ADR: can you reasonably refuse to mediate anymore?

It is now clear that parties to civil proceedings must consider ADR throughout a claim, including pre-action. Recent developments show that a failure to engage meaningfully in ADR can carry serious costs consequences, even for a successful party.

We consider the relevant rules, decisions, judicial commentary and when refusing to mediate can be reasonable.

The Legal Framework

The following civil procedural rules are relevant:

1. CPR 1.1 (the overriding objective) requires cases to be dealt with justly and at proportionate cost, which includes saving expense and allocating resources efficiently;
2. CPR 3.1 (o) now gives the court the power to order the parties to engage in ADR; and
3. CPR 44.2(5)(a)–(e) makes conduct, including unreasonable failure to engage in ADR, a relevant factor when the court exercises its discretion on costs.

The Halsey Factors

In Halsey v Milton Keynes General NHS Trust (2003), the Court of Appeal had to grapple with when it might be unreasonable for parties to refuse ADR in two joined appeals. The court defined ADR as “a collective description of methods of resolving disputes otherwise than through normal trial process”. In Halsey, as in most later cases, the refusal in question was a refusal to mediate.

In the first appeal, the court determined that whilst the defendant had refused to mediate despite repeated requests and strategic letters, from the claimant, that refusal was not unreasonable. The defendant’s rationale that the costs of mediation would be disproportionate to the small claim was valid.

In the second appeal, the claim rested on the issue of causation and, in particular, the application of legal principle. The defendant had refused to mediate, contending that mediation would not be capable of resolving that issue between the parties. Further, the offer to mediate came late in the proceedings and the costs would be disproportionate. Again, the court determined that refusal to be a reasonable one.

The Court of Appeal affirmed that:

1. Costs follow the event and a successful party will not be deprived of its costs for a refusal to mediate unless the unsuccessful party can discharge the burden of establishing that the refusal was unreasonable;
2. The parties should not be compelled, albeit they were encouraged, to partake in ADR. To compel it would “impose an unacceptable obstruction on their right of access to court”; and
3. In any event, cases in which it is reasonable to refuse ADR are “rare”.

The factors

The Court of Appeal set out a non-exhaustive list of factors which will be relevant to whether any such refusal is unreasonable, including:

• the nature of the dispute
• the merits of the case
• the extent of other settlement attempts
• whether ADR costs would be disproportionately high
• whether ADR would cause unacceptable delay
• whether ADR had a reasonable prospect of success.

When can the parties be compelled?
 
In 2023 the Court of Appeal again considered whether parties can be compelled to engage in ADR in Churchill v Merthyr Tydfil County Borough Council.

Mr Churchill brought a Japanese knotweed claim against his local authority. The local authority made an application for the proceedings to be stayed on the basis that Mr Churchill had not completed its complaints procedure before issuing the proceedings.

At first instance, the defendant’s application was refused as the court considered it was bound by Halsey. The judge referred to the fact that the Court of Appeal in Halsey had stated that, “to oblige unwilling parties to refer their disputes to mediation would unacceptably obstruct their right of access to the court”.

On appeal, two questions arose:

1. Whether a court can lawfully order the parties to court proceedings to engage in what was described as "a non-court-based dispute resolution process", and,
2. If so, in what circumstances it should do so.

The Court of Appeal concluded that as the question in Halsey related to costs sanctions, rather than the court’s decision to mandate mediation, any comments made in Halsey in that respect were obiter only (i.e., it was not bound by them).   Therefore, the court could make an order for parties to engage in alternative forms of dispute resolution without obstructing their right to a fair and public hearing under Article 6 of the European Convention on Human Rights (ECHR).

A Reasonable Refusal
 
In 2026 the court again grappled with when refusing to mediate can be considered reasonable in MJS Projects (March) Ltd v RPS Consulting Services Ltd. As with all of these cases, the issue of reasonableness turned on the particular facts.

This was a construction dispute where the issue between the parties turned on expert evidence. Ultimately, the defendant won at trial, but the claimant sought to argue that the defendant should have a reduction in its costs on the basis that the defendant had refused to mediate during the litigation.

The defendant’s position was that it had not refused but rather had written to the claimant about substantial issues which remained unresolved (namely, workmanship as a cause of the issues complained of).  Further, it was not willing to mediate on the terms set by the claimant, which were, it argued, on limited dates close to trial (prejudicing the trial date) and/or on the basis that the experts would not be in attendance, when, it said, the expert evidence was what the dispute turned on. The defendant argued that all of those were factors to be considered relying on Halsey.

As it happened, the claimant’s expert did change their evidence close to trial, which proved to be crucial to the outcome.
 
Ultimately, the court found in favour of the defendant on costs as the claimant had failed to discharge the burden of establishing that the defendant has been unreasonable.

These were some key takeaways:

• The court’s endorsement of ADR “is long standing and enshrined in the overriding objective (CPR 1.1)” and “ADR must always be considered”.
• Mediation was not the only, nor the preferred, method for parties engaging in ADR.  In this case, the defendant had engaged meaningfully via other means including suggesting without prejudice lawyers’ discussions and offers.
• The high relative cost of mediating late in the litigation was found to be a relevant factor, given the size of the claim (about £400,000).
• The prospects of success of any mediation on the terms proposed were limited as the parties were far apart and expert evidence was of key importance – in this dispute the mediation proposed did not have reasonable prospects of success.

Summary

ADR continues to be a core expectation, not an optional extra, and can now be ordered by the court. While a refusal may (on occasion) be justified, it will be closely scrutinised.  Ideally the reasons for the refusal to mediate should be set out fully in contemporaneous correspondence. Parties should be prepared to explain those reasons to the court, particularly where the opposing party is likely to seek costs sanctions.

When deciding whether to agree to ADR, it would be useful to consider the above decisions to ensure the correct decision is made. As the case law shows, parties who fail to engage risk significant adverse costs consequences – a proactive and pragmatic approach to ADR is essential.

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