Can civil courts mandate the use of alternative dispute resolution?

It started as a knotweed claim but the issues soon became more tangled…

Churchill v Merthyr Tydfil County Borough Council (2023)

Background:

Mr Churchill sought to claim against Merthyr Tydfil County Borough Council for damage to his property by Japanese knotweed that had encroached on his land from neighbouring land owned by the Council. He claimed the Japanese knotweed had caused a reduction in the value of his property and reduced his enjoyment of it.

Following receipt of Mr Churchill’s letter before action, the Council invited him to engage in its corporate complaints policy. The Council advised Mr Churchill that if he refused to engage in the complaints policy and proceeded to issue a claim, the Council would apply for a stay of the proceedings to force Mr Churchill to comply with the complaints policy.

Mr Churchill issued his claim regardless, and the Council applied for a stay.  The Council’s application for a stay was dismissed based on the decision in Halsey v Milton Keynes General NHS Trust [2004] (“Halsey”) which determined that there was no power to require unwilling parties to engage in ADR as this would amount to a breach of Article 6 of the European Convention on Human Rights (the right to a fair trial). Lord Justice Dyson commented in Halsey that “to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court.” 

The Council appealed and it came before the Court of Appeal, which identified 3 key questions:

1. Was Halsey binding?

The question of whether the court could require unwilling parties to engage in mandatory alternative dispute resolution (ADR) was not in issue in Halsey.  It was therefore decided that the comments in Halsey which suggested requiring unwilling parties to engage in ADR would amount to a breach of Article 6 were obiter.

As such the Courts were not bound by Dyson LJ’s findings in Halsey.

2. Can a court stay proceedings to require parties to engage in ADR?

Ultimately, yes. It was decided that the courts have the power to order parties to engage in ADR provided it does not impair the parties’ article 6 rights.

The Court made clear that “the court can lawfully stay proceedings for, or order, the parties to engage in a non-court based dispute resolution process provided that the order made:

(a) does not impair the very essence of the claimant’s right to a fair trial,

(b) is made in pursuit of a legitimate aim, and

(c) is proportionate to achieving that legitimate aim”.

3. When can the court mandate ADR?

Ultimately it will be up to each judge to determine the extent to which compulsory ADR will be appropriate taking into account the circumstances of each individual case.

The Court will consider the reasonableness and proportionality of the sanction.  Relevant factors to consider include, amongst other things, the proposed form of ADR, whether parties are legally represented, how effective ADR may be, the urgency of the case and the reasonableness of the delay caused by ADR, the cost of the ADR, whether there is a significant imbalance in the parties’ resources, and the parties’ reasons for not wishing to mediate.

Mr Churchill’s reasoning for not engaging with the defendants complaints policy was that [63] “a) there was no neutral third party involved, (b) no legal advice was available to the claimant (c) there was no settled written procedure by which it operated (d) it had no statutory backing (e) it had no fixed timescale and might take an open ended amount of time (f) the limitation period was not suspended during the process (g) there was no provision for the payment of a claimant’s costs (h) there was no express provision allowing for the payment of compensation in addition to eradicating the knotweed”

The Court of Appeal did in fact find that the Council’s internal complaints procedure was not the most appropriate process to resolve the dispute.

What does this mean moving forward?

The decision in Churchill confirms the Courts’ ability to order parties to engage in ADR and / or to order a stay to allow the parties to do so.

This decision has come at a time when both the government and the judiciary are keen to promote the use of alternative dispute resolution, not only to free up judicial resources, but to encourage those who would have not otherwise considered ADR, to do so.

The Government and Judiciary’s views on the use of mediation moving forward are set out in The Civil Justice Council’s report on Compulsory ADR (2021) and the Ministry of Justice ‘Increasing the use of mediation in the civil justice system’ July 2022 report.  It has now been announced that all civil disputes up to a value of £10,000 will have a free mediation session integrated into the Court process.

The latter report confirms the Civil Justice Councils Judicial ADR Liaison Committee believe that compulsory mediation is lawful, saying if it is not ‘disproportionately onerous and does not foreclose the parties’ effective access to the court, [it] will be compatible with the parties’ Article 6 rights’.

Our experience

Our Dispute Resolution team is experienced in all types of commercial mediation, acting for clients in a wide-range of commercial contract, shareholder, construction, intellectual property and property disputes.

Commercial mediation is an effective and increasingly popular choice for businesses and business owners involved in a dispute, but who wish to avoid litigation.

If you would like to speak with one of our dispute resolution solicitors, please contact Amelia Williams on 01202 099095, email [email protected] or Bella Rolph on 01202 204537, email [email protected] or complete the form below.