UK government proposes mandatory mediation in small claims and consults on increased regulation of the mediation industry

The Ministry of Justice (MoJ) has launched a public consultation on Increasing the use of mediation in the civil justice system.

It has also given an indication that the government intends for the UK to sign and ratify the Singapore Convention on Mediated Settlements.

The consultation issues

The consultation document seeks views on two distinct issues:

  1. A government proposal to introduce mandatory mediation for all defended Small Claims in the County Court (ie most claims valued below £10,000). Under the proposal, all parties in such actions will be required to participate in a free one hour telephone mediation (not just an information session about mediation) conducted by mediators within HMCTS –  under expansion of the Small Claims Mediation Service (which is currently voluntary).
    It appears to assume that the proposal will proceed, with the consultation focusing on possible exemptions (by case category and/or on a case-by-case basis), sanctions for non-compliance, and how the court should assess whether a party has engaged adequately with the mediation process.
  2. In anticipation of extending mandatory mediation to other County Court claims and beyond, involving use of the private mediation sector, views are sought on whether there is a need for increased regulation and oversight of the mediation industry, such as through accreditation of mediators, formalising standards of conduct and/or establishment of an industry regulator.

The proposal for mandatory mediation of Small Claims, although modest in terms of what it demands of parties, is significant as the first instance of compulsory mediation being made a permanent feature of an entire area of the English courts. Of course, such reform has been clearly foreshadowed over the past year, since the Civil Justice Council’s groundbreaking July 2021 report endorsing compulsory ADR in principle, which has been fully embraced by both the MoJ and the senior judiciary (as noted here).

The current consultation also sits alongside a parallel workstream being pursued by the Department of Business, Energy and Industrial Strategy (BEIS) regarding ADR of consumer disputes outside the court system (such as through Ombudsmen and other ADR schemes). As we recently reported, it is examining the role of compulsion in such schemes as well as introducing measures to strengthen the accreditation framework for consumer ADR providers.

The current MoJ consultation closes on 4 October 2022.

Singapore Convention

Although not the subject of the consultation, the Singapore Convention is mentioned briefly in a section referring to other government initiatives to promote mediation. It notes that these include

“.. proposing to support UK’s intention to ratify the UN Convention on International Settlement Agreements (the “Singapore Convention on Mediation”)“.

It is not clear whether this should be read as confirmation that the government has made its decision on whether to sign the Convention, and we still expect a more formal announcement in that regard following its consultation on that specific question earlier this year. However, the above reference supports the current widespread expectation that it will do so.

For a discussion of the practical impacts of the Singapore Convention for mediating parties, see our earlier posts collected here.

Jan O'Neill
Jan O'Neill
Professional Support Lawyer, London
+44 20 7466 2202

UK government report on responses to its Call for Evidence on ADR

The Ministry of Justice has published a Report summarising the responses it received to a Call for Evidence it issued in August last year.

Although entitled a Call for Evidence on Dispute Resolution in England and Wales, the document was in fact focused on methods of resolving disputes apart from litigation –  including mediation, conciliation, arbitration, Ombudsmen schemes and similar. (The somewhat confusing reference to such processes as simply “dispute resolution” reflects the recent policy of moving away from the description of non-court resolution as “alternative”).

The Call for Evidence sought views on a range of topics concerning non-court resolution, including drivers of engagement, standards and regulation of ADR providers, and the use of technology.  It was described as dovetailing with the Civil Justice Council’s (CJC) reviews into ADR in recent years, including its June 2021 report endorsing in principle the use of compulsory ADR in the English courts.

A total of 193 responses to the Call for Evidence were received. Given that it sought input from all categories of stakeholders across the entire civil, family and administrative jurisdictions, it is unsurprising that the views on almost all topics were “mixed”, including on the hot topic of compulsory ADR.

Next steps

The Report does not include any policy proposals or recommendations, or identify any specific future workstreams.  The “Conclusion and Next Steps” section is limited to a paragraph stating:

“The information gathered from this consultation exercise will inform the government’s developing work on how to utilise dispute resolution processes to deliver swifter, more cost-effective and more consensual access to justice. Any future policy proposals will be subject to further public consultation.”

