Is mandatory ADR lawful?

Is mandatory ADR lawful?

This is the question that has just been answered by the Court of Appeal in an extremely important and eagerly awaited judgment that was handed down yesterday (29 November 2023).

The facts were relatively simple. Mr Churchill bought a property in Merthyr Tydfil in 2015. Merthyr Tydfil County Borough Council (the Council) owns adjoining land. Mr Churchill claimed that, since 2016, Japanese knotweed had encroached from the Council’s land onto his property. In October 2020, Mr Churchill’s solicitors sent a letter of claim to the Council seeking financial compensation for the claimed reduction in value and loss of enjoyment of his property. The Council responded in January 2021 to query why Mr Churchill had not made use of its complaints procedure and said that if he issued legal proceeding without having done so, it would apply to the court for a stay of those proceedings and for its costs.

Mr Churchill did not make use of the Council’s complaints procedure and instigated legal proceedings in July 2021. In February 2022 the Council applied for the stay as it had said it would.

In the court at first instance, Mr Churchill argued that the court could not lawfully order him to engage in the Council’s internal complaints procedure to which he was not contractually bound and raised the general question of whether a court can lawfully order the parties to court proceedings to engage in a non-court-based dispute resolution process, and, if so, in what circumstances it should do so.

In May 2022, the first instance judge, Deputy District Judge Kempton Rees, dismissed the Council’s application for a stay on the grounds that he was bound by legal precedent to follow Dyson LJ’s statement in Halsey v. Milton Keynes General NHS Trust [2004] EWCA Civ 576, [2004] 1 WLR 3002 (Halsey) to the effect that: “to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court”.

In August 2022, the Council was granted permission to appeal that judgment and, because the case raised an important point of principle and practice and there were may other similar cases, the appeal was sent straight to the Court of Appeal. As an indication of the significance of the outcome of the appeal judgment to the Alternative Dispute Resolution (ADR) and mediation community The Law Society, The Bar Council, The Civil Mediation Council, The Centre for Effective Dispute Resolution, The Chartered Institute of Arbitrators, Housing Law Practitioners’ Association and The Social Housing Law Association all contributed to the legal arguments as interveners.

In a judgment that, for anyone who is interested in the subject matter, bears reading in full, The Master of the Rolls, Sir Geoffrey Vos, reviewed the legal precedents, including Halsey, and concluded that “the court can lawfully stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process provided that the order made does not impair the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.”

In coming to that conclusion, he declined to lay down fixed principles as to what will be relevant to determining the questions of a stay of proceedings or an order that the parties engage in a non-court-based dispute resolution process but said that many of the factors he had set out at paragraphs 61-63 of his judgment and the nature of the process contemplated will be relevant, as will other circumstances.

The judgment and learned commentary upon it is already one of the hottest topics in the legal world and will provide subject matter for many happy hours of further discussion and legal analysis. Our Mark Sanders is a Fellow of the Chartered Institute of Arbitrators and will be participating in those discussions.

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