Changes to court rules could lead to more settlements through mediation

Judges are now more likely to direct businesses involved in legal disputes to seek resolution through mediation or arbitration rather than proceeding to court.

Mark Aspin Director and Head of Dispute Resolution provides an update.

New updates to the Civil Procedure Rules (CPR) in England and Wales, effective from 1 October, emphasise alternative dispute resolution (ADR) as a key part of civil litigation. The changes follow the Court of Appeal’s decision in Churchill v Merthyr Tydfil last year, which confirmed that judges have the authority to pause court proceedings to allow parties to attempt resolution through mediation or other ADR methods.

The updates are designed to reduce the need for lengthy and costly litigation by encouraging parties to resolve disputes early, avoiding the need for a full trial.

Key changes to the rules

The CPR’s “overriding objective,” which guides judicial decision-making, now explicitly includes “promoting or using alternative dispute resolution.” This objective already prioritised ensuring cases are dealt with justly, proportionately, and efficiently, but the addition highlights the importance of ADR in achieving these aims.

The court’s powers have also been strengthened. Judges now have a clear authority to order parties to engage in ADR. Previously, they were only encouraged to promote and facilitate such methods. Courts are also required to consider ADR options at every stage of case management, including when issuing procedural directions.

Additionally, the rules on costs now include specific reference to parties’ conduct in engaging with ADR. A failure to comply with a court order for ADR, or an unreasonable refusal to participate, may result in financial penalties when costs are decided.

What this means for businesses

These changes are expected to increase the use of mediation and other ADR methods in commercial disputes.

Mediation, where a neutral third party helps parties negotiate a settlement, remains the most popular option, often achieving resolution in a single day. Other forms of ADR, such as arbitration or early neutral evaluation, may also become more common.

If you would like more information about the issues raised in this article or any aspect of litigation and protecting your business please contact Mark on 01228 516666 or send him an email.