Court mandated alternative dispute resolution following the landmark ruling in Churchill v Merthyr Tydfil Borough Council: a closer look at the litigation landscape.
On 20th November 2023, a landmark judgment was handed down by the Court of Appeal in the case of Churchill v Merthyr Tydfil Borough Council. Some argue that this is the most significant development in the civil justice system since the introduction of the Civil Procedure Rules in 1999. The Court ruled that parties in dispute could be ordered to engage in Alternative Dispute Resolution (ADR), provided that this would not infringe upon the right to a fair trial. The implication for litigants and lawyers is significant.
It remains the case that the staying of proceedings must not inhibit a party’s right to proceed to a judicial hearing. If the court were to mandate the parties in dispute to reach a settlement through the ADR process, this would remove those parties’ access to the courts and hence, the possibility of a fair trial. In the wake of the ruling, parties might simply be given a mandated opportunity to settle through ADR. If they fail do so, their right to proceed to a full trial remains.
The Policy Chair at the Federation of Small Businesses has noted that ‘access to justice for small business is a burning issue…’. The long wait for money that small businesses are owed in these cases often leads to issues in cash flow. Furthermore, with legal costs of tens of thousands of pounds, small businesses may be left vulnerable to insolvency.
Some of the principal advantages of ADR are that the costs are significantly lower than those incurred over the course of a full trial and, if parties engage meaningfully in the process, there is an opportunity to reach a settlement quickly.
Rahim Shamji, Founder and CEO of ADR/ODR International, explains that ADR processes—such as mediation—not only focus on reaching a mutually agreeable settlement for parties to the process, but importantly, the process itself is built around ‘peace-making’. Although not always successful, mediation holds space for parties to repair a relationship that may otherwise be lost in the dispute.
The benefits to the civil justice system are significant. The current backlog of cases in the small claims court sits at around 800,000 cases. The courts are overloaded, underfunded, and this backlog has been exacerbated by the coronavirus pandemic. Ordering parties to engage in ADR and encouraging an agreement to be reached outside of court, will undoubtedly ease the amounting pressure on the court system and aid in clearing the backlog.
We can look upon Italy as an example, which has the leading mediation model in the world. In Italy, parties are auto-opted into mediation as soon as proceedings are filed in court. The expectation is merely for parties to attend mediation for one hour. However, the approach has proven that parties that attend mediation, overall, do not leave without reaching a settlement. The country has seen 8 million cases mediated, with a success rate of 70%.
These statistics highlight the potential of ADR which is set to become an integral part of our civil justice system in the months and years to come. If parties embrace the opportunity, the benefits for all involved will speak for themselves.
