The Centre for Effective Dispute Resolution (CEDR) defines mediation as “a dispute resolution process in which a neutral facilitator (the mediator) works with clients in dispute to help them to have a structured conversation with each other with the objective of reaching a negotiated settlement”.

Mediation is a form of alternative dispute resolution (ADR) — a means by which parties to a dispute seek to resolve that dispute without having recourse to the formal litigation process. A mediation in England and Wales is confidential and conducted on a ‘without prejudice’ basis (which means that the substance of any discussions cannot be disclosed in a court or arbitration).

This chapter focuses on the mediation of civil and commercial disputes within the jurisdiction of England and Wales (rather than for mediations of family, community care or employment disputes).

The CEDR defines a mediator as “an active but neutral facilitator, helping the parties to negotiate effectively with each other in order to reach a settlement”. Therefore, a mediator’s role is to help the parties resolve their differences in order to settle a dispute.

The purpose of a mediation is to achieve a negotiated settlement of a dispute. The mediator is not responsible for imposing its independent legal opinion on the parties. The parties to a mediation are not constrained by purely legal arguments. A mediation is designed to accommodate the parties’ broader commercial interests, which are not necessarily arguable or enforceable in the context of litigation or arbitration. For this reason, “A mediator may be able to provide solutions which are beyond the powers of the court to provide” (Dunnett v. Railtrack plc [2002] EWCA Civ 3030, per Brooke L.J. at [14]).

By contrast, the purpose of litigation or an arbitration is to resolve a dispute via an adversarial process. There is a limited opportunity to resolve the dispute with reference to purely commercial factors which are relevant to the parties. The court or arbitrator’s primary role is not to facilitate settlement, but to hear all parties’ legal submissions, and assess the issues and merits of the case, before rendering a legally binding and enforceable judgment or an arbitral award on the parties.

In particular, an arbitral award may be recognised and enforced in excess of 170 countries across the world (pursuant to the New York Convention 1958). This affords a successful party more options to enforce an arbitral award against an opponent’s assets wherever they are situated in the world.

By comparison, a settlement agreement arising out of a mediation will typically specify only one jurisdiction where the terms of settlement may be enforced. Likewise, an international settlement agreement to a commercial dispute may be enforced and invoked, pursuant to the Singapore Convention on Mediation 2018. To date, there are 57 signatory states to the Convention, including the United Kingdom.

The Civil Procedure Rules 1998 (CPR) cover when the courts may require the parties to engage in ADR — including, but not limited to, mediation.

The Court of Appeal’s landmark decision in Churchill v. Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 established that the court could exercise its discretion to order parties to engage in a non-court-based dispute resolution process — or stay proceedings in order for the parties to engage in such a process, provided that order:

• did not “impair the essence of the party’s right to proceed to a judicial hearing”; and
• was “proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost” (Churchill at [65]).

On 1 October 2024, the CPR was revised to accommodate the decision in Churchill and we set out the relevant updates vis-à-vis mediation under CPR 1, 3, 28, 29 and 44 below.

Court’s case management powers

At the heart of the CPR remains the overriding objective — i.e., “enabling the court to deal with cases justly and at proportionate cost” — which includes “promoting or using alternative dispute resolution” (CPR 1.1(1), (f)).

CPR 1.4(1) provides that the court must “further the overriding objective by actively managing cases”. Following Churchill, this now includes the court “promoting or using alternative dispute resolution” (CPR 1.1(1)) and “ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution” (CPR 1.4(2)(e)).

CPR 3.1(2)(o) provides for the court to “order the parties to participate in alternative dispute resolution” under its general powers of case management.

When issuing directions for case management purposes in the fast track and multi-track, a court must — amongst other things — consider “whether to order or encourage the parties to engage in alternative dispute resolution” under CPR 28.7(d) and 29.2(1A) respectively.

Under CPR 44.2, the court has a broad discretion to make costs orders with regard to all circumstances of the case, including factoring in the conduct of the parties. The conduct of the parties includes — but is not limited to — “whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution” (CPR 44.2(5)(e)).

Following these amendments to the CPR, the High Court, in DKH Retail Limited & ors v. City Football Group Limited [2024] EWHC 3231 (Ch), issued a compulsory mediation order for the first time. The dispute was subsequently settled by the parties.

