Mediation has been an important part of commercial litigation since before I came to the law in 2000.
Back then, it was the parties’ decision whether to mediate. The alternative was for the dispute to be determined by a court.
But in 2023, with the Court of Appeal’s landmark decision in Churchill v Merthyr Tydfil County Borough Council, everything changed.
A turning point for ADR
For nearly twenty years, the case of Halsey v Milton Keynes General NHS Trust was widely taken to mean that while the court could encourage mediation, and even penalise an unreasonable refusal. However, it would not, and could not, compel unwilling parties to mediate.
The Court of Appeal changed all that with its decision in Churchill. It held that the court can order parties to go to mediation. The court cannot not deprive parties of a judicial hearing; any mandatory ADR must be proportionate to the aim of resolving the dispute fairly; and of course settlement itself remains the choice of the parties. However, the court can order a stay and oblige the parties to use it for mediation.
That shift was reinforced by amendments to the Civil Procedure Rules (CPR) effective from 1 October 2024 when the guiding principle (the overriding objective) was amended to expressly include the court promoting or using alternative dispute resolution. Active case management powers were also expanded to give the court the power to order or encourage ADR. The rules also expressly set out that a failure to comply with an ADR order, or an unreasonable failure to engage in ADR, can be taken into account when the court is exercising its discretion as to costs.
Encouragement to expectation
A number of recent decisions since Churchill show how the courts are willing both to scrutinise whether parties have genuinely engaged with opportunities to resolve their disputes through ADR and to order participation in mediation or another form of ADR. For example:
- Conway v Conway (2024) – The successful defendants’ recoverable costs were reduced following their unreasonable refusal to mediate. Observing that the importance of mediation could never be over-emphasised, the court said the defendants needed compelling reasons to justify rejecting the mediation proposal out of hand.
- Northamber plc v Genee World Ltd (2024) – A defendant ignored a mediation invitation and failed to provide reasons for non-engagement as required by an earlier order. The Court of Appeal imposed an additional costs sanction noting that “If breaches of such orders are ignored by courts when deciding costs, parties will have no incentive to comply with them. That would undermine the purpose of making them, which is robustly to encourage parties to mediate”.
- DKH Retail Ltd v City Football Group Ltd (2024) – The court ordered a “short and sharp” mediation at the claimant’s request despite objections about its prospects of success and proximity to trial by the defendant. Despite this resistance, the parties subsequently reported to the court that the dispute had settled.
- Dover Farm Developments Ltd v Smith (2025) – The court stayed proceedings for court-conducted mediation because the defendant could not afford private mediation, adapting the ADR process to the parties’ circumstances.
- Webster v Treloars Trust (2025) – The court refused a group litigation order (GLO), relying in part on the emphasis on ADR in the overriding objective. It would not be an appropriate use of the court’s resources to permit the claims to proceed let alone approve a GLO until the potential claimants had made claims in accordance with the relevant government compensation scheme (that being a form of ADR).
- Sky UK Ltd v Riverstone Managing Agency Ltd (2025) – The court directed the parties to attempt to resolve the dispute through negotiated dispute resolution, setting a specific window for that process.
Is mediation now mandatory?
Almost but not quite.
A party does not have to accept an invitation to mediate. However, they should expect consequences if that invitation is ignored or rejected out of hand. Those consequences will come in the form of costs penalties even for a successful party, and that has been the case for a long time.
This is not a blanket charter for speculative chancers to drag defendants through the expense of mediation. It will always remain in the discretion of the court.
The reasons for refusing mediation matter and will be taken into account. Relevant considerations might include the nature of the dispute, the merits of the case, previous settlement attempts, the likely cost of mediation, potential delay and the prospects of achieving a useful outcome.
But if you are going to refuse, you would be wise to put your reasons to your opponent in writing. And whilst doing so, perhaps pause to consider whether those reasons are really credible.
What is different since Churchill and the CPR amendments is that the court can order parties to mediate. As the above case law has shown, the courts are increasingly willing to make ADR orders. As judges become more familiar with ADR orders, we may even see them becoming routine in directions for trial.
Disobeying an order of the court is likely to have serious consequences. The courts’ approach to non-compliance with ADR orders is still developing. However, consequences may come to extend beyond adverse costs orders. We may yet see unless orders, specifying an automatic sanction for non-compliance. In an extreme case, non-compliance could potentially lead to the striking out of a claim or defence.
Put briefly, whilst mediation is not mandatory in commercial litigation, obeying court orders is. So, when you receive an ADR order, you should obey it.
When should I mediate?
Mediation works best when parties engage willingly and at the right stage. They both want resolution and they have the information that they need to achieve it.
Some disputes, and indeed some parties, just aren’t ready for mediation. The facts are up in the air, the documents have not been disclosed, the risk not fully assessed, and the parties are just not ready to compromise.
But those disputes are actually few and far between. More often the parties or even their solicitors imagine that their case is too tough to settle, when in fact it’s screaming out for mediation.
There is far more to a dispute than the simple martialling of facts: There is the time; the expense; diversion of resource; personal impact; reputation; stress, risk and a whole host of other commercial imperatives in play.
Mediation has a wonderful way of cutting through the noise, dispelling the red mist, and helping parties to focus on what actually matters in the dispute.
Mediation is about more than just being right. Settlement is about finding a resolution that both sides can accept. This may come from the exchange of information and evidence, the delivery of an apology, the humanising of an opponent, or simply by cutting the knot and getting straight to the deal.
Settlement is much cheaper before the costs have been incurred and will involve far less bad blood. It takes the decision out of the hands of the court and puts control back into the hands of the parties. Even if it does not settle on the day, an effective mediation may help to narrow the issues, break down barriers and open the door to settlement down the line.
So, consider mediation early, keep it under review. Take invitations to mediate seriously, and be sure that your reasons for refusal are credible.
Take any order to mediate very seriously because breaching court orders is bad, and the court may well be right that this is a matter that the parties can sort out for themselves.
How we can help
Alex Jakubowski is partner in Clarke Willmott and leads the commercial disputes team in Bristol, Cardiff, Birmingham and London.
He is an ADR Group accredited mediator with 15 years’ mediation experience. He is ranked in the Legal 500 for his mediation expertise.
He accepts mediation instructions across the country and is able to offer rooms in Bristol, Taunton, London and Southampton.
If you would like to instruct him, then please get in touch.