Engaging with alternative dispute resolution

A party may be penalised in costs for unreasonably refusing to engage with an alternative dispute resolution (ADR) procedure during the life of a dispute (CPR 44.2(5)(e); Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416; Halsey v Milton Keynes General NHS Trust [2004] WLR 3002; PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288; Thakkar v Patel [2017] EWCA Civ 117; DSN v Blackpool Football Club Ltd [2020] EWHC 670 (QB); BXB v Watch Tower and Bible Tract Society of Pennsylvannia & Ors [2020] EWHC 656 (Admin))).

Requirement to engage with ADR

In Northamber plc v Genee World Limited and others [2024] EWCA Civ 428, a district judge made an order that required the parties to engage with ADR. The claimant wrote to the defendants indicating its willingness to engage with mediation. The third defendant’s solicitors replied saying that they would take instructions, but there was no further response, and the second defendant did not respond at all. Neither party served a witness statement as required by the case management order. Following the trial, the judge awarded the claimant 70% of its costs. However, the judge refused to penalise the defendants in costs for their failure to comply with the case management order because there was no evidence that the claimant had chased the defendants for a reply. On appeal, the claimant argued that this aspect of the judge’s decision amounted to an error of principle.

In the judgement of the Court of Appeal, Arnold LJ agreed that the district judge had made an error. He noted that the defendants had remained silent in the face of an offer to mediate which was, in itself, unreasonable. The defendants also breached the case management order requiring them to explain their failure to agree to mediation. As Arnold LJ explained “If breaches of such orders are ignored by courts when deciding costs, parties will have no incentive to comply with them. That would undermine the purpose of making them, which is robustly to encourage parties to mediate.” The judge’s reasoning ignored these points.

Costs

The more difficult question was how the defendants’ conduct should be reflected in costs. Arnold LJ explained that “Although costs sanctions have been imposed in a number of cases for an unreasonable refusal to mediate or for silence in response to an offer of mediation, it does not automatically follow that a costs penalty should be imposed … rather, it is a factor to be taken into account among the other circumstances of the case.” Arnold LJ rejected the claimant’s contention that the defendants should be ordered to pay 100% of their costs, but did increase the claimant’s costs recovery by an additional 5% to 75% in total.A similar approach was taken in Cabo Concepts Ltd v MGA Entertainment (UK) Ltd [2025] 7 WLUK 21, where the claimants succeeded on almost all issues of liability but lost on causation and quantum, meaning no damages were payable. On the issue of costs, the defendants argued to have their costs paid as the overall winner of the trial, and because they had offered to settle. The claimants argued against an order for costs as they had won on liability and because of the defendants’ unreasonable conduct in failing to engage with mediation.

The judge, Bacon J, explained that the defendants’ refusal to attend a mediation was a relevant factor on the issue of costs. Following the decision in DSN v Blackpool Football Club Ltd [2020] EWHC 670 (QB), Bacon J held that just because a party believed their case was strong did not mean that they should not mediate. He explained that mediation had been worth a try and could have narrowed the issues in dispute and saved costs. The defendants’ costs were reduced.

Refusing mediation

Finally, in Appiah & Anor v Leeds City Council & Anor [2025] EWHC 1537 (KB) the High Court made an order that the parties consider resolving their dispute through ADR. Any party not engaging in a proposed ADR process, would have to serve a witness statement within 21 days of the proposal setting out their reasons for not engaging with ADR. The claimants had proposed mediation and argued that the second defendant had failed to engage with the order and had neither agreed to mediate nor provided the required explanatory statement. The second defendant argued that it had not refused mediation outright but merely sought to defer engagement until they had reviewed the claimants’ expert evidence.

The judge, Mrs Justice Thornton, found that the second defendants had breached the order on ADR by failing to engage in mediation within 21 days of the claimants’ clarified proposal and by failing to serve the necessary witness statement. Thornton held that, although the second defendant indicated that they were willing to eventually mediate, this was not enough. She explained that the obligation was procedural and mandatory, and urged the parties to review the order and reconsider engaging with mediation. The trial date was vacated.

These cases illustrate the courts’ increasingly robust stance on ADR engagement and theirwillingness to exercise their costs powers in sanctioning defaulting parties. The cases make clear that silence, delay, or conditional deferral in response to a genuine ADR offer will rarely be tolerated. Courts treat ADR-related obligations—particularly those arising from case management orders—as binding procedural requirements, not optional invitations.

The principle emerging from Northamber, Cabo Concepts, and Appiah is that ADR is not merely encouraged but is, in many circumstances, expected. Failure to meaningfully engage with ADR, or to comply with court directions regarding ADR, may result in adverse costs orders—even where the defaulting party ultimately succeeds on the substantive issues.

ADR obligations

While the precise costs consequences remain a matter for the court’s discretion, these cases send a clear message: parties ignore ADR obligations at their peril. Judicial language about ADR has shifted, framing participation as a procedural duty and costs penalties as a legitimate enforcement tool. As the jurisprudence evolves, the message is clear: ADR is no longer peripheral to the litigation process; it is integral to it.