Moving on from Halsey – a new compulsion to mediate?

The present underlying judicial authority on the relationship between ADR and the court system is the case of Halsey v Milton Keynes General NHS Trust in 2004. In Halsey the Court of Appeal established the principle that a party could be penalised in costs if it acted unreasonably in refusing to agree to ADR. To make such an order the court would consider all of the circumstances of the case, including certain specified matters.

Since Halsey there have been a number of cases that have provided further judicial encouragement of the need to consider ADR. One of the shortcomings of the Halsey approach though is that the Court will only make a punitive costs award post-trial. With a minority of cases getting to that point, and by that stage other issues often being relevant to costs, how effective is such a threat?

The Halsey approach has no doubt helped aid the culture change so that parties consider mediation more willingly and openly than previously, without fear that it displays a belief of weakness in their case.

Given the direction of travel it would not be surprising to see the Court of Appeal looking for a suitable case to address a new approach to ADR, and that the Court could legitimately compel parties to mediate during proceedings.

Is such an approach compatible with a party’s right to trial? Two things. First the compulsion would be to try mediation and not to compel a party to actually settle their case. That remains their choice and if they want to proceed to trial then they can do so. Signposting that fact will be important. Second, a Civil Justice Council ADR sub-committee, led by Lady Justice Asplin, considered this very point in 2022 and concluded that such an approach would be lawful and should be encouraged.

Watch this space.

Government proposals

The Government has a similar keenness on the benefits of ADR. In recent years there have been two Ministry of Justice consultations on the use of ADR, one in general and the second whether there should be compulsory referral to mediation on the Small Claims Track (sub-£10,000 cases) . The MOJ is currently considering next steps.

Part One – the Small Claims Track

Expect an announcement in the coming months that there will be a compulsory referral to ‘mediation’ for defended Small Claims Track cases. At present around 21% of Small Claims cases proceed to court provided mediation. Settlement and satisfaction rates from those using the process are high.

It will be a challenge to deal with the number of cases increasing substantially from 15,000 cases per annum to around 100,000. The process is telephone mediation only, via HMCTS mediators, lasting an hour and is very much ‘mediation-lite’ and, in essence, a form of barter.

Part Two – higher value cases

The second strand of development will likely be to higher value cases. As with the above the possibility of compulsion to mediate is likely to feature prominently.

Practical problems

Such changes present a whole host of challenges. These range from having the right level of resource available within HMCTS, to whether there are some cases that are unsuitable for such a process and if they should be automatically excluded or not. A perennial issue is that in ADR that involves SMEs or litigants in person there is a risk of power imbalance with an unrepresented party being at risk of attending mediation without an understanding of the strength or weakness of their case which may affect their negotiating position.

In higher value cases other practical problems relate to the potential availability of mediators at the right cost and with an assurance to the parties that they are properly trained and understand their role. The Government needs to consider that there is appropriate regulation of the mediator market before it encourages parties to engage in it.               

CEDR bi-annual survey

The recent CEDR survey of the mediation civil and commercial market shows that there were around 17,000 mediations in England & Wales in 2022, an increase of 3% since the last survey in 2021. The last few years have clearly expanded the use of online mediation into the mainstream, a necessity during the pandemic and a change in practice thereafter.

The number of cases resolved at mediation remains high. Around 72% settling on the day and a further 20% settling soon thereafter. The survey estimated that around £20 billion worth of disputes are mediated annually.

Singapore Convention

The Government announced in March that it will sign the Singapore Convention on Mediation as soon as possible.

This will mean that there will be enhanced rights of international enforcement of UK-related mediation settlement agreements. This will allow a party seeking enforcement to apply directly to courts outside England & Wales to enforce the agreement. There are some exceptions as to types of case that are not enforceable, and also an opportunity to opt-out as part of a settlement agreement (which may set alarm bells ringing). It is of course only in few cases that there is default in parties abiding by the agreed outcome.

Generally though signing the Convention strengthens the England & Wales jurisdiction for cross-border disputes.

The effect of changes

While all of the above will create a framework where ADR and mediation is further encouraged, most lawyers already use ADR as central parts of their dispute resolution practice. Many disputes are agreed by direct negotiation between lawyers before they go to Court, and many are settled using mediation already. Solicitors are under a duty to act in their client’s best interests and that includes considering suitable forms of dispute resolution. For many dispute lawyers, issuing proceedings is already something of a last resort.

The changes that are on their way may further encourage some cases where parties have the benefit of legal advice to use ADR that would not otherwise happen, but arguably the biggest effect will be on pushing lower value cases where parties act for themselves into whatever process is available to them. It will be a major challenge to ensure proper provision of resource and a suitable process is available.

Is the term ADR outdated?

And finally…is the term ADR itself outdated?

The ‘A’ in ADR obviously stands for Alternative and given the mainstream role envisaged such a term is not really suitable. Furthermore, culture change will be aided by more accurate terms being used. Already we are seeing Negotiated Dispute Resolution (NDR) included in the Commercial Court Guide and Integrated Dispute Resolution (IDR) is also sometimes used as an alternative.

Whatever it’s called – be ready for more change.