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The Court of Appeal has recently confirmed that the courts have authority to compel parties to a dispute that is already issued in court to engage in Alternative Dispute Resolution (ADR) in certain circumstances.

ADR is a mechanism used to try and reach a ‘resolution’ outside of court. There are many different forms of ADR that parties can engage in, which all share the intention of resolving a dispute so that court proceedings do not need to be either advanced or issued. ADR often has the advantage of resolving a dispute faster due to the backlogs of the courts and it is often less expensive.

The unanimous decision in James Churchill v Merthyr Tydfil County Borough Council is a landmark decision that focuses on the court’s authority to order a stay in proceedings, which essentially means that proceedings are paused until such a stay is lifted. This will give the parties in the dispute the opportunity to engage in ADR and if this proves unsuccessful then proceedings can carry on.

This decision applies and relates to all ADR procedures. An important factor for the court to consider when exercising their authority to order a stay in proceedings will be whether it is proportionate to the circumstances of a dispute and the parties involved. The court must also ensure that such an order will preserve the parties’ right to proceed to a judicial hearing.

Sir Geoffrey Vos, master of the rolls clearly stated the position within the judgment:-

‘The court should only stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process provided that the order made does not impair the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.’

Why is this important?

The position previously was that the court could not compel a party to engage in ADR, it could only seek to encourage such participation. To compel a party to engage in ADR had previously been considered to run the risk of infringing on a parties’ right to a fair trial.

The Court of Appeal has now concluded that, although the principles set out in previous case law remain influential, they are not binding and judicial discretion can be exercised.

What this means for the future

Although a case-by-case basis approach will be adopted it is clear that the courts have the authority to ensure that where necessary parties engage in ADR even if proceedings have already been issued.

This article was written by Juliet Schalker, a partner in our dispute resolution team and Millie Reynolds, a trainee lawyer in the dispute resolution team.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.