legal system, the United Kingdom doubles down on its commitment to ADR or private dispute resolution.   

In my previous article of June 2020 (UK Government calls on parties in contractual disputes arising from COVID-19 to use ADR methods for dispute resolution), I set out how the UK Government and the Courts are encouraging and promoting private dispute resolution. I also referred to the case of Halsey,[1] which provides for a cost penalty for a party that “unreasonably” fails to engage in ADR, though a party could not be compelled to engage in ADR. Since writing the article, the case for the integration of private dispute resolution into the judicial system has advanced considerably, with its use seen to be more cost-effective, faster, and less stressful for disputants. The increasing emphasis on greater integration represents a significant development.

Government developments supporting private dispute resolution.

Since the original article, the UK Government has continued to endorse private dispute resolution mechanisms. There has been a push towards online dispute resolution, especially in the wake of the ongoing digital transformation influenced by the pandemic. Online ADR methods are increasingly being looked at as viable options for dispute resolution.

The COVID-19 pandemic led to a surge in disputes, notably in commercial contracts and employment relationships. The clogs in the judicial system due to lockdowns have made private dispute resolution a more appealing route. This trend is likely to persist even as normalcy returns.

As part of doubling down on its commitment to private dispute resolution, in June 2021, the Civil Justice Council (CJC) produced a report on Compulsory ADR (the report) to inform possible future reform in the use of private dispute resolution. Lady Justice Asplin, who led the landmark report, said, “We have concluded that (A)DR can be made compulsory, subject to a number of factors. More work is necessary in order to determine the types of claim and situations in which compulsory (A)DR would be appropriate and most effective for all concerned, both in the present system and in relation to online justice.”

The Chair of the CJC and the Head of Civil Justice, Sir Geoffrey Vos, said, “As I have said before, ADR should no longer be viewed as “alternative” but as an integral part of the dispute resolution process; that process should focus on “resolution” rather than “dispute”. This report opens the door to a significant shift towards earlier resolution”. This simply means that ADR is no longer an alternative but a mainstream part of the dispute resolution process.

The CJC report also found that compulsory ADR was legal.

In July 2022, the Ministry of Justice report – "Increasing the use of mediation in the civil justice system" – was presented to Parliament by the Lord Chancellor and Secretary of State for Justice, Lord Bellamy KC who said. “...The UK has long been a leader in promoting [private dispute resolution], and we must continue to forge the way forward by cementing mediation as an essential part of the modern justice system”. The report sets out the Government’s plans to refer small claims in the County Court (generally under the value of £10,000) issued under standard Part 7 procedure to the HM Courts and Tribunals Service’s Small Claims Mediation Service for a free one-hour telephone mediation conducted by a court-employed mediator.

Of course, with this level of commitment to private dispute resolution, it is no surprise that the UK Government, on 3 May 2023, signed the Singapore Convention on Mediation.

Judicial developments supporting private dispute resolution

Halsey v. Milton Keynes General NHS Trust [2004] (Halsey)

In this landmark case, the Court of Appeal provided significant guidance on when the Court might penalize a party for refusing to engage in private dispute resolution. The court outlined various factors it would consider, such as the nature of the dispute, the merits of the case, and the extent to which other settlement methods have been attempted. This case forms the backbone of many subsequent decisions encouraging private dispute resolution. However, it is considered controversial for two reasons:

1. Several of the circumstances listed which might justify refusal are questionable; and

2. The decision to suggest that compelling parties to attempt mediation could represent a breach of ECHR article 6 is considered by many (now including Lord Justice Dyson, who presided over the Halsey ruling) to be incorrect [2].

Burchell v. Bullard [2005]

In this case involving a building dispute, the court underscored the value of ADR for resolving disputes that involve ongoing relationships between the parties. The Court opined that such disputes are often better resolved through mediation than litigation. This case provides an example of how the judiciary recognises the qualitative benefits of private dispute resolution beyond just cost and time savings.

PGF II SA v. OMFS Company 1 Ltd [2013]

This case further emphasised the importance of responding to an invitation to engage in private dispute resolution. The Court of Appeal held that silence in the face of an invitation to participate in private dispute resolution was, except in rare cases, unreasonable behaviour that would merit a costs sanction. This bolstered the idea that parties should actively engage with ADR options.

Lomax v. Lomax [2019]

This case expanded on the Court’s power to order an Early Neutral Evaluation (ENE), a type of private dispute resolution, even when one party objected. The Court determined that it had the discretion to order an ENE under the Civil Procedure Rules, emphasising that judicial encouragement for private dispute resolution methods extends to various forms of dispute resolution, not just mediation.

DSN v. Blackpool Football Club Ltd [2020] and BXB v. Watch Tower Bible and Tract Society of Pennsylvania and another [2020]

In these more recent cases, the High Court imposed indemnity costs (paying for unreasonable conduct) because of the parties’ unreasonable failure to engage in settlement negotiations, a form of private dispute resolution.

These cases collectively demonstrate the judiciary’s multifaceted approach to encouraging private dispute resolution in the UK. They show that courts are not only supportive of private dispute resolution but are increasingly willing to impose sanctions for failure to consider or engage in it.

Conclusion

ADR remains a cornerstone of the UK’s strategy for efficient, fast, cost-effective and fair dispute resolution. The combined forces of a changing legal landscape, technological advancement, and lessons learned during the pandemic are driving rapid developments in this area.

It is now abundantly clear that out-of-court settlement by any of the mechanisms for resolving disputes is the future as the UK moves steadily towards mandatory use.

The Government and the judiciary are actively promoting private dispute resolution. On the other hand, users are increasingly taking up ADR, especially as the UK heads towards fundamental integration of mediation into the court system.

This underscores the views of the Government, the judiciary, and the users of it that alternative dispute resolution should not be an ‘alternative’ but rather fully integrated into dispute resolution processes, both as a prerequisite step to litigation and an option that may be taken up at any point within the life of a legal case.

Parties in litigation can expect heavy sanctions by the courts if they fail to seriously engage in ADR with a genuine view to resolving the dispute.

The flexibility and focus on amicable resolution make private dispute resolution, in all its forms, an increasingly attractive option, both for domestics and international parties.

About the author:

Julius Nkafu FCIArb was called to the English Bar in 2014 (after practising for 12 years as a solicitor of the supreme court of England and Wales),  and to the Cameroon Bar in 2006. He is a Member of the Sanctions Appeals Board (SAB) of the African Development Bank Group and Chairman of the Cameroon Business Council and the ADR committee of the African Bar Association, as well as  a Board Member of the African Arbitration Association. Julius is an expert in international arbitration, acting as counsel and sitting as arbitrator. He is also a mediator and conciliator. He lectures on International Arbitration at Ciarb and is a Course Director. Julius has over 24 years of legal experience working in the City of London and Cameroon, acting for and against individuals, investors, and corporates.

Ciarb Resources:

UK Government responds to 2022 mediation consultation

Register your interest for Let’s Discuss Churchill v Merthyr Tydfil County Borough Council here .  The webinar will likely be held in late November, following the Court of Appeal’s judgement to debate the full implications of its decision.

[1] Halsey v. Milton Keynes General NHS Trust [2004]

[2] In June 2023, Ciarb announced it had united with the Civil Mediation Council and the Centre for Effective Dispute Resolution to intervene in the case of Churchill v. Merthyr Tydfil Country Borough Council before the Court of Appeal, later in the year.  The aim is to set aside the Halsey judgment on ECHR article 6.