Mandatory mediation in the small claims track

On 22 May 2024, the Ministry of Justice commenced a pilot scheme requiring all parties in money claims up to GBP 10,000 in value, to partake in a mandatory one-hour mediation before proceeding to court. The provisions of this pilot scheme are detailed under PD 51ZE of the CPR.

Pre-action protocols

The pre-action protocols to the CPR set out the preliminary steps that the court normally expects parties to take in particular categories of civil disputes, before issuing proceedings. Most of the pre-action protocols encourage parties to engage in ADR where possible, without recourse to litigation, and specifically identify mediation as a form of ADR.

Yes — England and Wales encourages mediation. We refer to Question 4, above, which details how the CPR encourages parties to mediate their disputes and only pursue litigation as a last resort. However, this is very much part of the court procedure — there is no equivalent encouragement to mediate in an arbitration.

Yes. We refer to Question 4, above.

As stated under Question 4, above, the courts have a broad discretion under CPR 44.2(4) to make costs orders with regard to all circumstances of the case — including the conduct of all the parties and “whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution” (CPR 44.2(5)(e)).

A successful party who unreasonably refuses to properly engage in ADR will likely be subject to costs sanctions. In determining whether a successful party in litigation has unreasonably refused to engage in ADR, the court will consider a number of factors, including (but not limited to) the following (see Halsey v. Milton Keynes General NHS Trust [2004] EWCA Civ 576, at [16]–[35]):

• The nature of the dispute. While most cases are suitable for ADR, other types of cases are not (for instance, where a point of law needs to be determined, or if a party needs to obtain injunctive or other relief to protect its position).
• The merits of the case. A party that reasonably believes it has a strong case may have sufficient grounds to reasonably refuse ADR. A party who unreasonably believes it has a strong case would not be justified in refusing ADR. A borderline case is likely to be suitable for ADR unless there are “significant countervailing factors” to the contrary.
• The extent to which other settlement methods have been attempted. The court will take into account any previous offers which have been made and rejected by the parties, as it goes to whether ADR has a reasonable prospect of success.
• Whether the costs of ADR are disproportionately high. If the costs of a mediation are disproportionate compared to the value of the dispute, that would suggest that a party would be acting reasonably in refusing to agree to ADR.
• Delay. The courts will account for whether any delay in setting up ADR would have been prejudicial to a party — namely, by delaying the date of the trial. However, in practice, the parties to a dispute will seek not to adversely impact the date of the trial.
• Whether the ADR has a reasonable prospect of success. The question here is whether, objectively speaking, a mediation has any real prospect of success. The burden falls on the unsuccessful party to show that there was a reasonable prospect that the mediation would have succeeded. Generally, the courts have held that a party is entitled to refuse mediation, where there is no reasonable prospect of success. However, where there is a reasonable prospect of success, then the party refusing mediation is likely to be penalised.

Mediation can happen at any time. Often, mediation takes place prior to or during legal proceedings. Mediation may also take place after a court hearing but before judgment is handed down. Mediation is largely driven by the objectives of the party at any given time. We refer to Question 19, below, for further details.

• The parties are willing and able to engage in constructive settlement negotiations.
• There is significant risk to the parties litigating their dispute.
• There are viable commercial solutions which outweigh the litigation risk of proceeding to trial.
• Neither party has accrued significant legal costs or the parties are about to incur significant costs (which tend to be incurred from the disclosure stage all the way to trial), and so are more amenable to negotiating a settlement without making unattractive concessions on costs.

We refer to Question 19, below, for further details on the advantages and disadvantages of mediation.

All types of civil disputes are subject to mediation in England and Wales, including civil fraud disputes. The courts have observed that “allegations of fraud or other commercially disreputable conduct” are unlikely to be successfully mediated (see Halsey, at [17]). The success of mediating a civil fraud dispute will also depend on whether there are other underlying issues relating to the fraud.

There are no precise statistics on the number of ADR clauses mandating mediation in England and Wales. A commercial contract may contain an ADR clause setting out the process by which the parties must attempt to resolve a dispute before commencing proceedings. However, in practice, an ADR clause may not always be as helpful as the parties expect, as it can delay the resolution of disputes.

