Mediation on Trial: The Legal and Practical Impact of the 2024 Civil Procedure Rules (CPR) Changes
Post by
Tahir Khan
February 24, 2025
February 24, 2025
Introduction:
The 1stOctober 2024 (Amendment No.3) (SI 2024 No.839) to the Civil Procedure Rules (CPR) mark a pivotal shift in the UK’s dispute resolution framework, reinforcing the role of Alternative Dispute Resolution (ADR), particularly mediation, as a fundamental aspect of civil justice. These changes reflect the judiciary’s growing commitment to promoting cost-effective, efficient, and accessible dispute resolution mechanisms. By granting courts greater powers to mandate mediation and imposing cost sanctions for non-compliance, the amendments aim to alleviate court congestion, reduce litigation expenses, and encourage early settlements. This article explores the key procedural reforms, judicial interpretations shaping ADR’s evolving role, and the practical advantages and challenges of mandatory mediation under the new rules.
Key Changes to the CPR:
The recent amendments to CPR 1.1, 1.4(2), 3.1(2), Part 28 & 29, and Part 44 have introduced significant procedural reforms to embed ADR into the litigation framework:
- CPR 1.1 (Overriding Objective): The overriding objective now explicitly includes the promotion of ADR where appropriate, reinforcing that just dispute resolution involves exploring alternatives to trial.
- CPR 1.4(2) (Court's Duty to Manage Cases): Courts are tasked with actively encouraging and facilitating ADR at an early stage, marking a shift from passive suggestion to proactive enforcement.
- CPR 3.1(2) (Court’s General Powers of Management): This provision empowers courts to mandate mediation in specific cases, reflecting a move beyond voluntary participation.
- Parts 28 (fast/intermediate tracks) and 29 (multitrack): - to confirm that the matters the court should consider when making case management directions include "whether to order or encourage the parties to engage in [ADR]"
- Part 44 (Costs): Adverse costs orders can now be imposed on parties unreasonably refusing mediation, reinforcing compliance with ADR initiatives.
Courts' Approach:
In James Churchill v Merthyr Tydfil County Borough Council [2023] EWHC 2334 (QB), the Court of Appeal considered whether a court could lawfully order parties to engage in a non-court-based dispute resolution process and under what circumstances it should do so. The case arose after Mr. Churchill sued the Council, claiming Japanese knotweed had encroached from its land onto his property, causing damage and loss of value. The Council argued that he should have first used its Corporate Complaints Procedure and applied for a stay of proceedings.
At first instance, Deputy District Judge Kempton Rees, relying on Halsey v Milton Keynes General NHS Trust [2004], refused to grant the stay, holding that compelling unwilling parties to mediation would obstruct their right of access to the courts. However, the Court of Appeal (led by the Master of the Rolls) ruled that the judge had misinterpreted Halsey—the relevant passages were not binding. The Court held that courts can lawfully order or stay proceedings for ADR, provided this does not undermine a claimant’s fundamental right to a judicial hearing and is proportionate to achieving a fair, cost-effective resolution. However, no fixed principles were established for determining when such orders should be made.
In this case, the Court of Appeal declined to grant a stay but urged the parties to consider mediation or another alternative resolution process. The ruling clarifies that courts have discretion to require ADR participation in appropriate cases, signalling a shift towards stronger judicial support for non-court-based dispute resolution.
In Northamber PLC v Genee World Ltd & Ors [2024] EWCA Civ 428, the Court of Appeal reaffirmed that failing to respond to a mediation proposal is inherently unreasonable, even without an explicit refusal. This decision builds on Halsey v Milton Keynes (2004) and PGF v OMFS (2013), reinforcing that courts may impose cost penalties on parties who disregard mediation. The case involved a commercial litigation dispute over a breach of exclusivity agreements. The claimant proposed mediation, highlighting significant legal costs (£450,000 compared to a £300,000 budget), but the defendants failed to provide a substantive response or justify their refusal, despite a court order requiring an explanation. The trial court found the claimant’s mediation offer half-hearted and declined to impose cost penalties. However, the Court of Appeal held that silence in response to a mediation offer is unreasonable and constitutes a failure to engage with alternative dispute resolution (ADR). It also ruled that ignoring a court order requiring an explanation for rejecting mediation undermines the effectiveness of such directives. The court found that the trial judge was wrong to suggest the claimant should have followed up on the mediation request—once an offer is made, the burden shifts to the recipient. While cost penalties should not be automatic, they should be assessed considering all relevant factors. As a result, the defendants were penalised with a 5% increase in the claimant’s cost recovery (raising it from 70% to 75%). The judgment serves as a clear warning that disregarding mediation invitations can lead to financial consequences. Litigants should never ignore an offer to mediate. Even if mediation is deemed unsuitable, a timely response explaining the reasoning is essential to avoid potential cost sanctions.
