Will Cole

The growth of ADR

Since the turn of the century, the courts in the jurisdictions of England and Wales and Scotland have become more supportive of the use of alternative dispute resolution (ADR) processes such as mediation as a means to resolve civil litigation. Where all parties want time to attempt ADR, courts north and south of the border will generally try to accommodate it. It is where the parties do not agree about ADR that approaches have diverged.

English courts wield the stick

In England and Wales, a series of decisions by senior courts going back to 2002 established a general principle that if, during civil proceedings, one party unreasonably refused the other party’s offer of mediation, the court could penalise the refusing party later. The penalty would come in the form of ‘costs’ (what we call “judicial expenses” in Scotland); either an increased costs liability if the refusing party ends up losing the case, or a decreased costs recovery if the refusing party wins. While this did not make mediation compulsory for civil litigants in England, it gave impetus to its use.

Scottish courts leave it to the carrot

In Scotland, on the other hand, no such general rule has been established. While the use of mediation has certainly become more common here too, this has happened more organically. It has happened in large part because lawyers and their clients have become more familiar with the process and the potential benefits of it, not because of any fear of reprisal.

Momentum gained and lost in Scotland

In the years running up to 2021, mediation seemed to be picking up momentum in Scotland. In the 2016 siimple procedure rules for claims worth up to £5,000, sheriffs (the judges in the local courts) were empowered to refer parties to ADR. In May 2019, Margaret Mitchell MSP proposed a private Mediation (Scotland) Bill. The same month, the Scottish government announced a collaborative partnership with the Law Society of Scotland, the Faculty of Advocates, the Royal Institute of Chartered Surveyors in Scotland and the Chartered Institute of Arbitrators to promote Scotland as a world-class centre for dispute resolution. The Scottish government had previously organised an independent review of mediation by an expert group, which produced a report in June 2019 entitled “Bringing mediation into the mainstream in the civil justice system in Scotland”.

The report made a number of recommendations, including building a degree of compulsion into the Scottish system, and introducing a Scottish government’s mediation bill. In response, the Scottish government convened the Scottish Dispute Resolution Delivery Group “to develop and shape an evidence-based package of reform” which commenced meeting in 2020. Regrettably, the Group seems only to have had the opportunity to meet four times before dissolving, and no package of reform has materialised. According to the FOI response we have recently received, the Group’s activity ceased “due to the combined pressures of responding to COVID 19 and Brexit pressures”.

Government initiatives in 2024

Although perhaps lacking the ambition shown prior to 2021, the present Scottish government administration has continued to identify itself as pro-mediation. We have been told that “[t]he focus of the current Scottish government is to expand the availability of free mediation services to widen access to justice for citizens and businesses consistently across the whole of Scotland.” To date, this seems to have manifested in the extension of funding for free mediation services in simple procedure cases (up to £5,000) from 22 to 39 Sheriff Court areas. A modest but positive development, since the power to refer parties to mediation is of limited utility if cost effective mediation services are not actually available.

Not to be outdone, the Ministry of Justice has recently stated an intention to introduce a free mediation scheme during the course of this year and make it a standard part of the procedure in England and Wales for claims worth up to £10,000.

Churchill: renewed momentum south of the border

A recent decision of the Court of Appeal may prove to be just as significant as the government initiatives mentioned above. In Churchill v Merthyr Tydfil County Borough Council, the court decided that the courts can competently order parties to attempt ADR.

Mr Churchill had claimed that Japanese knotweed had encroached from the council’s land on to his. He sent the council a letter of claim. The council asked Mr Churchill to use ADR, namely its corporate complaints procedure. Mr Churchill issued nuisance proceedings in court regardless, and the council asked the court to ‘stay’ (pause) the case to allow the corporate complaints procedure to take its course.

The judge at first instance (Deputy District Judge Kempton Rees) refused to pause the case, based on the Court of Appeal’s 2004 decision in Halsey v Milton Keynes General NHS Trust. In that case, the Court of Appeal had considered how to apply the general principle about ‘costs’ mentioned above. In the judgment, Lord Justice Dyson had made comments to the effect that going as far as ordering the parties to engage in ADR would be an unacceptable restraint on their ‘human right’ of access to the court under Article 6 of the ECHR.

