In a landmark decision, the Court of Appeal decided that courts in England and Wales can stay proceedings and compel parties to engage in non-court-based ADR processes. This is provided that the order does not impair the essence of the claimant’s right to a judicial hearing and is proportionate to the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.
The reasoning behind the decision is due to ADR being seen as an integral part of the dispute resolution process along with it being generally in the best interest of parties.
The decision overturns two decades of case law (Halsey v Milton Keynes General NHS Trust) and highlights the importance of parties engaging in alternative dispute resolution (ADR) prior to commencing court proceedings.
The decision is likely to be a welcomed relief to the civil courts who have been challenged by an increase in caseload over several years leading to a lack of courtroom capacity.
The case further highlights the importance of parties complying with pre-action protocols. Parties are expected to make appropriate attempts to resolve disputes without the need for litigation (CPR 44.4(3)(a)). This can include negotiating settlement agreements and/ or undertaking ADR.
Parties often argue that ADR may not be the most practical next step in resolving their dispute, in particular when the relationship between parties is hostile or has broken down. However, where possible and appropriate this should be explored. It can often lead to a resolution quicker and at a much more reasonable cost. The consequences of parties failing to engage in ADR should also be made clear to parties, this can lead to adverse cost consequences being awarded by the courts.
While mediation and arbitration are viewed as the more popular forms of ADR where road traffic accidents are involved, the case also highlights internal complaint procedures being a form of dispute resolution which can sometimes be overlooked by parties. Parties should consider any process that allows them to resolve their dispute prior to considering litigation.
It remains to be seen how this landmark decision is applied in practice, but it is clear that requiring parties to engage in ADR will aid delays in the civil litigation process and ease the pressure on the courts.
The decision will also impact how we provide advice to clients. It is important that clients are attempting to resolve their disputes without the need for litigation where possible. We should be discussing the option of ADR along with the consequences should the client fail to engage. It is ultimately the client’s decision on how they intend to resolve their dispute. However, we should make them aware of the potential pitfalls should they rush into issuing court proceedings.
