Over the last year momentum has been increasing towards the introduction of a more forceful approach to encouraging parties to use alternatives to litigation. This remains firmly on the agenda going into 2022, appearing in numerous dispute resolution 'hot topics' or 'what to expect in 2022' lists. There is a growing sense that the introduction of compulsory ADR in litigation is a case of when and not if.
The court's traditional approach
Mediation as a form of alternative dispute resolution (ADR) has been a mainstay of the dispute resolution landscape now for many years. In litigation, legal representatives are under a duty to discuss mediation and settlement with their clients and to advise on the potential benefits, but parties cannot be forced to mediate.
The balance between the importance of attempting to resolve disputes outside of the courtroom and the parties' right of access to a court hearing has been considered by the courts. The traditional view, and that expressed in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, was that to compel unwilling parties to refer their disputes to mediation would mean the imposition of "an unacceptable obstruction on their right of access to the court".
In that context, a carrot and stick approach has been taken to encourage negotiated settlement. The costs consequences of refusing to mediate, or failing to accept reasonable offers to settle, for example under Part 36 of the Civil Procedure Rules, have rewarded those willing to come to the table and compromise, and punished those who are not.
The tide of change
In speeches given in June 2021, Sir Geoffrey Vos, Master of the Rolls, provided his view that "Alternative Dispute Resolution should really be renamed as "Dispute Resolution" since it is not alternative at all". Similarly, the recently updated Commercial Court Guide prefers the term 'Negotiated Dispute Resolution' to encompass approaches including mediation and conciliation, and to differentiate those processes from litigation and arbitration which, while alternatives to one another, both involve preparing a case for determination by an authoritative third party.
In his June 2021 speech to the London School of Economics, Sir Geoffrey Vos also spoke about changes to the justice system following COVID-19 and the way in which online justice systems allow for "continuous mediated interventions" to encourage, at every stage, the resolution of the dispute.
The following month, the Civil Justice Council (CJC) published its report "Compulsory ADR" (ADR here defined as "any dispute resolution technique in which the parties are assisted in exploring a settlement by a third party… playing a non-adjudicative role"). The report concluded that compulsory ADR was compatible with Article 6 of the European Convention on Human Rights, and was, therefore, lawful.
The Civil Mediation Council (CMC) welcomed the report and called for ADR to be put "at the centre of the civil justice process". The CJC and CMC agreed that if a form of compulsory ADR were introduced, non-compliance with an order to engage in ADR should attract the same sanctions as, for example, non-compliance with an order for disclosure.
So, what exactly is being proposed?
The precise proposals are not yet clear. The CJC report considers the potential advantage of early, pre-action attempts to resolve disputes, but acknowledges that this can require significant effort being put into ADR at an early stage which could be disproportionate, particularly in cases which may effectively go undefended. It follows that a blanket requirement to mediate at the pre-action stage would be impractical and unlikely to be implemented.
There was also consideration given to compulsion through ad hoc case management by the court and the potential for online case management systems which provide prompts to make offers or engage in forms of ADR throughout the case.
Another option may be to begin with piecemeal changes in respect of certain types of claims. An example of this is the Commercial Rent (Coronavirus) Bill 2021-22 which seeks to introduce a new binding arbitration process for resolving disputes related to ringfenced rent debts resulting from mandated business closures during the pandemic. The Bill was introduced to the House of Commons in November 2021, is currently in the House of Lords and is intended to be passed by 25 March 2022.
Reservations within the legal sector
Few could fail to see the advantages of reaching a negotiated settlement, which resolves a dispute whilst avoiding potentially costly and protracted court proceedings. Aside from the potential benefits for individual parties, a stretched court system will, no doubt, function more effectively if disputes capable of resolution out of court are removed from the court list.
However, there are likely to be reservations about the wholesale introduction of mandatory ADR. No two cases, or clients, are the same and legal representatives may well feel that clients would be better served by allowing cases to take their own route to resolution, depending on the particular facts, rather than being forced to use a one size fits all process.
The CJC report itself acknowledges that there is always a risk that ADR won’t work - either because the parties are intransigent, or because they do not know enough about ADR and may not engage properly in the process.
The Law Society's November 2021 response to the Ministry of Justice's call to evidence, which followed the CJC's report, also highlighted valid concerns. These included giving due consideration to cases of particular urgency and seriousness, making allowances for certain categories of litigants, and the importance of ensuring continued access, so that parties have the option of seeking resolution of a dispute through the courts, as a remedy of last resort.
In addition, the Law Society urged caution in response to the CJC's fundamental conclusion that compulsory ADR is lawful. The Law Society said it had not seen any detailed analysis of the law to support that conclusion.
What next?
In February, the London Chamber of Arbitration and Mediation and Herbert Smith Freehills launched the "LCAM/HSF Mediation Survey – Compulsory Mediation" seeking opinions on attitudes to compulsory mediation in litigation and arbitration. It is a sign not only that the issue of compulsory mediation remains firmly on the agenda in 2022, but also that the focus of the English courts on compulsory mediation is mirrored in the world of arbitration.
The eventual implementation of compulsory ADR seems increasingly likely, but exactly how and when that might take place remains unclear.
The Law Society recommend that, before implementing any form of compulsory ADR, the UK government should conduct a pilot, with clear and measurable outcomes. It may be reassuring to the Law Society and legal representatives that, based on recently implemented changes (such as the introduction of electronic document filing at various courts, online portals for certain types of cases, and reforms to the CPR such as the disclosure pilot scheme), it is likely compulsory ADR would be piloted and phased in gradually.
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