We have previously made the point that it is difficult to analyse the role of ADR in the civil justice system in any meaningful way from the perspective of the entire system. The factors that influence how and when it can best be employed, and how to optimise its use, differ markedly across the very broad spectrum of claim types. What may be appropriate in one area may be ineffective or detrimental in other areas.

While that fact is commonly acknowledged briefly in policy discussions around ADR (including this Report), the substance has remained for the most part focused at a high level. It is hoped that the next stages of the various reforms and developments currently underway will reflect this reality more substantively by considering separately the particular features of different categories of civil claims.

(Non) alternative dispute resolution in the UK civil courts: Has its day finally come?

The last year has seen a notable increase in focus on the role of ADR in the English civil justice system, from both the judiciary and government.

Amongst the various moving parts in what is becoming a crowded landscape of developments are:

  • the Master of the Rolls’ vision for out-of-court resolution options to be fully embedded throughout the court system, rather than an ‘alternative’ to it
  • the Civil Justice Council’s in-principle endorsement of mandatory ADR  last year
  • the Ministry of Justice’s subsequent Call for Evidence on that and other ADR issues
  • the government’s proposed signing of the Singapore Convention
  • the pandemic-led advent of remote mediation
  • recent Civil Justice Council proposals for changes to the ADR requirements within the pre-action protocols.

Jan O’Neill in our London Disputes team has published a post on the Practical Law Dispute Resolution Blog examining the various factors at play. Read the post here.

 

Jan O'Neill
Jan O'Neill
Professional Support Lawyer, London
+44 20 7466 2202

 

 

Civil Justice Council proposed reforms to pre-action protocols include controversial ADR provisions

Recent Civil Justice Council proposals for reforms to the civil pre-action protocols (PAPs) have sparked some concern that, if they are intended to apply to commercial disputes via a default general protocol, they would represent a departure from current practice and a significantly more prescriptive approach.

Amongst the more controversial suggestions is the introduction of a “good faith obligation to try to resolve or narrow the dispute at the pre-action stage”.

This would go significantly further than the current PAP requirement to consider ADR at the pre-action stage, and would arguably amount to a mandatory ADR gateway – requiring the parties to take a “concrete step” toward settling the dispute, as a distinct stage in a series of preconditions to commencing proceedings.

In the context of the ongoing separate review into the issue of mandatory ADR, we and many other users of the commercial courts have reiterated a view that substantial commercial litigation is an area of civil justice where compelling ADR would be not only unnecessary but counterproductive to efforts to encourage out-of-court resolution.

The Law Society’s recently published response to the PAP proposals also confirms that it does not support the notion of PAPs being a default mechanism for the delivery of mandatory ADR.

The hope is that the CJC’s final report and recommendations will recognise the need for pragmatic flexibility in complex commercial litigation. Even then the matter ultimately rests with the Civil Procedure Rules Committee, which retains responsibility for drafting – or rejecting – any change to the pre-action protocols.

For more detail on the CJC’s proposals and our commentary, see this post on our Litigation Notes blog.

 

Jan O'Neill
Jan O'Neill
Professional Support Lawyer, London
+44 20 7466 2202

 

Court of Appeal orders early neutral evaluation despite party objection

The Court of Appeal has held that the court has power to order an early neutral evaluation (ENE) by a judge even where one or more parties do not consent to that course. There was no reason to imply into the relevant rule giving the court power to order ENE any limitation based on the parties’ consent: Lomax v Lomax [2019] EWCA Civ 1467.

Early neutral evaluation (ENE) is a form of alternative dispute resolution in which a neutral third party (often a judge) provides the disputing parties with a non-binding assessment of the merits of the dispute. The aim of the process is to assist the parties’ bilateral settlement discussions by encouraging them to appraise their cases realistically and step away from deadlocked positions.

The use of ENE in the UK has been very limited to date and the decision has the potential to prompt an increase in its use.  Although it is unlikely to result in a large number of cases where judges order such a hearing over the parties’ objections, particularly in commercial disputes, the increased prominence of the process through the Court of Appeal’s strong endorsement of it could feasibly lead to it being more frequently suggested by judges and/or proposed by parties.

