ADR, Mediation & Arbitration
Court's Approach to ADR
- Courts actively encourage ADR under the overriding objective (CPR r.1.1 — dealing with cases justly and at proportionate cost) and the duty to further the overriding objective (CPR r.1.3).
- Unreasonable refusal to engage in ADR can result in adverse costs orders even against a winning party — Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576. The Court of Appeal held a party could not be compelled to mediate but that unreasonable refusal risked costs sanctions.
- Note (post-2023 development): In Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416, the Court of Appeal departed from the Halsey dictum and confirmed that courts can order parties to engage in ADR (including mediation) provided it does not impair the claimant's right to a fair trial and is proportionate. This is the current leading authority.
Mediation
- A without prejudice process; the mediator has no power to impose a settlement.
- Anything said in mediation is confidential and inadmissible in proceedings (save in very narrow exceptions, e.g. alleged fraud on the mediation).
- Settlement reached in mediation forms a binding contract once reduced to writing and signed.
Arbitration — Key Principles
Governing statute: Arbitration Act 1996.
- Arbitration agreement: must be in writing — s.5 Arbitration Act 1996. The court will stay proceedings brought in breach of a valid arbitration agreement — s.9 Arbitration Act 1996 (mandatory stay).
- Tribunal's general duty: s.33 — fair, efficient resolution; avoid unnecessary delay/expense.
- Award: final and binding on the parties — s.58. Limited grounds for challenge:
- Serious irregularity — s.68 (e.g. failure to deal with issues, fraud).
- Appeal on a point of law — s.69, but only with agreement of all parties or leave of court; the court may only overturn if obviously wrong or of general public importance.
- Enforcement of an award as a judgment of the court — s.66 Arbitration Act 1996.
Common Traps
- The s.9 stay of court proceedings is mandatory if the arbitration agreement is valid and covers the dispute — the court has no discretion to refuse.
- Churchill (2023) supersedes the older Halsey view that courts cannot order mediation — expect SQE1 to test this update.
Exam Tip
For arbitration questions: identify (1) valid written agreement, (2) s.9 stay, (3) limited grounds of challenge under ss.68–69 — these three points cover the majority of exam scenarios.