What are the changes to the Civil Procedure Rules?
The growing significance of mediation is underscored by recent changes to the Civil Procedure Rules (CPR) 1998, which took effect on 1 October 2024, emphasising the role of Alternative Dispute Resolution (ADR) in the resolution of civil claims. These amendments reflect the judiciary’s increasing focus on encouraging mediation as a primary means of dispute resolution in commercial contexts.
CPR 1 sets out the “overriding objective” of the CPR. The objective of “enabling the court to deal with cases justly and at proportionate cost” has now been widened to include “(f) promoting or using alternative dispute resolution.”
CPR 1.4(2)(e), dealing with the court’s duty of active case management, now includes “ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution.”
CPR 3.1(2)(o), the court’s general powers of case management now includes a power to “(o) order the parties to participate in ADR.”
CPR 28 (directions in fast and intermediate track cases) and CPR 29 (directions in multi-track cases) now includes a requirement for the court to consider “whether to order or encourage the parties to engage in alternative dispute resolution.”
CPR 44 has also been amended, and as such, the court is required to consider the parties’ conduct and such conduct includes:
“(e) whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution.”
What are the benefits of mediation as a form of alternative dispute resolution?
The benefits of mediation in commercial disputes are numerous, including:
Cost-efficiency
Litigation is expensive, with costs potentially spiralling as cases proceed through courts. Mediation, on the other hand, is generally much less costly, offering a streamlined process that saves legal fees, court costs, and other expenses associated with a lengthy trial.
Time savings
Litigation can take months, if not years, to reach a conclusion, with court schedules often leading to delays. Mediation is significantly quicker, allowing disputes to be resolved in a matter of days or weeks, rather than months or years.
Confidentiality
Mediation proceedings are private, and the details of the dispute do not become part of the public record, whereas court proceedings do. This is particularly important for commercial parties wishing to protect sensitive information and avoid any potential damage to their reputations.
Preserving business relationships
Commercial disputes often arise between parties with ongoing business relationships. Mediation helps maintain these relationships by encouraging cooperation and mutual understanding, whereas litigation tends to be more adversarial, which can permanently damage professional connections.
Flexibility in Solutions
Courts are limited in the types of remedies they can offer, typically awarding damages or specific performance. Mediation allows for more creative and tailored solutions that better align with the needs and interests of both parties. This flexibility can be a game-changer in commercial disputes, where parties may seek more practical, business-oriented outcomes.
The future of resolving commercial disputes
Businesses now face increased pressure to engage in mediation early in the litigation process, which is likely to lead to faster and more amicable resolutions. Given the benefits of mediation, this shift could help companies avoid the financial and reputational damage that often accompanies protracted litigation.
Moreover, the possibility of sanctions for refusing mediation provides a powerful incentive for parties to approach disputes with a more open and pragmatic mindset. In commercial environments where disputes can have far-reaching consequences, this is crucial. Companies are now encouraged to assess not just the legal merits of their case, but also the practical implications of prolonged litigation versus a mediated settlement.
Businesses should now view mediation as a primary option for resolving disputes swiftly and amicably, preserving valuable business relationships and protecting their financial and reputational interests.
The future of commercial dispute resolution is undoubtedly geared towards promoting early settlement through mediation, offering a flexible, private, and less adversarial path to resolving even the most complex commercial conflicts.
The success of mediation will still depend upon the parties’ attitudes to mediation and settlement of the dispute, and particularly, their ability to approach the mediation with a commercial mindset, when sometimes disputes can become emotive. It is the job of a highly skilled and experienced mediator to facilitate discussions between the parties in order to reach a mutually acceptable settlement.
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Natalie works closely with her clients to understand their objectives and to provide practical solutions to commercial disputes.
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Commercial disputes can be complex. Whether it’s a supplier who lets you down, a claim for professional negligence or the loss of commercial value, the list of potential disputes are endless. Our business dispute solicitors can help you to resolve them quickly and efficiently.