Perhaps more importantly, the decision is arguably of wider significance in the context of the ongoing debate as to the extent to which the court’s encouragement of ADR should extend into compulsion.  Since the Court of Appeal’s 2004 decision in Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002, the established position in the UK has been that, while the court may strongly encourage parties to engage in ADR (including imposing costs sanctions for unreasonable refusal to mediate), this power stops short of compelling unwilling parties to do so.   Amongst other reasons, it was held in Halsey that such compulsion would amount to an unacceptable obstruction of the parties right of access to the court, in breach of Article 6 of the European Convention on Human Rights.

However, as efforts to increase the use of ADR have failed to meet expectations, and with the increased focus on the efficient use of the courts’ resources, there have been increasingly prominent voices calling for a reconsideration of this position, at least for particular categories of disputes. These voices include that of Lord Justice Ward in Wright v Michael Wright Supplies Ltd & Anor [2013] EWCA Civ 234 (see our post here), in which Ward LJ (who was himself on the panel in Halsey) queried with hindsight the correctness of the “access to justice” objection.  Whilst the point did not need to be decided in Wright, Ward LJ suggested that a bold judge may in future wish to rule on this question, in order that the Court of Appeal might revisit this aspect of Halsey.

The Court of Appeal in the present case has not directly taken up that challenge.  It held that compelling ENE could be distinguished from the circumstances addressed by Halsey, and it therefore did not need to enter into the question raised in Wright as to what Halsey determined and the extent to which it remains good law. The court limited itself in this regard to a comment that “the court’s engagement with mediation has progressed significantly since Halsey was decided”.

The court’s decision here was clearly driven by its view of the value of ENE as a process, as demonstrated particularly by its successful use in the Family Division. However, the grounds on which the court was prepared to distinguish Halsey in order to compel ENE arguably suggest an openness to moving away from a wholesale prohibition on compelling ADR, and to open the door further to a full reconsideration of Halsey.

As we have previously commented, the extent to which such a development would be welcome would depend on the degree to which it took into account the vast differences in the types of cases dealt with across the civil litigation landscape.  What measures may be appropriate to encourage a greater use of ADR will depend on a range of factors which differ across the broad range of claim types, not least of which includes the litigants’ level of familiarity with litigation and ADR processes (“ADR reform: One size does not fit all“).

Background

The context for the decision was an application by a widow under the Inheritance (Provision for Family & Dependants) Act 1975.  The claimant sought an ENE hearing, which the defendant opposed on the basis that it considered mediation to be the preferable ADR option in the circumstances.  Although the trial judge considered that the case “cries … out for a robust judge-led process”, she concluded that the court did not have the power to order an ENE hearing in the absence of all parties’ consent to the process.

Decision

The court’s decision was given by Lord Justice Moylan, with Lord Justice McCombe and Lady Justice Rose agreeing.

The court approached the issue principally by reference to CPR 3.1(2)(m).  Rule 3.1 contains the court’s general case management powers and sets out a list of powers which are in addition to any other powers the court might have. The list includes, at paragraph 2(m), a catch-all provision specifying that the court may “take any other step or make any other order for the purpose of managing the case and furthering the overriding objective, including hearing an Early Neutral Evaluation with the aim of helping the parties settle the case”. The reference to ENE was added in October 2015 and was broadly understood to have been prompted by the decision in Seals and Seals v Williams [2015] EWHC 1829 in which Norris J concluded that the court had power to order an ENE despite there being no reference to such power in the rules.  In that case, the parties had consented to the ENE process.

The claimant argued that there was nothing in the wording of the provision or in principle to justify reading it as though it was dependant on the parties’ agreement.  It also noted that, up until recently, commentary in the White Book stated that the power to order an ENE “is not constrained by the need to secure party consent” (this was deleted and the current version does not address the question of party consent).

Unsurprisingly, the defendant relied heavily upon Halsey. It argued that that authority applied to all forms of ADR, was still good law, and therefore precluded the court from interpreting the rules in such a way as would allow the court to order any form of ADR over a party’s objection. It also noted that each of the Commercial Court Guide, the Technology and Construction Court Guide and the Chancery Guide includes statements to the effect that party consent is a prerequisite to the ordering of ENE.