Importantly, however, the judge also held that Mr Churchill and his lawyers had acted unreasonably by failing to engage with the corporate complaints procedure. This was contrary to the spirit and the letter of the court’s pre-action protocol. The relevant protocol provided, amongst other things, that parties to a dispute should consider whether ADR might enable them to settle their dispute without commencing proceedings; and that a party’s refusal to participate in ADR might be considered unreasonable and lead to an order to pay additional costs.

In Churchill, the Court of Appeal was persuaded to look at the comments in Halsey again, following interventions by a number of organisations interested in ADR, including the Civil Mediation Council, the Chartered Institute of Arbitrators, the Centre for Effective Dispute Resolution, the English Law Society, and the Bar Council. In a judgment delivered by Sir Geoffrey Vos, Master of the Rolls, the court decided that the comments in Halsey about the potential breach of human rights should be disregarded.

Firstly, because those comments had never been binding on lower courts. They were only obiter dicta. That is, non-binding incidental remarks which were not essential to the court’s judgment on the matter at issue. Secondly, because the comments were wrong. A court could order parties to attempt ADR without breaching their human rights, as long as what was being ordered was proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost, and did not prevent the parties coming back to court if the dispute did not settle. The Civil Procedure Rules required courts to actively manage cases, including by encouraging and facilitating ADR where appropriate. The courts also had a specific power to stay the proceedings if they considered it appropriate, even without the parties requesting it, which they could use. In conclusion, courts could “lawfully stay existing proceedings for, or order, the parties to engage in a non-court-based dispute resolution process”.

Churchill in Scotland

Churchill is not technically binding on the Scottish courts. Having said that, Scotland is part of the same human rights framework as England and Wales. The Scottish courts may well find the Court of Appeal’s reasoning in Churchill “persuasive”; and the provisions in the English pre-action protocols and CPR do have analogues in Scottish procedure, notably in commercial cases.

Looking specifically at Scottish commercial court procedure, the Court of Session’s 2017 Practice Note makes clear that the parties to a dispute should consider whether ADR would help resolve any of the issues at various key stages. In particular, like the English protocol referred to in Churchill, it requires parties to consider and discuss, before litigating, whether the dispute may be amenable to ADR.

Given the history set out above, it is perhaps unsurprising that the authors of the 2017 Practice Note did not go as far as providing for orders for ADR. However, the Practice Note does envisage the judge “continuing” (adjourning) the initial “Preliminary Hearing” to allow time to comply with the pre-action provisions, which include the requirement to consider and discuss ADR. Moreover, like the English judges operating under CPR, judges in Scottish commercial cases are given very wide case management powers, including the power to make such orders as they think fit for the speedy determination of the action. The Practice Note makes clear that this includes the power to order the parties to have a joint meeting to explore whether the dispute is capable of extra-judicial settlement, which is expected to happen “in most cases”. It might not seem that great a leap from this to making orders of the sort held to be lawful in England in Churchill.

We can put the key question as follows. Assuming that a Court of Session judge did agree with the Court of Appeal that the ‘human rights’ objection in Halsey was not insurmountable, would he or she be willing to grant an application for an order that the parties engage in a form of ADR? Perhaps an application of that sort would be more persuasive where there was an established ADR process in place and one of the parties had suggested it pre-litigation, like the council in Churchill had with its corporate complaints procedure.

However, there are grounds to think that such an application would be ‘optimistic’. There is no express support for such an application in the current court rules, and the prevailing winds of reform have not been blowing in that direction either. The Scottish Civil Justice Council, headed up by Lord Carloway, the Lord President of the Court of Session, has for some years been working on rewriting the rules that will apply to most civil cases in Scotland. The SCJC’s second report on the project (July 2022) did envisage that under the new framework, a failure to consider ADR could result in cost sanctions. However, the report also included an unequivocal statement that the new rules would not make ADR compulsory. Unfortunately, the most recent consultation closed the day after the Churchill judgment was handed down, so we do not have the benefit of any commentary on the implication from the various learned respondents. But there must be a possibility that the new landscape post Churchill could yet have a bearing on the development of the new civil procedure rules and we shall be watching developments with interest.

Will Cole is a partner at BTO Solicitors LLP