ADR — mediation & arbitration

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.