The court concluded that there was no reason to imply into CPR 3.1(2)(m) any limitation on the court’s power to order an ENE hearing in the absence of the parties’ consent. In particular:

  • In relation to the Court Guides, the court confirmed that, whilst they can assist in particular where there is ambiguity, the effect of rules and directions cannot be suspended or disapplied by what may be said in such guides.  Similarly,  commentary in the White Book (or the deletion of such commentary) is not determinative as to the proper interpretation of the rules.
  • As to Halsey, the court stated:

“I do not consider that Halsey v Milton Keynes assists with the proper interpretation of subparagraph (m) because it was dealing with a very different situation. It was concerned with whether a court can oblige parties ‘to submit their disputes to mediation’. It does not, therefore, in my view assist with the interpretation of subparagraph (m), which is dealing with an ENE hearing as part of the court process.”

The court went on to note that, in any event, ENE does not prevent the parties from having their disputes determined by the court if they do not settle their dispute at or following an ENE hearing and concluded that the process therefore does not obstruct a party’s access to the court. Insofar as it includes an additional step in the process, the court did not consider this in any sense an “unacceptable constraint” of the type disapproved of in Halsey.

It is not clear on what basis the court considered this position distinguishable from mediation, following which the parties can similarly commence or continue court proceedings if no settlement was reached.

It is also not clear whether the court intended to suggest that the prohibition in Halsey was limited to mediation. Such a distinction would be difficult to justify given that the judgments in Halsey refer on several occasions to “ADR” generally when expressing the prohibition. The court in the present case does not appear to have taken issue with the defendant’s submission that ENE is a form of ADR (within the glossary definition in the White Book).

  • On the issue of ENE more generally, the court was clearly heavily influenced by its use in financial remedy cases in the Family Division since 1996 (in the form of Financial Dispute Resolution (FDR) appointments).  The court agreed with the trial judge’s observation that that process had been “outstandingly successful”.  Further, it observed that those benefits frequently extended to cases where the parties were resistant or even hostile to the suggestion of resolving the dispute by agreement and resistant to the listing of an FDR.  The court referred here with approval to the observations of Norris J in Bradley v Heslin [2014] EWHC 3267 (Ch) in the context of boundary disputes:

“I think it is no longer enough to leave the parties the opportunity to mediate and to warn of costs consequences if the opportunity is not taken. In boundary and neighbour disputes the opportunities are not being taken and the warnings are not being heeded, and those embroiled in them need saving from themselves.”

Given the trial judge’s clear view that ENE was appropriate in this case, the court directed that such a hearing take place.

Jan O'Neill
Jan O'Neill
Professional Support Lawyer, London
+44 20 7466 2202

 

 

UK: Civil Justice Council report on ADR calls for review of Halsey guidelines but stops short of recommending mandatory mediation

Jan O’Neill
Professional Support Lawyer, London

 

The Civil Justice Council’s ADR working group has released its final report on ADR and Civil Justice, following consultation on its interim report released last year. The broad mandate of the review was “to maintain the search for the right relationship between civil justice and ADR” and to promote debate over possible reforms.

The report includes various recommendations aimed at improving the awareness of ADR (both in the general public and in the professions/judiciary) and the availability of ADR (both in terms of funding/logistics and regulation of the professionals involved).

However the recommendations likely to be of most interest to users of the civil justice system in the short term are those that relate to Court/Government encouragement of ADR.  In this regard:

  • The report does not support blanket compulsion of ADR in the sense of requiring proof of ADR activity as an administrative precondition to any particular step in the litigation.
  • It also rejects the introduction of mandatory Mediation Information and Advice Meetings (as used in the family courts) as a precondition to pursuing civil claims.

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Article published – ADR reform: one size does not fit all

On 6 March, the Civil Justice Council held a workshop to discuss the recommendations made in its interim report on ADR, which was subject to consultation late last year. The interim report addresses concerns regarding a perceived underuse of ADR within some sections of the civil justice system and suggests a variety of possible corrective measures. The proposals include a power for the court to determine whether costs sanctions should be imposed for unreasonable conduct relating to ADR (such as an unreasonable refusal to mediate) not only at the end of a case, as currently, but during the matter when the decisions regarding ADR are taken.

Jan O’Neill has published a post on Practical Law’s Dispute Resolution blog in which she questions how realistic the suggestion of “midstream” assessment of parties’ conduct relating to ADR would be in practice. She suggests that many of the concerns expressed in the report as to the underuse of ADR are not relevant to many larger, complex claims, and urges the working group to tailor any final recommendations to the specific courts or dispute types for which the evidence suggests they are needed and practicable.

Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).