Recent case law indicates that if a party seeks to enforce an ADR clause, then the courts may stay proceedings in accordance with the following principles (Children’s Ark Partnerships Limited v. Kajima Construction Europe (UK) Limited and Anor [2022] EWHC 1595 (TCC)) at[39(i)]–[39(iv)]):

• The clause creates a mandatory, enforceable obligation which requires the parties to comply with the ADR clause.
• It is unnecessary for the ADR clause to be expressed as a ‘condition precedent’ per se, as long as the words used make clear that “the right to commence proceedings is subject to the failure of the dispute resolution procedure” (Children’s Ark, at [58]).
• The ADR process described in the clause does not need to be formal — however, it must be “sufficiently clear and certain by reference to objective criteria”. Such objective criteria include explaining the process of appointing a mediator or determining any necessary stages in the process without requiring any further agreement from the parties.
• If proceedings are issued in breach of an ADR clause, the court has a discretion to stay proceedings. In considering whether to exercise its discretion, the court will have regard to “the public policy interest in upholding the [p]arties’ commercial agreement” and “furthering the overriding objective in assisting the [p]arties to resolve their disputes”.

If the parties to a mediation agree upon a settlement, this will be recorded in a settlement agreement executed by all parties. This imposes a contractual obligation on the parties to comply with the terms of the settlement. Provided that this settlement is agreed at the pre-action stage, there is no need for the parties to take further action.

If litigation is ongoing at the time of the settlement, then the parties may either:

• agree to a consent order to dismiss the proceedings in their entirety; or
• agree to a ‘Tomlin Order’ — i.e., a consent order which stays the current proceedings on agreed terms, but which permits the parties to apply to court to lift that stay and enforce those terms in the event that the opposing party does not comply.

The parties may decide to enclose the terms of settlement as a schedule to the Order, or keep the terms confidential and merely state that copies of the settlement are held by both parties’ legal representatives.

It is not mandatory for a mediator to have any formal qualifications. A mediator may take an accredited training course to train as a mediator.

This accreditation may be in addition to existing professional experience gained as a practising solicitor, barrister, legal executive or judge.

No — mediators within England and Wales are not governed by a specific governing body.

Mediators who are practising legal professionals, such as solicitors, barristers and chartered legal executives, will be subject to the codes of conduct mandated by their professional regulators.

The Civil Mediation Council (CMC) — a charity and recognised authority for matters relating to civil, commercial and workplace mediation — also operates a voluntary regulatory scheme for mediators, under the CMC Code of Conduct.

See above, Question 14.

Pre-mediation stage

The parties must agree on the date of the mediation, the venue for the mediation, and the specific mediator they seek to use for the mediation. Parties must also decide on who will attend the mediation, and the apportionment of the costs of the mediation.

The parties will prepare a position statement, which sets out a party’s position on the dispute. Because the position statements are drafted with a view to advancing the settlement of the dispute, they: (i) are treated as confidential and without prejudice; and (ii) should be commercial and not merely repeat legal submissions. The parties will exchange their position statements prior to the mediation date.

The parties will also agree upon a mediation bundle, containing a selection of key documents concerning the dispute. The mediator will read the position statements and the bundle before the mediation date.

Mediation

It is usual for a preliminary meeting to take place between each party and the mediator, once they arrive at the venue.

From there, a mediation typically begins with a ‘plenary’ — a joint session where the parties to the dispute, their lawyers and the mediator are in attendance. The mediator will introduce the plenary and open the floor to the parties to deliver a brief oral statement. It is for the parties to decide exactly who their spokesperson will be. It is generally helpful for the parties themselves to speak, even if a legal representative also speaks.

Once the plenary session is complete, the structure of the mediation can vary over the course of the day. There will likely be a mix of further private meetings and joint meetings (which may involve all or some of each party’s delegation), as proposed by the mediator and agreed by the parties. The parties may engage the mediator to perform ‘shuttle diplomacy’, spending time with each party to probe the other party’s position and communicate settlement offers.

Post-mediation

If the parties have successfully negotiated an outcome on the day of the mediation, then they will typically negotiate and sign a settlement agreement, or at a minimum, draft heads of terms. A party may already have prepared a draft settlement agreement for this purpose. We refer to Question 12, above, on how this settlement can be enforced.

If the parties are unsuccessful in negotiating a settlement on the day of the mediation, then the parties will proceed with the litigation. The mediator may make contact with the parties thereafter to see whether further progress towards a settlement may be possible. This does not prevent the parties from achieving a settlement following further negotiations. 

As set out above in Question 4, the CPR actively encourages parties to engage in ADR as a means of resolving disputes. There is no formal barrier to mediation within this jurisdiction.

