Winston Churchill wasn’t known for his pacifist tendencies. Neither was he referring to civil litigation when he uttered the above words. However, since the case of Halsey v Milton Keynes General NHS Trust in 2004 - which decided 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” - pressure on litigating parties to resolve their disputes informally has been steadily growing, underpinned by the increasing willingness of judges to impose costs sanctions, even on parties who are ultimately wholly successful, for failing to attempt settlement without the need for a costly trial.

The Halsey decision noted the basic principle that the loser pays the winner’s costs of the litigation. It asserted that a departure from that, on the grounds of a refusal to mediate, could only be justified if the winner acted unreasonably in refusing to agree to it. There was no presumption in favour of mediation, and refusing parties were simply advised to explain their reasoning by reference to certain criteria.

The position is now fundamentally different.

In 2023, the Court of Appeal handed down its judgment in Churchill v Merthyr Tydfil County Borough Council. The issues revolved around Mr Churchill’s failure to engage in the council’s non-contractual complaints procedure concerning his complaint that Japanese knotweed had encroached from the council’s land onto his own. Instead, he issued proceedings seeking damages for nuisance and the council duly sought a stay, as it had warned him it would do prior to the issue of his claim.

The Court of Appeal found against Mr Churchill regarding his failure to utilise the complaints procedure (which it deemed to be a form of alternative dispute resolution (ADR)) and, crucially, held that the court can compel a party to engage in ADR, provided it does not prevent the claimant’s right to proceed to trial (impliedly if the ADR is unsuccessful) and if it is proportionate to achieving the legitimate aim of settling the dispute quickly, fairly and at a reasonable cost. It did not set out fixed principles governing whether a stay should be ordered in future cases.

The case has informed a series of important changes in the Civil Procedure Rules, which govern civil claims in the courts of England and Wales. These came into effect on 1 October 2024. Part 1 – ‘the overriding objective’ - now includes the aim of "promoting or using alternative dispute resolution" and it gives the court the powers of "ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution”.

More importantly still, the court’s case management powers now contain a specific provision permitting the court to “order the parties to engage in alternative dispute resolution.” In addition to the usual directions concerning the exchange of documentary evidence and witness statements, the court will now consider “whether to order or encourage the parties to engage in alternative dispute resolution”.

Finally, following judgment, when costs come to be dealt with and the parties’ conduct must be considered in determining what costs order to make, the court will have regard, among other things, to “whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution.”

A refusal to mediate, or a failure to respond to a proposal to mediate, will almost invariably be seen by the court as unreasonable.

It remains to be seen exactly how the courts will use their new powers but probable that guidance indicated in Churchill v Merthyr Tydfil will be the starting point. Will courts simply punish offending parties in costs after the event (as they do now)? Or might cases be stayed indefinitely until a mediation has taken place, perhaps against the will of one of the parties?

The bottom line

Courts like mediation and, except in a very few cases where it may be impractical, they expect parties to suggest it, agree to it, and pursue it with, so far as possible, an open mind. Seddons has a policy of raising it with clients at the outset of a matter, indeed in the retainer letter, and thereafter at appropriate intervals. By and large, clients agree to try.

There are good reasons for this. A case settled by way of mediation, especially earlier rather than later in the litigation timetable, can save a fortune in legal costs, particularly for whoever turns out to be the ultimate loser at trial. Uncertainty as to who that will be often impels parties, who may agree on nothing else, to try to mediate the dispute to avoid the risks of trial.

The overall success rate of mediation is high, well over 75%. The vast majority settle on the day or shortly thereafter, often contrary to the expectations of a client predicting in advance: “He’ll never settle; he’d rather go down fighting” or similar.

Finally, mediation allows the parties to achieve settlement on almost any terms, including ones the court itself could not impose. I am reminded of a case I heard about years ago. It involved a claim, decades before, by the mother of a young man against the local bus company, seeking damages arising out of his death in an accident. The case was not settling. At a meeting arranged to establish why – it wasn’t called mediation in those days - it emerged that all the mother wanted was not to have to see the very same bus that had killed her son passing her house several times each day. The bus company immediately offered to remove it from the route and replace it with a new bus. The case was settled immediately.

The court could not have ordered that.