Since PGF, courts have consistently stressed the expectation that the parties will engage in mediation, rejecting common excuses for refusal – such as confidence in a strong defence or belief that mediation will be futile. Subsequent cases have reinforced this stance. In Northrop Grumman v BAE Systems [2014], a defendant was penalised for refusing mediation despite believing in the strength of its case. Similarly, in Laporte v Commissioner for the Police of the Metropolis [2015], a successful defendant still faced criticism for failing to mediate.
Courts assess unreasonable refusals to mediate under Part 44 of the Civil Procedure Rules, with cost penalties potentially imposed even on victorious litigants. These rulings make it clear that mediation should be proactively considered, as refusal can have financial consequences regardless of the case’s outcome.
The Court of Appeal in Halsey v Milton Keynes General NHS Trust & Steel v Joy & Halliday [2004] EWCA Civ 576 clarified that while courts should encourage mediation, they should not compel parties to participate, as doing so could violate Article 6 of the European Convention on Human Rights (the right to a fair trial). However, courts can require parties to take steps toward ADR, stopping short of mandating mediation.
The judgment outlined key factors courts consider when awarding costs where mediation has been refused:
- Nature of the dispute – Some cases, such as those requiring legal rulings, may be unsuitable for mediation.
- Merits of the case – A party with a strong legal position may justifiably refuse mediation.
- Attempts at settlement – If a party has made settlement offers that were rejected, this may demonstrate a willingness to settle.
- Mediation costs – If mediation costs are disproportionately high compared to trial expenses, refusal may be justified.
- Delay – If mediation is proposed too close to trial and would cause unnecessary delay, refusal may be reasonable.
- Reasonable prospect of success – The burden is on the unsuccessful party to prove that refusal to mediate was unreasonable.
The ruling reassured those opposed to compulsory mediation while reinforcing that courts will penalise parties who refuse ADR without a valid reason. Strong judicial encouragement for mediation increases the likelihood that an unreasonable refusal will attract cost penalties.
The case of DKH Retail Ltd & Ors v City Football Group Ltd [2024] EWHC 3231 (Ch) highlights the court’s evolving stance on compulsory mediation, particularly following the amendments to the Civil Procedure Rules (CPR) effective from 1 October 2024.
At a Pre-Trial Review, the claimants sought an order for mediation in a trademark dispute under the Shorter Trials Scheme. Mr Justice Miles granted the order, emphasizing the judiciary’s increasing focus on alternative dispute resolution (ADR) to reduce litigation costs and conserve court resources. He noted that mediation has proven effective in even the most entrenched disputes and that parties often reach settlements despite initially opposing positions.
Key observations from the judgment include the recognition of a shift in the courts’ approach to ADR, the need for efficient resource allocation, and the potential for mediation to resolve disputes even when prior settlement efforts have failed. The judge also stressed that mediation could remove obstacles to settlement and need not disrupt trial preparations.
Ultimately, the mediation order led to the case settling, reinforcing the courts’ growing preference for ADR as a means of dispute resolution post-October 2024.
Insights from the CEDR Mediation Audit:
The 2023 Tenth CEDR Mediation Audit reported Mediation continues to be a highly effective method of dispute resolution, with an overall settlement rate of 92%, demonstrating consistency with the findings from 2020. This suggests that mediation remains a reliable mechanism for resolving conflicts efficiently and amicably.
However, among the Advanced mediator group, the settlement rate has declined from 92% in 2020 to 85% 2023. This decrease may indicate a shift in the complexity of cases handled by more experienced mediators, changes in negotiation dynamics, or evolving attitudes of disputing parties. While still a strong success rate, the decline warrants further analysis to understand potential contributing factors.
To ensure the accuracy of these figures, the reported settlement rates from mediators were cross validated with findings from a separate survey of lawyers. This validation strengthens the credibility of the results and provides a more comprehensive perspective on the effectiveness of mediation as viewed by both practitioners and legal professionals.
Advantages and Disadvantages of Mediation Under the October 2024 Civil Procedure Rules:
Advantages of Mediation Under the New Rules
Cost Savings:
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- Mediation significantly reduces legal expenses compared to prolonged litigation, where parties must bear court fees, legal representation costs, and other incidental expenditures.
