The Court of Appeal's decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 fundamentally altered the landscape of civil dispute resolution in England and Wales by confirming that courts may compel parties to engage in alternative dispute resolution, including mediation, before or during litigation. Reinforced by amendments to the Civil Procedure Rules that took effect on 1 October 2024, which embed ADR into the overriding objective itself, this shift has concrete consequences for any business or investor involved in English commercial disputes. Understanding how these developments interact with pre-litigation strategy, settlement agreement drafting and cross-border enforcement is now a practical necessity rather than an academic exercise.
From Halsey to Churchill: A Shift in Judicial Philosophy
For nearly two decades, the accepted position in England and Wales rested on the Court of Appeal's guidance in Halsey v Milton Keynes General NHS Trust [2004], which suggested that compelling unwilling parties to mediate would breach their right to a fair trial. That reasoning shaped how litigators advised clients: mediation was something parties could decline, provided they articulated reasons clearly enough to survive a costs sanction.
Churchill v Merthyr Tydfil CBC [2023] EWCA Civ 1416 departed from that orthodoxy. The Court of Appeal held unequivocally that Halsey had not authoritatively determined that court-ordered ADR was impermissible, and that a court does have jurisdiction to stay proceedings or order parties to participate in a non-court-based dispute resolution process. The court was careful not to mandate mediation in every case, but the significance lies in removing the conceptual barrier: a judge who considers it proportionate and appropriate may now direct parties to mediate without that order being vulnerable to challenge on fair-trial grounds alone.
This is not merely a procedural refinement. It represents a philosophical reorientation – courts are no longer passive facilitators of party autonomy in this respect but active case managers empowered to divert disputes away from full trial.
The CPR Amendments of 1 October 2024: ADR in the Overriding Objective
The legislative consolidation of Churchill came swiftly. From 1 October 2024, amendments to the Civil Procedure Rules brought ADR within the overriding objective, the foundational principle that governs how courts interpret and apply the CPR. This is constitutionally significant within the English procedural framework: any exercise of judicial discretion, any costs decision and any case management direction must now be read through a lens that treats ADR engagement as part of what it means to deal with a case justly and at proportionate cost.
Practically, this means several things for parties and their advisers:
- Case management conferences will routinely include questions about whether ADR has been attempted, is planned or has been refused – and refusals will require credible justification.
- Costs sanctions for unreasonable refusal to engage in mediation or other ADR processes are now structurally more likely, because a court assessing costs behaviour can point directly to the overriding objective as the standard against which conduct is measured.
- Pre-action protocols and the letter before action process already encouraged settlement discussions; those requirements are now reinforced by the understanding that courts view ADR engagement as part of reasonable pre-litigation conduct, not an optional courtesy.
- Stays of proceedings to allow mediation may be ordered on the court's own initiative, even absent an application by either party.
Advisers acting before the High Court will need to factor these changes into every litigation plan, from the drafting of the initial letter before action to the terms of any standstill agreement that pauses limitation periods while settlement discussions proceed.
Open Questions: The Boundaries of Compelled Participation
Despite the clarity of the Churchill principle, several questions remain live in English courts and among practitioners.
The first concerns the meaning of participation. A court can order parties to attend a mediation, but it cannot compel a genuine settlement. The distinction between attending in form and engaging in good faith is not easily policed. There is no authoritative guidance on whether a party that attends but refuses all proposals has complied with a court order or exposed itself to further sanction.
The second concerns timing. Orders to mediate issued after the close of pleadings but before disclosure raise questions about information asymmetry: parties may be unable to assess their position meaningfully without access to the other side's documents. Courts will need to develop consistent practice as to when in the procedural timetable a mediation order is most appropriate.
The third concerns the interaction with contractual dispute resolution clauses. Many commercial contracts already contain tiered dispute resolution provisions – negotiation, then expert determination, then arbitration or litigation. Where such a clause is present, the question of whether a court should nonetheless impose an additional mediation layer requires careful analysis of the contract terms and the court's inherent jurisdiction.
The fourth, particularly relevant to regulated entities, concerns confidentiality. Mediation in England operates under a without-prejudice shield and, increasingly, under express mediation privilege. However, where one or both parties are regulated by bodies such as the FCA or are subject to financial sanctions administered by OFSI, disclosure obligations may interact with confidentiality expectations in ways that require specific advice before entering a mediation.
Practical Impact for Commercial Disputes in England
For domestic and international businesses with disputes arising under English law or litigated in the English courts, the post-Churchill environment changes the risk calculus at several stages.
Pre-litigation: The weight attached to ADR under the CPR overriding objective means that a party that proceeds straight to litigation without making any attempt at settlement, or without giving any substantive response to a letter before action, now faces a more pronounced risk of adverse costs treatment. Structuring pre-action correspondence thoughtfully – and considering whether a short standstill agreement to allow settlement discussions is appropriate – has become a more significant advisory task.
Funding and cash flow disputes: In disputes involving a payment plan or debt recovery element, mediation creates an opportunity to negotiate restructured terms without the delay and cost of enforcement proceedings. The willingness of courts to impose mediation in such cases is higher than in disputes involving purely reputational or equitable issues, because the subject matter is well-suited to compromise.
