Court of Appeal rules that parties to English court proceedings can be lawfully ordered to engage in ADR

An issue ripe to be addressed

Prior to the Court of Appeal’s decision in Churchill, Dyson LJ’s statement in Halsey that “to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court” was widely taken to have the effect that, if a party wants to derail the prospect of ADR and press on with litigation, they have a broadly unfettered right to do so.   

Almost 20 years on from the judgment in Halsey, much progress has been made, through procedural reform, to encourage parties to attempt in the first instance to settle their disputes without resorting to litigation.  It is unsurprising, in this context, that the subsequently unchallenged Halsey decision had become subject to increasing criticism for railing against that general trend. 

When permitting the appeal, the Court of Appeal acknowledged there was an important issue to settle: an inherent tension between fundamental access to justice and the emerging priority of a procedural system which promotes cost-efficient dispute resolution.  Concern for the latter inspired intervention from a number of third parties, including the Law Society, the Bar Council, the Civil Mediation Council and the Centre for Effective Dispute Resolution. 

The decision

The Court of Appeal in Churchill found that the Halsey authority relied upon by the first instance Judge “was not part of the essential reasoning…and did not bind the judge to dismiss the council’s application for the stay”.  The Halsey judgment was focussed on assessing whether the successful parties in the two cases under appeal should be penalised through costs sanctions for their allegedly unreasonable refusal to participate in ADR; the issue before it did not directly relate to the ordering of a stay for ADR. 

The Court of Appeal in Churchill was therefore at liberty to find that “[t]he court can lawfully stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process provided that the order made does not impair the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.”

In his judgment, the Master of the Rolls found that “it is plain that, had the [first instance] judge not concluded that he was bound by Halsey to refuse a stay, he would have granted one”.  Nevertheless, 18 months had passed since the decision under appeal, during which time the claimant had refused to permit the Defendant council to treat the knotweed which had developed on his property, “standing on his right to seek compensation and costs from the court”.  On a practical level, at the time of its decision, some way into the litigation, the Court of Appeal found that the council’s internal complaints procedure – which would be the relevant ADR process in this instance - “may not be the most appropriate process for an entrenched dispute of this kind”. 

Going forward: discretion preferred to guidance

In addition to holding that the Court has power, in principle, to order a stay for ADR, against the will of one or more parties, the Court of Appeal was invited to set out some guidance as to the factors which should influence the Court’s assessment whether to make such an order in future cases.  The Court of Appeal declined to do so, deciding that it would be “undesirable to provide a checklist or a score sheet for judges to operate”.  It was found instead that judges “will be well qualified to decide whether a particular process is or is not likely or appropriate for the purpose of achieving the important objective of bringing about a fair, speedy and cost-effective solution to the dispute”. 

The Master of the Rolls acknowledged that factors likely to be relevant to the overall assessment include: whether parties have access to legal advice; the form of any available ADR; the prospects of success for any such ADR; costs; and any anticipated delays.  But he also contemplated that there would likely be other factors to be considered on the specific facts of each case. 

Commentary

The Court of Appeal’s decision in Churchill will undoubtedly be welcomed by critics of Halsey.  The door is now open for the Courts of England and Wales to give renewed attention to their case management power to order stays for ADR.  Parties considering their position at the outset of a dispute should be aware of the consequences of non-engagement with ADR. 

On the other hand, when deciding ultimately not to order the stay the Defendant sought in Churchill, the Court of Appeal acknowledged that there was “little point in doing so now, since nothing will be gained if a one-month stay were granted”.  This brings to mind the saying that, while you can lead a horse to water, you cannot make it drink.  After Churchill, in addition to adverse costs, it is fair to say that uncooperative parties can expect an increased risk of an order for a stay for ADR, in the right circumstances, but if the Court is presented with a scenario in which the chances of one party actually (and actively) engaging in ADR during that stay are remote, it remains hard to imagine that a Court will find making such an order an attractive option. 

The decision has nevertheless provided welcome judicial endorsement from the Master of the Rolls of the merits of ADR:

“Experience has shown that it is extremely beneficial for the parties to disputes to be able to settle their differences cheaply and quickly. Even with initially unwilling parties, mediation can often be successful. Mediation, early neutral evaluation and other means of non-court-based dispute resolution are, in general terms, cheaper and quicker than court-based solutions. Whether the court should order or facilitate any particular method of non-court-based dispute resolution in a particular case is a matter of the court’s discretion, to which many factors will be relevant.”

Next steps

In light of all the above, here are a few closing thoughts about what to expect after Churchill:

• Renewed efforts by corporates/institutions prone to portfolio disputes to ensure their complaints resolution processes are broad and attractive to potential claimants.  
• Increased activity from industry sector bodies seeking to develop their frameworks for ADR which would provide an inviting basis for a court to halt the progress of litigious proceedings until an opportunity has been given to the parties to seize an alternative option. 
• Continued debate over how to define the “essence of the claimant’s right to proceed to a judicial hearing”, which the Court of Appeal decided should not be impaired by any order for a stay. 
• A greater emphasis on parties working with their lawyers to consider when and what form of ADR may be appropriate throughout a dispute.
• Increased prospects of successful applications to court for a stay, which may be a strategic option for parties that wish to engage in ADR (when their opponents do not).

Authored by Alex Sciannaca, William Foubister, and Emma Childs.