Changes to the CPR taking effect on 1 October 2024: Power to compel ADR

Last year, the Court of Appeal in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 141 decided that courts in England and Wales can force parties to engage in non-court-based ADR processes, provided that doing so is proportionate to achieving the legitimate purpose of settling the dispute quickly, fairly and at reasonable cost.

From 1 October 2024, the CPR will be amended to reflect that decision. In particular:

• The overriding objective will now include "promoting or using alternative dispute resolution" and "ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution”.
• The court's case management powers in CPR 3.1 will include a new sub-section (o) that allows the court to "order the parties to engage in alternative dispute resolution".
• CPR 28.7(1) (which deals with directions on the fast track) will include a new CPR 28.7(1)(d), to provide that the matters for directions include “whether to order or encourage the parties to engage in alternative dispute resolution”. An equivalent provision will be added to CPR 28.14 (directions on the intermediate track) at new CPR 28.14(1)(e).
• When considering the conduct of the parties in the context of deciding what order (if any) to make about costs, the court will have regard to "whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to participate in alternative dispute resolution" (CPR 44.2(5)).
• PD 29.4.10(9) (Multi-track PD) will also be amended to provide that the court may give directions “ordering or encouraging the parties to engage in alternative dispute resolution (ADR)”. 

The rules do not specify how the court will exercise its power to order the use of ADR, but in Churchill, the Court of Appeal approved the Bar Council's submissions that the following were relevant factors:

• Form of ADR being considered.
• Whether parties were legally advised or represented and, if not, whether ADR was likely to be appropriate without it.
• Whether it was made clear to the parties that if they did not settle, they were free to pursue their claim or defence.
• Urgency of the case and the reasonableness of the delay caused by ADR and whether that would vitiate the claim or give rise to or exacerbate limitation issues.
• Cost of ADR, including in relation to the parties' resources and the value of the claim.
• Whether there was a realistic prospect of resolution of the claim through ADR.
• Existence of any significant imbalance in the parties' resources, bargaining power or sophistication.
• Reasons given by a party for not wishing to engage in ADR.
• Reasonableness and proportionality of the sanction in the event that a party declined ADR in the face of a court order.