In brief
The question: How do courts exercise their powers regarding court mediation in England and Wales under the Civil Procedure Rules (CPR), and how can commercial parties comply without risking severe costs sanctions?
The short answer: Under the CPR framework effective from 1 October 2024, judges across the High Court and County Court hold express power to stay proceedings and order parties to participate in alternative dispute resolution (ADR). An order to mediate must not impair a party’s right to a fair trial under Article 6 of the European Convention on Human Rights (ECHR) and must remain proportionate to the dispute. Merits-based confidence, perceived opponent intransigence, or tactical silence do not justify refusing ADR. Unreasonable failure to engage routinely triggers severe costs sanctions under CPR 44.2(5)(e), including indemnity basis assessments and substantial cost disallowances, even for a party that ultimately succeeds at trial.
The CPR Framework for Court-Ordered ADR
The English civil justice system treats dispute resolution as an active component of case management, moving away from historic assumptions that courts cannot direct unwilling parties into mediation. Under Statutory Instrument 2024/839, judicial encouragement and mandatory directions operate across the rulebook:
- CPR 1.1(2)(f) (The Overriding Objective): Dealing with a case justly and at proportionate cost expressly includes promoting or using alternative dispute resolution.
- CPR 1.4(2)(e) (Active Case Management): The court must actively manage cases by encouraging, ordering, or facilitating ADR at appropriate stages.
- CPR 3.1(2)(o) (Court’s Management Powers): Judges hold express power to “order the parties to participate in alternative dispute resolution” of their own motion or upon application.
- CPR 28.7, 28.14, and 29.2(1A): At case management conferences across the Fast, Intermediate, and Multi-Tracks, judges are required to consider whether to direct ADR.
- CPR 44.2(5)(e) (Costs Discretion): When determining costs liabilities, the court evaluates whether a party failed to comply with an ADR order or unreasonably refused to engage in ADR.
While defended money claims under £10,000 on the Small Claims Track undergo automatic referral to a one-hour telephone mediation under Practice Direction 51ZE, larger Fast, Intermediate, and Multi-Track disputes in court mediation in England and Wales are governed by these broad discretionary powers.
How Judges Apply Compulsory ADR in Commercial Disputes
Judicial discretion to order mediation rests on a clear two-part test: the order must not impair the essence of a litigant’s right to a fair trial under Article 6 ECHR—meaning parties remain free to proceed to trial if talks fail—and it must be proportionate to the aim of resolving the dispute quickly and at reasonable cost.
Rather than working through a rigid checklist, judges weigh factors such as incurred legal spend, commercial urgency, legal representation, and the realistic chances of settlement. Commercial courts regularly reject arguments that severe personal friction, polarised positions, or extensive procedural history make mediation pointless, recognising that structured independent facilitation routinely unlocks entrenched deadlocks.
Grounds for Resisting or Deferring ADR: Defensible vs Fatal Positions
A judicial order compels attendance and constructive participation in an ADR process; it does not compel commercial surrender. Declining to engage simply because a business believes its legal position is unassailable carries substantial procedural and financial exposure.
The table below sets out how courts assess common explanations for refusing or seeking to delay an ADR process:
| Ground Invoked by Litigant | Judicial Assessment | Procedural Reference | Practical & Costs Impact |
|---|---|---|---|
| “We have an unassailable case and will win at trial.” | Fatal objection. Merits confidence alone is routinely rejected. Commercial disputes frequently settle once a structured mediation gets underway. | CPR 44.2(5)(e) | Substantial risk of cost disallowances or indemnity costs, even if the party succeeds at trial. |
| “The opponent is entirely unreasonable; settlement is impossible.” | Fatal objection. Perceived party intransigence is not a valid basis for refusal. A neutral mediator’s primary function is to bridge commercial deadlocks. | CPR 1.4(2)(e); CPR 3.1(2)(o) | The court will generally dismiss the objection and may order ADR with costs reserved pending conduct. |
| Tactical silence or ignoring an ADR proposal. | High risk of sanction. Failing to respond to an ADR proposal is generally treated by English courts as unreasonable conduct under case law and is assessed under CPR 44.2(5)(e). Litigants should respond promptly with substantive, objective reasons. | CPR 44.2(5)(e) | Substantial risk of adverse costs orders, commonly resulting in 20% to 50% deductions from recoverable trial costs or indemnity basis assessments. |
| “Foundational disclosure or expert exchange is needed to value the claim.” | Defensible ground for deferral. Effective mediation requires a baseline of commercial facts. The party should propose a clear timetable for targeted disclosure followed by mediation. | CPR 1.1(2)(f); CPR 29.2(1A) | Protects the costs position, demonstrates procedural cooperation, and avoids premature mediator fees. |
| “The dispute requires emergency relief or an authoritative public precedent.” | Defensible exception. Where immediate injunctive relief or an authoritative public interpretation of law is genuinely required, compelling ADR may be inappropriate. | Article 6 ECHR proportionality test | Legitimate ground to resist an ADR stay, provided necessity is objectively proven rather than asserted for tactical advantage. |
Costs Sanctions: Consequences of Non-Engagement
Under the Civil Procedure Rules, the court’s discretion under CPR 44.2 serves as the primary disciplinary mechanism. Where a litigant ignores an ADR invitation or fails to comply with a direction under CPR 3.1(2)(o), the court can depart substantially from the default presumption that the unsuccessful party pays the successful party’s costs.
