Alternative Dispute Resolution (ADR) refers to all forms of dispute resolution methods other than court proceedings and arbitration. Litigation in England and Wales is governed by the Civil Procedure Rules (CPR) which encourage cost saving, proportionality and efficiency. This emphasis is evident in the Overriding Objective (CPR 1); this provision details the founding principles that underpin English civil litigation.
CPR 1 states:
“(1) These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.
(2) Dealing with a case justly and at proportionate cost includes, so far as is practicable-
(a) ensuring that the parties are on an equal footing;
(b) saving expense;
(c) dealing with the case in ways which are proportionate-
(i) to the amount of money involved;
(ii) to the importance of the case;
(iii) to the complexity of the issues; and
(iv) to the financial position of each party;
(d) ensuring that it is dealt with expeditiously and fairly;
(e) allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases; and
(f) enforcing compliance with rules, practice directions and orders.”
The CPR oblige Parties to help the Court further the overriding objective. As such the Courts will examine whether parties have explored ADR as a cheaper, more efficient and proportionate method of resolving their dispute. The true importance of the requirement to consider ADR is confirmed by CPR 44, this rule lists factors that the Courts should consider when making an order for costs. CPR 44.1(3)(a)(ii) provides that the Court will examine “the efforts made, if any, before and during the proceedings in order to try and resolve the dispute”. As a result, behaviour that indicates that ADR was not properly considered will have negative costs consequences for the party at fault.
The Courts have demonstrated that where a party unreasonably fails to mediate or attempt ADR it may be penalised on costs (Dunnett v Railtrack plc  EWCA Civ 303). A party may for example be reprimanded if it was instructed by the Court to consider ADR and failed to do so. Generally the emphasis is placed upon the unsuccessful party to demonstrate that as a result of the conduct of its opponent the Court should depart from the general rule that the loser pays the winner’s costs.
The losing party must show that the successful party acted unreasonably in refusing to participate in ADR. The case of Dyson and Field v Leeds City Council 22 November 1991, illustrated the Court’s willingness to adjourn proceedings to allow for ADR to be attempted, furthermore it may sanction parties with indemnity costs orders for failure to do so.
In the case of Halsey v Milton Keynes General NHS Trust  4 All ER 920 the Court outlined factors that the Court should consider in determining whether a party has acted unreasonably in refusing to engage in ADR, they include:
- The nature of the dispute;
- The merits of the case;
- An examination of whether other settlement methods had been looked at/attempted;
- Whether the cost incurred by ADR would have been disproportionate;
- Whether the delays caused by attending and organising ADR would have caused a prejudice to either party;
- Whether ADR would have had a reasonable prospect of success; and
- Whether a party has refused to enter into ADR despite the Court’s encouragement.
However, even if the party asserts that mediation would have been unlikely to succeed and they have refused to engage in ADR, this may not exonerate them from the negative costs consequences flowing from the arrangement (Attorney General of Zambia v Meer Care & Desai  EWHC 1540). Sometimes such refusal may be upheld by the Courts, for example Davis LJ in Mason and others v Mills & Reeve  EWCA Civ 498 considered that ADR cannot be viewed as a panacea for all disputes and therefore it may not be appropriate in every case.
A party’s choice to withdraw from mediation may also be penalised by the Courts. For example in the case of Roundstone Nurseries Limited v Stephenson Holdings Limited  EWHC 1431, a costs order was made against a party that withdrew from mediation. The proceedings had been stayed to allow for mediation to take place however the party withdrew when a third party that it deemed key to the dispute declined to engage in the process.
Recently a case was examined where a party refused to engage with its opponent as to the possibility of mediation – PGF II SA v OMFS Company and another  EWHC 83. At first instance the Court held that PGF could not recover some of its costs, due to the fact it had failed to respond to its opponent’s offer to mediate. PGF appealed it considered that it had not acted unreasonably because silence did not necessarily indicate a refusal to mediate and that mediation was unlikely to have been successful because the parties had presented vastly different offers. The Court of Appeal rejected this argument. The Court extended the aforementioned Halsey principles. It ruled that it was unreasonable for a party to remain silent following an invitation to mediate, this would be the case regardless whether the invitation was reasonable for feasible. The Court reasoned that a party’s offer is not always indicative of their final position therefore insurmountable differences may in fact be reconcilable.
It is clear and positive that, although ADR is not a mandatory step in English litigation, the financial enticements that are now confirmed in the CPR and by the Courts are having a tangible impact on the willingness of parties to contemplate ADR as method of resolving their dispute.