Mandatory mediation has been ushered in to England and Wales

The legal landscape in England and Wales has undergone a significant transformation following the Court of Appeal's hotly anticipated ruling this week in Churchill v Merthyr Tydfil County Borough Council, which has expanded the court's power to compel parties to take part in non-court dispute resolution processes.

Dispute background

Mr Churchill commenced legal proceedings in August 2021, and the defendant, Merthyr Tydfil Council, sought a stay in February 2022 to handle the matter through its internal complaints procedure.

The defendant's application was rejected, however, by Deputy District Judge Kempton Rees, who cited the precedent set by Lord Justice Dyson's statement in Halsey v Milton Keynes General NHS Trust [2004]. This was that "to oblige truly unwilling parties to refer disputes to mediation would be to impose an unacceptable obstruction on their right of access to court".

The judge, at first instance, felt constrained by the statement in Halsey, although he would have been  willing to mandate mediation if not for the existing legal framework. The council challenged this decision, and the Court of Appeal has now handed down its decision.

Court of Appeal ruling

The leading judgment was given by the Master of the Rolls, Sir Geoffrey Vos, who gave a speech on mediation in which he endorsed a Civil Justice Council's report from July 2021 that found that compulsory alternative dispute resolution (ADR) would be lawful and should be encouraged. It is, therefore, not surprising that his decision ushers in the possibility of unwilling parties being ordered to engage in mediation or other forms of non-court-based dispute resolution procedures.

The Court of Appeal ruled that that Lord Justice Dyson's statement was not relied on as justification for the conclusion in Halsey, which was about whether there should be a costs sanction imposed because of a party's unreasonable refusal to mediate. Accordingly, this part of the judgment was not binding on judges of the High Court or below.

But what if both parties are unwilling to try ADR? The Court of Appeal noted that "even with initially unwilling parties, mediation can often be successful." The Court of Appeal also emphasised that parties should be ordered to take part in ADR and mediation only if that does not impair their rights to proceed to trial and is proportionate to achieving a settlement fairly and quickly – and at a reasonable cost.

Osborne Clarke comment

This decision has been expected for some time: it was the first opportunity the Master of the Rolls and the Court of Appeal have had to finally decide the point (unless a further appeal is brought to the Supreme Court). However, the decision does not mean that ADR and mediation will be ordered in every case nor that orders will not be made just because one or both parties are unwilling to give ADR a go.

As the case makes clear, the hope is that getting the parties to discuss settlement – especially if a skilled mediator is involved too – will nevertheless encourage settlement, which, hopefully, will free up valuable court time and resources. But the position remains that the parties can never be forced to settle; although they might, exceptionally, face a costs sanction if they act unreasonably at the mediation. The parties' right remains to have their dispute settled by litigation or arbitration (whichever they have chosen).

That said, mediation, in particular, can be a potent tool, offering parties the chance to make substantial cost savings if a settlement can be reached. Even in cases where a resolution is not reached, mediation often helps parties identify aspects of the dispute that may not warrant litigation, fostering potential future settlements. Mediation's flexibility also allows for the exploration of creative solutions to disputes. (For more details about mediation, please see our earlier articles here and here.)

Parties are encouraged throughout the litigation process to attempt to settle disputes, for good reason, and this decision may encourage more litigants to explore settlement possibilities before being ordered to do so by the court.