- The cost-effectiveness is particularly pronounced in lower-value claims, where litigation costs may otherwise outweigh potential recoveries.
Time Efficiency:
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- On average, mediations conclude within three months, offering a resolution far more quickly than court proceedings, which can take years due to backlogs.
- Timely dispute resolution helps businesses and individuals avoid prolonged uncertainty and financial strain.
Accessibility and Convenience:
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- The integration of virtual mediation allows parties to participate from different locations, removing logistical and financial barriers.
- Particularly beneficial for tech-related and international disputes, where parties may be based in different jurisdictions.
Enhanced Access to Justice:
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- The amendments emphasise proactive Alternative Dispute Resolution (ADR) integration, reducing costs and delays that often hinder access to justice.
- This is particularly advantageous for individuals and small businesses with limited financial resources.
Judicial Efficiency:
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- Mediation enables courts to focus on cases requiring formal adjudication, reducing caseload pressures and improving overall judicial efficiency.
- This shift allows courts to allocate resources more effectively to complex legal disputes that demand formal legal determinations.
Cultural Shift Toward Collaboration:
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- The amendments promote a culture of cooperative dispute resolution, encouraging parties to engage constructively rather than adopt adversarial positions.
- This shift fosters better long-term relationships, particularly in disputes involving ongoing contractual or familial relationships.
Disadvantages of Mediation Under the New Rules
Potential Coercion and Loss of Voluntariness:
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- The mandatory mediation provisions may undermine the traditional voluntary nature of mediation, possibly reducing parties’ willingness to genuinely engage in the process.
- Some parties may perceive mediation as an additional procedural hurdle rather than a viable resolution mechanism.
Resource Constraints for Smaller Firms:
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- High-quality mediation services require experienced mediators, which may not be readily available to smaller law firms and individual litigants.
- The disparity in access to skilled mediators could lead to inequities in outcomes, particularly where one party has greater financial and legal resources.
Enforcement Challenges:
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- Unlike court judgments, mediated settlements do not automatically have legal enforceability unless formalised into a binding agreement.
- In cases of non-compliance, parties may still need to resort to litigation to enforce mediated settlements, negating the time and cost savings.
Judicial Use of Enhanced Powers Under the October 2024 Rules
Case Types for Mandatory Mediation:
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- Courts are expected to mandate ADR, particularly in low- to medium-complexity civil cases, such as landlord-tenant disputes, consumer claims, and contractual disagreements.
- Disputes involving ongoing relationships, such as business partnerships and family matters, will also be prioritised for early mediation.
Early-Stage ADR Interventions:
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- The new rules emphasise the integration of mediation into pre-action protocols, ensuring that disputes are addressed before escalating to litigation.
- Early mediation can help clarify legal positions, narrow issues in contention, and reduce overall litigation burdens.
Cost Sanctions for Non-Compliance:
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- Courts will increasingly use adverse cost orders against parties who unreasonably refuse to engage in mediation or fail to comply with ADR obligations.
- This approach incentivises serious participation in mediation, reducing instances where parties exploit litigation delays for strategic advantage.
Conclusion:
The October 2024 amendments to the Civil Procedure Rules (CPR) represent a landmark shift in the UK’s civil justice system, reinforcing mediation as a cornerstone of dispute resolution. By granting courts the authority to mandate mediation and imposing cost sanctions for non-compliance, these changes seek to enhance access to justice, reduce litigation costs, and alleviate court backlogs. The judicial decisions in Churchill, Northamber, and other key cases signal an increasing expectation for parties to engage meaningfully with ADR, reinforcing a broader cultural shift toward collaborative dispute resolution.
While the reforms present significant advantages—including cost savings, time efficiency, and improved judicial resource allocation—challenges remain. The potential erosion of voluntariness in mediation, disparities in access to skilled mediators, and enforcement difficulties may pose hurdles in certain cases. However, the overwhelmingly positive settlement rates reported by the CEDR Mediation Audit indicate that mediation remains a highly effective tool for resolving disputes outside the courtroom.
Ultimately, the success of these reforms will depend on their practical implementation and the judiciary’s approach to balancing mandatory mediation with the fundamental right to a fair trial. As courts, litigants, and practitioners adapt to this evolving framework, the legal landscape will continue to shift towards a more pragmatic, cost-conscious, and efficient system of civil dispute resolution.
https://www.justice.gov.uk/courts/procedure-rules/civil
https://www.judiciary.uk/judgments/james-churchill-v-merthyr-tydfil-county-borough-council/
https://www.bailii.org/ew/cases/EWCA/Civ/2024/428.html
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