Should ADR be compulsory?

In the Civil Justice Council’s June 2021 report on whether alternative dispute resolution (ADR) should be compulsory, it was concluded that it should be encouraged bringing compulsory ADR one step closer to a reality.

When this issue was previously reviewed in 2018, the Civil Justice Council said there should be increased focus on promoting ‘awareness, availability and encouragement’ of mediation. They did not recommend a presumption that parties would agree to ADR as a condition for issuing proceedings.

This latest report is another starting point for an area that is still ripe for consultation. It appears changes could be on the horizon due to a popular view that attempts should be made to integrate the ADR process with the judicial system rather than making it an ‘extra step’ to take if suggested. Sir Geoffrey Vos stated pre-report that compelling parties to mediate was ‘highly controversial’ but he later commented that every case has a ‘sweet spot’ but that litigants feel it is their right to have their ‘day in court’ having paid a court fee. He would like mediating to be ‘part and parcel’ of resolving all disputes rather than an alternative process.

The 2021 report concentrated on two main questions:

1. The legality question – can parties lawfully be compelled to participate in an ADR process?
   The report considers the case of Halsey v Milton Keynes [2004] which was a Court of Appeal decision and rejected the idea of mandatory ADR as it would ‘impose an unacceptable obstruction on their right of access to the court’. This report disagrees with findings in this case and concluded that compulsory ADR is in fact compatible with Article 6 of the European Court of Human Rights provided that there are appropriate safeguards in place. The report states that as long as the ADR settlement process does not lead the parties to be coerced into settlement against their will and the parties can refuse a settlement and refer back to the judicial system, then they can be lawfully compelled. The report concluded that the greater use of compulsion is justified and should be considered.
2. The desirability question – if parties can be compelled, how and in what circumstances, in what kind of case and at what stage should such a requirement be imposed?
   The report again referred to the Halsey case and that in their opinion, compulsory ADR was fitting for the right type of claim so long as there is always some access to the court based process. This begs the question of what type of claims are fitting for ADR and how would a reluctant participant be persuaded? Costs as ever come into the equation and the risk of doing it ‘on the cheap’ has already been expressed by the Civil Mediation Council as a concern in their response to the report.

The report does not contain any detailed proposals for reform but does point to three specific observations on the form that compulsory ADR might take:

• i. Where participation in a suitable and effective form of ADR costs no money or extra time to the parties, making it compulsory should not be controversial;
• ii. Compulsory mediation may be considered, provided it is sufficiently regulated and made available where appropriate in short, affordable formats; and
• iii. Greater use of compulsory judge-led ADR processes would be beneficial, given they are free and appear effective in the contexts in which they are already compulsory or, the tools are already available to the Court. An example of this is the little-used process of Early Neutral Evaluation (ENE) which can be ordered without the consent of the parties (as it was for example in the contentious probate case of Lomax v Lomax [2019]).

The Gazette reported that online dispute resolution could resolve more than 200,000 disputes over five years and help small businesses recover £3.4 billion in debts. These figures are quoted as part of the LawtechUK initiative which is a collaboration between industry, the LawtechUK Panel and the Ministry of Justice. An ‘SME online dispute resolution’ platform could form part of the of online services called for by Sir Geoffrey Vos. Report authors Dr Mimi Zou and Professor Thomas Melham acknowledge the current dispute resolution processes and services already in existence but argue that the proposed system would ‘provide a superior solution in terms of time, cost, clarity of process, and enforceability of outcomes’. The new system would offer a ‘one-stop shop’ for ADR and ODR providers to offer services to SME’s as an alternative to court. It is believed this new system could both solve a real business problem and bring forward an innovative and less adversarial approach to dispute resolution.

The statistics for settlement on or close to the day of mediation are ever favourable and rising. Mediation at an appropriate stage of a case can very often be beneficial but there are of course hurdles to overcome. The costs need to be proportionate and the time must be right with both parties being willing to engage. It is of course not a silver bullet but can be incredibly effective. It is becoming more and more apparent that current forms of ADR such as ENE are grossly under-used in practice and we would welcome the Court considering that option as a matter of routine, perhaps assisted by a change in the rules or a tweak to the standard directions given at CMC stage.

It appears a change of mindset is needed and more information about the advantages of participating in all types of ADR (as well as the consequences of rejecting them) should be at the forefront of a litigant’s mind at the outset rather than just looking to ADR as an afterthought when a case is up and running through the courts.

If you would like further information on ADR, please do not hesitate to contact Phil Smith or Sinead Lester.