However, mediation remains a collaborative process between all parties to a dispute. As such, the success or failure of a mediation is contingent on the willingness and ability of the parties to engage with the process. Distrust and hostility between the parties are all potential obstacles to a successful mediation. We refer to Question 19, below, for the advantages and disadvantages of mediation.

Generally, lawyers and parties are aware of and engage in mediation (see below, Question 21). For some, there remains a lack of awareness concerning the function of ADR and the role of mediators. In March 2022, the Ministry of Justice published a summary of responses to its ‘Call for Evidence on Dispute Resolution in England and Wales — Summary of Responses’ which observed the following:

• The costs of ADR compared to litigation were not always clear to respondents.
• Mediation was often perceived by respondents as a mere “hurdle to jump” prior to reaching court, which prevented the parties from regarding mediation as a serious route to settlement.
• The respondents considered ADR to reach settlement as a “form of capitulation which signals admission or weakness”.
• Respondents cited the frequent “confusion and uncertainty” of parties, regarding the role of mediators, their impartiality, independence and their ability to provide advice or impose a decision on parties.
• The notion of court and justice was strongly associated with the “ingrained” belief that it was necessary to have “one’s ‘day in court’”.

Advantages

• Speed. Most mediations take place over the course of a day (or two), and in any event long before litigation or arbitration runs its course.
• Costs. The costs of preparing for and holding a mediation — while expensive in itself — will comparatively be cheaper than the costs of proceeding to a trial/hearing in court.
• Confidentiality/without prejudice. A mediation is also held on a without prejudice and confidential basis. This is beneficial where the issues in dispute — if publicised — are capable of causing reputational damage to the parties involved. Therefore, any discussions and offers made during the mediation process remain confidential, unless the parties agree to disclose matters publicly.
• Flexibility. A mediation offers the parties greater control over the terms and outcome of the settlement. A mediation can be run on a more flexible basis, and with the opportunity to engage with commercial solutions that would not be feasible or even available in the context of litigation or arbitration.
• Relationship building. Furthermore, given the commercial flexibility and confidentiality of mediation, there are improved odds for the parties to maintain, or even rescue, a business relationship from irrevocable damage.
• Testing ground. Even if no settlement is achieved, a mediation gives parties an opportunity to test their case and the resolve of the parties to settle or proceed with the litigation.

Disadvantages

• Prospects of success. A party reasonably believes that it has strong grounds to pursue its claim/application for summary judgment and/or strike out, and this can be disposed of quickly and efficiently. However, this approach can backfire on the question of costs — see above, Question 7.
• Attitude. The opponent is unwilling to mediate, or their position is such that a mediation has no realistic prospect of success.
• Urgent remedy. If a party requires an urgent remedy (e.g., injunctive relief), then mediation would be inappropriate. This is because: (i) a mediator has no adjudicative powers; and (ii) delaying court action would have an adverse impact on the ability of that party to obtain a remedy.
• Point of law. There is an important point of law or construction that a party seeks to determine, or serious allegations of fraud which may not be amenable to mediation. The mediator has no adjudicative powers and therefore mediation is not a suitable forum to resolve that issue.

In England and Wales, mediations can take place in person or remotely.

Many mediations may involve a hybrid process, whereby some parties attend in person, but others (who may not be physically available) dial in/attend via video conference.

The frequency of online mediation has increased, precipitated by the COVID-19 pandemic in 2020. The Ninth CEDR Mediation Audit 2021 noted that, prior to March 2020, only 26% of mediators reported online mediation. However, within the first six months of the pandemic, 71% of mediators conducted their practice online.

The Tenth CEDR Mediation Audit 2023 noted that, for the year up to 30 September 2022, there were 17,000 reported mediations, out of which 64% were conducted online. Accordingly, there has been a substantial increase in mediations and online mediations over the past few years.

The jurisdiction of England and Wales has seen an increased use of mediation since 2020. The Tenth CEDR Mediation Audit found that for the year up to 30 September 2022, there had been 17,000 cases — a c.3% increase from pre-pandemic levels.

The CEDR also noted that mediators considered that the “current economic climate and social changes arising from the lockdown” would likely lead to increased mediation activity going forward.

The use of AI in mediation is largely speculative and in its infancy. There has been some commentary on the potential for AI tools to assist mediation — for instance, through the use of an AI tool in place of (or in support of) a human mediator. For now, there is no widespread reported usage of AI for the purposes of mediation in England and Wales.