FLK1 · Dispute Resolution

ADR — mediation & arbitration

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

DR.13 — ADR: Mediation & Arbitration

What ADR is. Alternative Dispute Resolution = resolving disputes outside (or alongside) court litigation. The main forms: negotiation, mediation, arbitration, plus early neutral evaluation, conciliation, and adjudication. Know the spectrum from facilitative (parties keep control) to determinative (a third party imposes a binding decision).

Mediation

  • A neutral mediator helps the parties reach their own settlement. The mediator does not decide or impose anything — it is consensual and non-binding until a settlement agreement is signed (then enforceable as a contract).
  • Confidential and "without prejudice" — what is said cannot generally be used in later litigation.
  • Any settlement is voluntary; parties can walk away at any point.

Arbitration

  • A private, determinative process: an arbitrator (or tribunal) hears the dispute and issues a binding award.
  • Governed by the Arbitration Act 1996 (amended by the Arbitration Act 2025). Requires an arbitration agreement (usually a contract clause).
  • The award is final and binding, enforceable like a court judgment; appeal rights are very limited (e.g. serious irregularity, or a point of law where permitted).

Court's approach (key shift)

  • Halsey v Milton Keynes [2004] previously said courts could not compel unwilling parties to mediate (only encourage, with costs sanctions).
  • Churchill v Merthyr Tydfil [2023] overruled that point: courts can lawfully order or stay proceedings for ADR, provided it does not impair the right to a fair trial and is proportionate.
  • CPR (from 1 Oct 2024): the overriding objective and case management powers now expressly include ordering or encouraging ADR. Courts impose costs sanctions on a party that unreasonably refuses ADR (PGF II SA v OMFS [2013] — silence in the face of an ADR offer is itself unreasonable).

Common traps

  • Mediator facilitates; arbitrator decides. Don't confuse them.
  • Mediation outcome is not binding until agreement signed; an arbitral award is binding immediately.
  • Refusing ADR is not automatically fatal, but unreasonable refusal/silence risks costs penalties — even for the winner.
  • Courts can now compel ADR (Churchill), not merely encourage — Halsey on this point is no longer good law.
  • ADR can be used before or during litigation; failing to consider it breaches the overriding objective.

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A supplier delivers machinery to a manufacturer under a simple contract, not a deed. On 3 March 2024, its defective machinery causes a fire that seriously burns an adult factory worker and damages the factory. That day the worker knows the burns are serious, that they resulted from the supplier's defective machinery and who the supplier is. He proposes a negligence claim against the supplier for his injuries. The manufacturer proposes a contract claim against the supplier for the factory damage; the contractual breach also occurred on 3 March 2024. Neither claimant is under a disability, and there is no later date of knowledge or concealed fact to consider. Which best states the applicable primary limitation periods, leaving aside any discretionary extension?

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More Dispute Resolution topics

See all topics in the FLK1 guide or the full SQE1 syllabus.

Independent SQE1 revision notes for study — not legal advice; check primary sources before relying on any point. Exam rules are set by the SRA; see the official SQE site.

ADR — mediation & arbitration — SQE1 revision notes (FLK1) | Lawdojo