By JOHN PUGH-SMITH, Barrister, 39 Essex Chambers

Introduction

It is an “inconvenient truth” (as the titled 2006 film then described climate change) and litigation reality that the current civil justice system is broken. Indeed, at last November’s Civil Mediation Council Annual Conference (held online), the keynote address by Sir Geoffrey Voss MR included mention of the need for litigants to “exit the court system” as soon as achievable. No doubt, this remark was not only prompted by the, then, administrative state of the civil courts but also a clear acknowledgement of the benefits of non-court based dispute resolution processes, which both practitioners and the Civil Procedure Rules (CPR) continue to describe as “alternative dispute resolution” and by its acronym “ADR”. Indeed, the Civil Procedure Rules Committee consciously chose not to define what “alternative dispute resolution” means, leaving it to the parties to decide what is the most suitable form of ADR for the particular dispute; and that same approach is found in the current  wording of the CPR .

While this “sea change” is attributed to the case of Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416 (Churchill) overruling the earlier Halsey decision, allowing courts to mandate that parties explore ADR, specialist commentators maintain that it was already in train. Nonetheless, it has still required the specific CPR amendments  last October for the cultural climate to begin changing meaningfully. Indeed, while there are good stories being shared in the industry press there are still too many examples of where a Halsey type approach  prevailing, that mediation is an optional extra rather than a core part of the contemporary dispute resolution process.

Set against the framework of the CPR Amendments, this article looks at how ADR can now be made to work and at different stages of a dispute. Put another way, the “A” in ADR is not just “alternative” but also “adaptable” and “agile”. Its focus is upon the two processes most likely to be engaged: Mediation and Early Neutral Evaluation (ENE/NE),

The CPR Amendments

As the most significant change has been to the scope of  CPR 1, it needs now to be remembered that the overriding objective of  “enabling the court to deal with cases justly and at proportionate cost” is now expanded to include “using and promoting ADR”. Indeed, CPR 1.4, dealing with the court’s duty of active case management, now includes “ordering or encouraging the parties to use an ADR procedure if the court considers it appropriate and facilitating the use of such procedure”.

[Note: my emphases are added by underlining]

Secondly, are the amendments to court’s management powers under CPR 3.1(2)(o) and (p) . These now read:

“(o) order the parties to participate in ADR;

(p) take any other step or make any other order for the purpose of managing the case and furthering the overriding objective, including hearing an Early Neutral Evaluation with the aim of helping the parties settle the case.”

This is followed through in CPR 28 (which deals with matters to be dealt with by directions in fast track and intermediate track cases). It now includes “whether to order or encourage the parties to participate in ADR”. Likewise, CPR 29 (which deals with case management in multitrack cases, so all litigation of significant value and complexity not covered by other Court Guides) requires directions hearing in every case and now provides:

“(1A) When giving directions, the court must consider whether to order or encourage the parties to participate in ADR.”

Thirdly, and, in my view crucially, is the amendment to the costs provisions of CPR 44 (which includes how the litigation has been conducted by the parties). The following is added:

“whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution proposed by another party.”

Account also needs to be taken of pre-action protocol requirements, both current and in train. Indeed, in an area where ADR had not previously been seriously considered, the November 2024 Civil Justice Council’s  Phase 2 final report on pre-action protocols commented that there are “some judicial review cases where ADR will be appropriate and the court can make case management directions to enable it to happen”.

So, the fundamental change for general litigation (and practitioner expectation) should  now lie in the ability of the Judiciary to mobilise ADR (especially mediation) during the life of any case. This is in contrast with the pressure to mediate merely being generated by the likelihood that a case will reach trial, and, that  costs sanctions might be imposed by a judge retrospectively for unreasonably refusing to mediate.