Sanctions regularly imposed by judges include:
- Recoverable Costs Disallowances: A party that succeeds entirely at trial may be deprived of a substantial percentage of its costs (often between 20% and 50%) because it unreasonably refused earlier mediation.
- Indemnity Costs Orders: Unreasonable refusal can lead to costs being assessed on the indemnity basis, removing proportionality restrictions and resolving doubts in favour of the receiving party under CPR 44.3 and CPR 44.2.
- Adverse Interest Orders: Under CPR 44.2(6)(g), judges may order interest on costs from or until a specified date, or disallow interest, as a sanction for poor conduct.
For an examination of the financial trade-offs between prolonged court battles and early structured resolution, see our comparison on commercial contract dispute costs: mediation vs litigation compared.
Responding Constructively to ADR Directions and Proposals
When an opponent invites you to mediate or the court raises ADR at a Case Management Conference, legal teams should adopt a practical procedural sequence:
- Establish the Information Baseline: Check whether you have the key documentation needed to evaluate commercial risk and quantum. If critical evidence is missing, set out the precise documents required and provide a firm date to mediate once that material is exchanged.
- Never Leave an Invitation Unanswered: Tactical silence is generally treated as unreasonable conduct under established case law. Always reply in writing within a reasonable window, setting out clear, constructive, and objective reasons if you are seeking a phased deferral.
- Select the Right Process: Engaging an independent neutral via professional commercial mediation enables businesses to explore flexible commercial remedies—such as restructured payment plans, amended contracts, or supply variations—that fall outside a judge’s remedial powers.
- Take the Initiative on Settlement: Proactively proposing mediation puts your opponent on risk under CPR 44.2(5)(e). If they refuse without good reason, your costs position is insulated for the rest of the action. You can explore broader strategic considerations in our Mediation, ADR & Settlement Strategy hub.
Participating Effectively Without Prejudicing Trial
Attending a court-mandated mediation does not compromise your trial preparation or expose privileged strategy. The entire mediation process takes place under strict without-prejudice privilege and confidentiality.
To extract value from the session while preserving your litigation posture:
- Ensure Decision-Makers Have Full Authority: Attendees must hold sufficient commercial authority to negotiate and sign a binding settlement agreement on the day without repeatedly seeking external board approvals.
- Prepare a Pragmatic Position Statement: Focus the document on commercial drivers, risk allocation, and viable solution structures rather than simply repeating formal court pleadings. For practical context, review our guide on contract dispute mediation for commercial breaches.
- Draft Heads of Settlement in Advance: Preparing core contractual settlement terms before the mediation begins ensures that any agreement reached late in the day can be converted into an enforceable settlement without unnecessary delays.
Frequently asked questions
Can an English court force parties to settle in mediation?
No. English courts have the power under CPR 3.1(2)(o) to order parties to attend and participate constructively in mediation, but they cannot compel anyone to sign a settlement or compromise legal rights. If no agreement is reached, the right to proceed to trial is fully preserved under Article 6 ECHR.
Is having a strong legal case a valid reason to refuse mediation?
No. Courts consistently hold that belief in strong merits does not justify declining ADR. Even strong claims involve cost exposure, enforcement risks, and operational distraction. Refusing mediation based on merits confidence routinely attracts adverse costs orders under CPR 44.2(5)(e).
What happens if a party ignores an invitation to mediate?
Failing to respond to an ADR proposal is generally treated by English courts as unreasonable conduct under established case law. Litigants who remain silent risk severe costs sanctions under CPR 44.2(5)(e), such as indemnity costs orders or substantial percentage disallowances of their recoverable trial costs, even if they ultimately win the claim.
When can a party legitimately ask to defer mediation?
A party can legitimately seek to defer mediation where vital foundational disclosure or expert evidence is required to assess claim value. Rather than refusing outright, the party must explain why the process is currently premature and propose a clear timetable to mediate once that specific information is exchanged.
How do the CPR amendments affect fast and intermediate track cases?
Under CPR 28.7 and 28.14, judges managing Fast Track and Intermediate Track cases must actively consider whether to direct or order ADR at the case management stage, integrating ADR review into standard civil proceedings.
Authoritative UK guidance and further reading
Primary and official sources
- The Civil Procedure (Amendment No. 3) Rules 2024 (legislation.gov.uk)
- PART 1 – OVERRIDING OBJECTIVE – Civil Procedure Rules – Justice UK (justice.gov.uk)
- The Civil Procedure (Amendment No. 3) Rules 2024 (legislation.gov.uk)
- PRACTICE DIRECTION 51ZE – SMALL CLAIMS TRACK AUTOMATIC REFERRAL TO MEDIATION PILOT SCHEME – Justice UK (justice.gov.uk)
Further professional reading
- Amending the CPR to Accommodate the Impact of Churchill — Civil Mediation (civilmediation.org)
- Civil Procedure Rules embed ADR into the civil justice system | Gowling WLG (gowlingwlg.com)
- The impact of Churchill – ADR 20 months on (reedsmith.com)
- CPR Changes Bring Mandatory ADR, From 1 October 2024 | Paul Hastings LLP (paulhastings.com)
This guide provides general information about dispute resolution and mediation. It is not legal advice. The appropriate approach depends on the facts, documents, procedural position and the parties involved; obtain legal advice where required.