Corporate and regulatory disputes: Disputes involving company structures registered at Companies House, shareholder arrangements or matters touching on regulated activities require particular care, because a mediated settlement agreement may need to be drafted with an eye to its impact on regulatory filings, authorisations or ongoing compliance obligations.
If your business is facing a dispute in England and you are uncertain how the post-Churchill framework affects your strategic options, the team at Ferraz & Whitmore is available to discuss your position. Please write to info@ferrazwhitmore.com or visit our contacts page.
Cross-Border Dimensions: International Clients and Court-Ordered Mediation
For foreign investors and international counterparties, the post-Churchill landscape intersects with a number of cross-border considerations that are not always fully appreciated.
Governing law and jurisdiction clauses: Where a contract designates English law and the English courts but the parties and their assets are located in different jurisdictions, a court-ordered mediation in London may impose attendance obligations and costs on a party that did not anticipate that layer of process when drafting the original agreement. Reviewing dispute resolution clauses in existing contracts for their adequacy under current English law is prudent.
Enforcement of settlement agreements: A settlement agreement reached in an English mediation is a binding contract enforceable under English law and, in appropriate cases, through the courts. Where one party is based in a jurisdiction that has ratified the Singapore Convention on Mediation (the United Nations Convention on International Settlement Agreements Resulting from Mediation), enforcement of the mediated settlement in that jurisdiction may be facilitated directly under the Convention's mechanism. The United Kingdom has not yet ratified the Singapore Convention, but the practical enforceability of an English settlement agreement across borders remains a central concern in any cross-border mediation strategy.
Interplay with arbitration agreements: Where a valid arbitration agreement exists, an English court will generally stay its own proceedings and refer the parties to arbitration under the Arbitration Act 1996. The question of whether a court can nonetheless order mediation in parallel, or as a precondition to arbitration, is not fully resolved and requires case-specific analysis.
Ferraz & Whitmore advises on commercial negotiations and dispute resolution in the United Kingdom, with particular experience in structuring pre-dispute and mid-dispute processes that account for both English procedural requirements and the expectations of counterparties in other jurisdictions.
Strategic Recommendations for Parties and Advisers
Against the background set out above, the following strategic considerations are relevant for any party engaged in, or anticipating, English civil litigation after the Churchill amendments.
- Audit existing dispute resolution clauses. Commercial contracts should be reviewed to ensure that tiered dispute resolution provisions are consistent with the current expectations of English courts and that they adequately address the possibility of court-ordered mediation.
- Treat the letter before action as a strategic document. Under the post-CPR amendment framework, the letter before action should address not only the substantive claim but also the claimant's position on ADR – including any offer to mediate and, where appropriate, a proposal for a standstill agreement to allow discussions without limitation period risk.
- Prepare for mediation at an early stage. Waiting until a court orders mediation to begin preparation is a tactical error. Parties that have identified their key interests, assessed their BATNA and prepared their key documents are better placed to use the mediation constructively.
- Draft settlement agreements with enforcement in mind. A mediated settlement agreement that does not clearly set out payment obligations, dispute resolution for breach and applicable law may be difficult to enforce efficiently. Agreements that include a payment plan component require particular attention to events of default and remedies.
- Consider insolvency and restructuring dimensions. Where a counterparty is financially distressed, a mediated settlement may need to be evaluated against the risk that the counterparty enters administration or liquidation before payment is made. Early advice on these intersecting risks – including the interaction between a settlement agreement and insolvency set-off rules – can prevent a successful mediation from producing an unenforceable outcome. Our team advising on bankruptcy and restructuring in the United Kingdom works alongside our disputes practice on exactly these scenarios.
- Document ADR engagement carefully. If a party has genuine reasons not to mediate at a particular stage, those reasons should be recorded clearly in correspondence. In any subsequent costs argument, the court will examine the contemporaneous record.
The Outlook: Towards a New Default
The trajectory of English civil procedure is clear. The Churchill decision and the 1 October 2024 CPR amendments are not isolated interventions but part of a sustained policy direction – supported by successive civil justice reviews – to reduce the volume of matters that proceed to full trial and to embed ADR as an expected and enforceable step in the litigation process.
It is reasonable to anticipate that judicial practice will continue to develop in the same direction, with courts becoming progressively more confident in making mediation orders and in imposing costs consequences on parties that decline without adequate justification. Whether Parliament will eventually go further and introduce a statutory framework for compulsory pre-action mediation in certain categories of civil dispute – as has occurred in some other jurisdictions – remains to be seen, but the current trajectory does not exclude that possibility.
For international clients, the message is practical: English litigation is no longer a process in which the decision to settle or fight rests entirely in private hands. Courts are now active participants in shaping the dispute resolution journey, and strategy must be built with that reality in mind. An early assessment of the mediation landscape, conducted before a dispute escalates to proceedings, consistently produces better outcomes than reactive engagement after a court order has been made.
For a more detailed account of how these principles have applied in practice, including in cross-border supply disputes, see our case analysis: Mediating a Cross-Border Supply Dispute Before Trial – United Kingdom.
If you would like to discuss how the post-Churchill framework applies to a specific dispute or transaction, please contact the Ferraz & Whitmore team at info@ferrazwhitmore.com or through our contacts page. We advise clients at every stage of the dispute cycle, from pre-litigation assessment to settlement agreement execution and enforcement.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.