Ruling means court-ordered alternative dispute resolution extends beyond construction contracts

This is a blockbuster of a judgment. Make a note: the name is Churchill vs Merthyr Tydfil County Borough Council (2023). This very powerful Court of Appeal – consisting of the Master of the Rolls, the Lady Chief Justice and Lord Justice Birse – have unanimously decided that the court, any court, can lawfully order disputing parties to engage in a non‑court-based dispute resolution process.

Twenty-five years ago, parliament passed a law saying that this sort of dispute resolution process would apply – and only apply – to “construction contracts”. They gave us construction adjudication. In the 25 years since then, the court has had its beady eye on us folk using this newfangled idea of 28-day adjudication. I go so far as to say that the court gives us folk a solid thumbs-up. And thanks to Churchill vs Merthyr Tydfil, the law now is that those in dispute about bananas, basket cases or whatever can adjudicate. It didn’t require an act of parliament. Instead, this is the High Court exercising rules of court.

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The Court of Appeal said: “The court can lawfully stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process provided that the order made does not impair the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.”

You can use any alternative dispute resolution (ADR) process that fits the bill.

By the way – and it is only by the way – the dispute that came to court was about Japanese knotweed. Mr Churchill tackled his neighbour, being land owned by the council, for compensation for the harmful weed invading his garden. The claim went to court. It wasn’t a construction contract. It was then that a debate began about avoiding the expense of litigation by using ADR.

Did the court have the power to pause the litigation and order an alternative dispute resolution process? Yes, said the Court of Appeal. Then it asked in what circumstances the court should do so.

The court started by looking at standard rules of court. They say that before commencing proceedings, the court will expect parties to have exchanged sufficient information to try to settle the issues without proceedings, and to consider a form of ADR to assist with settlement as well as reduce the costs of resolving the dispute.

Litigation is to be regarded as a last resort. Negotiate first – then, if that fails, go for a dispute resolution process. If the other party resists embarking on some form of ADR adjudication, the court’s help can be sought

Moreover, litigation is to be regarded as a last resort. Negotiate first – then, if that fails, go for a dispute resolution process. If the other party resists embarking on some form of ADR adjudication, the court’s help can be sought. It will look at the circumstances (that is the key word) then exercise its discretion (another key word).

Here are some suggestions by the enterprise that oversees and trains barristers, the Bar Council. It recommends what to look at when exercising that discretion about whether to order ADR. First, it says, look at the type or form of ADR; then ask whether the parties are legally represented or advised, and whether the ADR will be effective without representation. Ask whether the ADR makes clear that, if no settlement is achieved, the parties are free to pursue their claim or defect. Ask, too, whether the ADR will unreasonably delay things or interfere with statutes of limitation; ask also what the ADR says about costs. Avoid an imbalance of parties’ skills to argue their case.

The success of construction adjudication ADR was down to a document known as the Scheme. It provides the procedure for carrying out the task of presenting and then deciding the dispute. The essential ingredient is that any such machinery gives the decision via what is known as due process. It is fair to both parties and requires the dispute decider to be impartial and totally independent of the parties. Remember: we are devising a system of adjudicating any sort of dispute, anything that has the potential to come to court. The scope includes contractual as well as non-contractual disputes. The knotweed row was outside of any contract; it was a claim in nuisance. It can be adjudicated. Needed now is a model form for high-speed, low-cost, enforceable ADR which provides a binding decision until finally decided in court or by agreement.

In 2023 we know that 2,100 appointments were made for dispute resolution within construction adjudication ADR via institutional appointments; there were doubtless many more made outwith institutions. The point is that we have a wealth of information about operating the machinery for ADR. I am convinced we can make a success of what the Court of Appeal has given thumbs-up to. Let’s go!

Tony Bingham is a barrister and arbitrator at 3 Paper Buildings, Temple