For the last 20 years it has been thought that it could not.
In the hugely significant decision in Churchill v Merthyr Tydfil County Borough Council , the Court of Appeal has confirmed that it can.
We look below at how the court has previously approached the use of alternative methods of resolving disputes, what the court decided in Churchill and how the decision might impact on future cases.
What is Alternative Dispute Resolution (ADR)?
ADR is a collective description of methods of resolving disputes otherwise than through the traditional court process.
There is some debate about what methods come within the description, but in England and Wales ADR is generally thought to include negotiation, mediation, early neutral evaluation, expert determination, adjudication, arbitration and ombudsmen schemes.
Some also criticise the use of the word “alternative” in the description, partly because ADR is often attempted before or in parallel with, rather than instead of, court proceedings.
The courts historic approach to ADR
To see how the court’s thinking has evolved, one just has to look at the court’s approach to ADR at the case management stage of proceedings over the last 20 years.
Initially, the standard forms parties were required to complete to help the court decide what directions to make about the next steps in the proceedings simply asked the parties if they wished to suspend the case for a month to allow settlement discussions to take place.
Those forms have changed over time, so that they now require each party’s legal representative to confirm that they have explained the need to try to settle to their client, and the potential cost sanctions for refusing. Parties who don’t want to suspend the proceedings to allow time for settlement negotiations have to give reasons why they consider it inappropriate to settle at this stage. Some courts now even direct a party to set out in a witness statement why they have refused a proposal by the other side to engage in a particular form of ADR.
The direction of travel has therefore been clear.
The courts have gone from asking if the parties want to have time to try some form of ADR, to strongly encouraging them to use ADR and penalising them in costs if they unreasonably refuse to do so.
However, until now, it was thought that the court only had the power to encourage the parties to enter into an ADR process but that it could not require them to do so.
This stemmed from comments made by the Court of Appeal in a case called Halsey v Milton Keynes General NHS Trust .
Halsey v Milton Keynes General NHS Trust 
The general rule on costs in court proceedings is that the unsuccessful party will be ordered to pay the costs of the successful party.
However, the Civil Procedure Rules that govern practice and procedure for civil claims, say that the court has the discretion to make a different order having regard to all the circumstances.
The court can take a variety of factors into account when deciding whether it might be appropriate to depart from the general rule, including the conduct of the parties before and during the proceedings, and any settlement offers the parties have put forward.
Halsey involved two separate cases that were consolidated because they gave rise to the same issue.
The issue in Halsey was whether the successful party in each case should be deprived of their costs because they had previously refused invitations to take part in an ADR process (in these cases, mediation).
The Court of Appeal held that the successful parties should not be denied their entitlement to costs just because they had refused to mediate.
In reaching this conclusion, the lead judge made a number of comments which caused the legal profession to believe that the court could not compel parties to attempt ADR.
For example, the judge said that it was one thing to encourage parties to agree to mediation, even in the strongest terms, but it was another to order them to do so. To order unwilling parties to refer their disputes to ADR would, he thought, impose an unacceptable obstruction on their right of access to the court. Even if that was wrong, the judge found it difficult to conceive of circumstances in which it would be appropriate to force unwilling parties to attempt ADR.
Churchill v Merthyr Tydfil County Borough Council 
Mr Churchill had bought a property in Wales. The Council owned the adjoining land. The claimant claimed that Japanese knotweed had encroached from the Council’s land onto his own land, causing damage and a reduction in the value of his property.
In response to a letter of claim, the Council queried why Mr Churchill had not made use of a complaints handling procedure that it operated. The Council said that, if Mr Churchill did not use that procedure, it would ask the court to suspend any subsequent court proceedings and draw attention to this on the matter of costs.
Despite the Council’s warning, Mr Churchill went ahead and issued court proceedings.
The Council applied to the court to suspend the claim as it had said it would.
The County Court dismissed the Council’s application for a suspension. The District Judge believed he was bound by the Court of Appeal’s comments in Halsey to the effect that unwilling parties should not be forced to use ADR. This was despite believing that Mr Churchill had acted unreasonably in failing to engage with the Council’s complaints procedure.
The Council appealed.
The Court of Appeal decided that:
- The comments in Halsey about being unable to compel unwilling parties to submit to ADR were not binding on other courts. Halsey was about whether cost sanctions should be imposed for a refusal to agree to ADR, not whether the court could order parties to participate in ADR. The Judge’s comments in Halsey did not, therefore, form a necessary part of the reasoning that led to the decision in that case.
- The court does have the power to suspend proceedings for, or order, the parties to engage in a non-court-based dispute resolution process.
- The court should, however, only exercise its power to suspend proceedings or compel parties to engage in ADR if the order will not impair the claimant’s right to a fair trial, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.
- Whether the court should order or facilitate any particular method of ADR in a particular case is a matter of the court's discretion, to which many factors will be relevant. The Court of Appeal declined to lay down fixed principles or provide a checklist of relevant factors, as this will depend on the circumstances of each case. Such factors might, for example, include the type of ADR process proposed; whether the parties are legally represented; the urgency of the case; the costs of ADR; and the prospects of the matter being resolved through ADR.
Although it was obvious that the County Court would have ordered a suspension had it known at the time that it was not bound by Halsey, things had now moved on.
The Court of Appeal concluded that there was little point in suspending Mr Churchill’s claim for one-month given where matters currently stood, deciding to leave arguments about the Council’s particular internal complaints procedure to be resolved on another occasion (presumably when the matter of costs is dealt with at the end of any future trial).
The parties were, however, encouraged to try to agree to a temporary suspension to attempt some form of ADR.
This decision firmly embeds non-court-based dispute resolution processes within the civil justice system.
There are numerous benefits to ADR. In many cases a process, such as mediation, can result in a quicker, more cost-effective and potentially fairer resolution than going to trial. Mediation is a particularly strong option for property disputes, as the parties can agree creative solutions that the court could never impose.
The judgment does, however, leave a few questions up in the air and could have some unintended consequences. For example, might we see more satellite litigation around whether or not ADR would be appropriate in a particular case? What will the court do if each party proposes a different form of ADR? Might fewer adverse costs orders be made if parties that might previously have unreasonably refused to engage in ADR may now be forced to do so? And, if an unwilling party can be forced to try ADR, but cannot be compelled to actively participate or actually settle, will the focus of future costs battles now shift to how a party conducted themselves during the process? Time will tell.
The Court of Appeal’s decision is, though, overwhelmingly positive. If you lead more horses to water, a greater number of them will drink.