By way of post Churchill examples, the  case of Northamber v Genee World [2024] EWCA Civ 428  was an early Court of Appeal endorsement of a sanction being imposed for failure to mediate. In the High Court, Heyes v Holt [2024] EWHC 779 (Ch)  and Francis v Pearson, [2024] EWHC 605 (KB) are cases where parties were directed to mediate for a second time where the first mediation did not result in resolution. Indeed, in  Pentagon Food Group Ltd and others v B Cadman Ltd [2024] EWHC 2513 (Comm) the judge even encouraged the parties to consider a third mediation. The judgments in Worcester v Hopley [2024] EWHC 2181 (KB) and Jenkins v Thurrock Council [2024] EWHC 2248 (KB) give rise to the prospect that parties might agree, or be ordered, to use an ADR process to explore agreement of costs budgets and or directions, rather than wait for a lengthy period until directions and decisions can be given at a Costs and Case Management Conference. Finally,  the more publicised judgment of Miles J. in  DKH Retail Ltd v City Football Group Ltd [2024 EWHC 3231 (“the SuperDry litigation”) demonstrates that compulsory mediation can be ordered before trial even in circumstances where it is asserted both parties want their position to be judicially determined. His  postscript is refreshingly revealing as well as reassuring:  “ … on 13 January 2025 the parties notified the court that they had settled their dispute” Perhaps, too, there was a judicial chuckle when he added these words, given his earlier comment: “Experience shows that mediation is capable of cracking even the hardest nuts”.

 Constructive Outworkings

Putting the “A” for Agility into ADR requires both the parties as well as the professionals to understand what is available.

Putting the “A” for “Adaptability” into ADR requires the ability to carve out aspects of a dispute to suit the form of ADR most suitable (e.g. on technical matters) as wwel las in the interests of d/or commercial expediency. Indeed, a “Swiss army knife” hybrid approach allows the form of the ADR needed at different stages to be deployed.

“Mediation”  at its most pure form is simply facilitated negotiation. This can take place either through neutral chairing or the more formalised process. In this latter context, and, as usually contemplated by the Courts by the stage a case reaches its judicial case management, it is the process of confidential, assisted negotiation guided by a trained, independent professional (the mediator). It will give the parties in dispute and their representatives an opportunity to agree jointly the details of any settlement after an examination of their respective needs and of the options and possibilities for resolution. While the mediator does not make a determination of the issues in dispute or impose a settlement on the parties, their  aims are to assist the parties to identify and agree a settlement that is responsive to their needs and with which they commit to comply. From experience, both as mediator and  as retained counsel, that requires not only rapport building (usually these days by video meeting (s) in advance) but also ensuring that the chosen mediator is sufficiently briefed so that their skills can be best deployed, and, from a sufficiently informed understanding of the parties and the issues. Late appointment and too limited materials lead to less successful outcomes. Equally, over-formalising the process with large paginated bundles etc can unnecessarily add to costs and time loss.

Indeed, as those experienced with this process will know, the choice of mediator, their area(s) of expertise, their “style” including the ability to “reality test”, and, their availability (and cost)  are key drivers in achieving a successful outcome. Indeed, though highly experienced,  a  “known name” is not always the best choice to meet these criteria. Where behavioural change is the objective (for example in more community related mediation) practitioners known to use a predominantly facilitative style will be more likely candidates. In commercial mediation, it should be an accredited mediator with the proven ability (comfortably and hopefully seamlessly) who can move along a spectrum of facilitation (often in the early stages) to evaluation, and, to agreement; but that will only be successful once the principles of communication, information sharing, rapport and negotiation have been well established by that mediator. That is where experience (and time availability within the overall mediation process) will really count; and while time limited mediations have their positives there is a relational process that cannot always be achieved swiftly or successfully within fixed periods. Given that the context in which this article is being written, the settlement agreement will, of course, need to be formalised by way of a consent order or consent judgment so as to achieve the same binding effect as would be achieved by that litigation. Therefore, the ability and availability of the mediator to review and assist with working drafts is another factor that should be borne in mind.

The “ENE/NE” process in its simplest form involves a suitably qualified, experienced and independent third party (“the evaluator”) considering the merits of a case and expressing their view, orally and/or in writing, with the aim of assisting the parties to achieve a consensual resolution or limitation of the contentious issues. The process ensures that negotiations are really and truly conducted in the litigation context, ensuring that the underlying case merits are kept in mind throughout, alongside a realistic assessment of the likely risks and costs, financial or otherwise, of walking away from the negotiating table.

