Earlier this year, the Ministry of Justice introduced compulsory mediation in all new monetary claims under £10,000 (within the small claims track) as part of its continued commitment towards Alternative Dispute Resolution (ADR). More changes will come into force next month.

Small claims track cases issued after 22 May 2024 are now subject to compulsory mediation in an attempt to resolve the cases at an early stage and free up valuable court time. The time it takes for a small claims track matter to reach trial (after being issued) has crept up over the past few years and it is now taking over a year for claims to reach trial. It is hoped that the introduction of compulsory mediation for a large percentage of claims within the small claims track will reduce those waiting times.

The introduction of compulsory mediation came off the back of a Court of Appeal case in 2023 (Churchill v Merthyr Tydfil Borough Council) where the Court ruled that in some circumstances, a Court does have the power to stay proceedings for, or order, parties to engage in out of court alternative dispute resolution processes, such as mediation.

The decision in Churchill overturned a long-standing judgment from some 20 years earlier (in Halsey v Milton Keynes General NHS Trust) where the Court had ruled that they could not order or compel parties to engage in ADR, as compulsory ADR could be seen to be a denial of justice and the right to have a trial.

Following the decision in Churchill, the Civil Procedure Rules Committee published a consultation on proposed changes to the Civil Procedure Rules (CPR) to deal with the Court’s power to order parties to engage in ADR. The results of the consultation have recently been published and amendments to the CPR will come into effect from 1 October 2024.

Amongst the previous overriding objective, the Court was obliged to encourage parties to use ADR. This has now been changed to “ordering and encouraging” parties to use ADR.

Changes have been made to the Court’s case management powers to include new rules stating that a Court may “order the parties to engage in alternative dispute resolution”.

Amendments have been made to the parts of the CPR which deal with both fast-track and multi-track cases. When considering directions within the fast-track, the Court will now specifically have to consider whether to order or encourage the parties to engage in ADR. Similarly in multi-track cases, the new CPR provides that when giving directions, they must consider whether to order or encourage the parties to engage in ADR.

Specific provision is now made in the rules regarding costs. A Court has the power to make any order regarding costs and they will take the conduct of the parties into account when deciding on the order to make.

However, from 1 October 2024, the CPR will confirm that the conduct of the parties will now specifically include whether a party has failed to comply with an order for ADR or unreasonably failed to engage in it.

If a party has failed to comply or unreasonably failed to engage they will be required to provide strong evidence to the Court as to why they failed to do so. They will need to explain why their case was not suitable for ADR or why they rejected the offer of ADR from their opponent. If they fail to convince the Court, the Court are likely to penalise them in regards to costs, regardless of whether their claim has been successful or not.

The new amendments to the Civil Procedure Rules coming into force this October show the Ministry of Justice’s continued commitment towards ADR. Forms of ADR, such as mediation, often have high success (or settlement) rates and are usually cheaper and quicker than the parties going to a trial. They do, however, require engagement from both parties and a willingness on both parties to want to settle the claim. Of course, if any of the parties are particularly entrenched in their position, then they are unlikely to settle, in which case the ADR could be a waste of time and costs.