While ENE can offer significant costs savings it carries an increased risk of being unsuccessful for want of information which may be material to the merits. NE conducted later is likely to be much better informed but, even if successful, may not achieve the costs savings that might otherwise have been contemplated. So, its successful deployment is in that sweet spot at which the best possible balance can be struck. There is also much flexibility as to how an NE can be conducted. Although a hearing with oral submissions may be more desirable,  it is possible to conduct an NE on the papers, for example, where there is a major point of principle being argued and, if correct, then the rights and obligations of the parties take one form and, if not, another. hat can also lead to constructive discussions in terms of facts and figures, and, consequences.

In terms of its deployment, for example, a morning of NE followed by an afternoon of mediation (when the views expressed by the evaluator remain fresh in the parties’ minds) can maximise the prospects of a negotiated settlement. There is also scope for parties already engaged in mediation to pause their discussions, engage in NE, and then return to mediation with renewed insight as to the likely outcome of any possible litigation. In other situations, which  has been more my experience,  NE commits the  parties to agreeing all that they can, and then referring all that they cannot to arbitration, or, an issues limited court hearing with the aim of ensuring a certain final outcome within a reasonable period of time,  at a more proportionate cost, and, on terms which have been the subject of the fullest measure of agreement possible in the particular circumstances of the case. That can also help maintain or restore relationships, too.

The choice of the evaluator, like that of the mediator, is also key. They need to be, so far as achievable, a  bespoke appointment. So, sector expertise as well availability, cost and accessibility are all factors to be borne in mind.

Equally, as to “reading material”, the wider and deeper the disclosure exercise, the greater the body of documentary evidence the parties (and hopefully the evaluator) will have to inform their thinking, but, the greater will be the likely cost of the exercise, As with a formal mediation, much will depend on the facts of the case, the nature and extent of the dispute, and, the judgment calls of the legal advisers and the evaluator. What is essential is that all parties should feel that they have sufficient information and documentation on which to found a proper understanding of the implications of any deal which may be struck.

If agreement is reached, then that needs to be recorded in writing, signed by the parties and the advocates, and,  for a copy to be provided to the evaluator, even though they cannot formally ‘approve’ the same. Depending on the complexity of the agreement, it can be recorded either as heads of agreement (recording solely the substantive terms) or as a fully drafted order which can then be filed at court.  If agreement is not reached, then  best practice  should be for the advocates to agree whether the last offer(s) made will lapse at the end of the day, or will be held open for potential acceptance until an agreed time and date. While further negotiation after the NE may need to take place then clearly “without prejudice (save as to costs)” considerations need to be borne in mind.

Finally, experience shows that the Court will usually support suggestions for ENE/NE; for, as mentioned at the outset of this article, both the direction of travel as well as the new CPR 3.1(2)(p), now embrace judicial expectations that the resolution of the litigation should, if feasible, be broken up, rather than requiring a full adjudication.

 Concluding thoughts

Contemporary litigation management, like stemming climate change through moves towards “net zero”, are as much about changes in habits and practices as well as what can be realistically achieved. It  is also about (re-)education and understanding. Because ADR is conducted on a confidential basis, too little publicity can or is being given to its successful deployment at present. Nonetheless, there are growing “good news” stories as well as reported cases which should encourage even the more conservative members of the legal profession to soften their historic stance, and, for the newer arrivals more willingly to embrace the deployment ADR. Here’s hoping … !

 JOHN PUGH-SMITH FCIArb of 39 Essex Chambers is an experienced mediator, arbitrator and dispute ‘neutral’. He is on the panel of the RICS President’s appointments for non-rent review references and  a  member of the Bar Council’s Alternative Dispute Resolution Panel. He has been and remains extensively involved in various initiatives to use ADR particularly to resolve a range of public sector issues. This article has been informed and assisted by his colleagues on the ADR Panel, particularly Andrew Parsons and Rhys Taylor, and the Panel’s ongoing work  to produce,  for example, the Bar Council’s own guidance on Neutral Evaluation: https://www.barcouncilethics.co.uk/wp-content/uploads/2024/11/Bar-Council-Guide-to-NE-final.pdf