“Litigation should be a last resort. As part of a relevant pre-action protocol or this Practice Direction, the parties should consider whether negotiation or some other form of ADR might enable them to settle their dispute without commencing proceedings.” (Para. 8, Practice Direction – Pre-Action Conduct and Protocols)
From 1 October 2024, the CPR changed to place resolution methods outside of trial at the centre of litigation strategy. The amendments to CPR 1.1 and 1.4 mean that judges no longer merely encourage ADR; they now have express powers to order it. For barristers and solicitors, this shift requires a move away from the traditional adversarial default towards the early use of evaluative tools, specifically Early Neutral Evaluation (ENE).
The Evaluative Turn: ENE Explained
ENE is a non-binding, confidential process where an independent neutral provides a reasoned assessment of the merits of a dispute. Comparing ENE with mediation:
Mediation is facilitative in which an independent, trusted, neutral manages the process of negotiation, focusing on interests and relationship preservation. In the UK model, the mediator rarely offers a view on the legal merits (in contrast to the model typically deployed in the USA that tends to actively advise and propose solutions.)
Early Neutral Evaluation is evaluative. The neutral (often a judge or specialist KC) assesses the substance of the dispute. The evaluation then provides a reality check on the law and evidence, predicting the likely outcome at trial.
This evaluative function addresses “optimism bias,” where parties (and sometimes their advisors) overestimate their prospects of success. By injecting an objective, authoritative opinion early, ENE can puncture unrealistic expectations and provide a rational baseline for settlement. By injecting objective findings early in the process, ENE can allow parties to reduce the risk of pursuing unmeritorious claims or defences.
The End of Voluntary ADR: Churchill and the CPR
The legal basis for this change is the Court of Appeal decision in Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416. That judgment established that courts can stay proceedings or order parties to engage in ADR, provided the order does not obstruct the right to a fair trial and is proportionate.
In the specific context of ENE, Lomax v Lomax [2019] EWCA Civ 1467 remains the leading authority. It confirms that a court can order an ENE hearing under CPR 3.1(2)(p) even if one party objects. Since October 2024, this power has been formalised across the fast track, intermediate track, and multi-track.
Costs of Silence and the Risk of Winning
Recent case law provides further confirmation that the courts will punish parties who fail to engage with ADR. In Northamber PLC v Genee World Ltd [2024] EWCA Civ 428, the CA found that silence in response to an ADR offer is inherently unreasonable. The claimant was awarded an additional 5% in costs as a sanction for the defendant’s failure to respond to a mediation proposal.
Even winning at trial does not provide a shield. In Conway v Conway [2024] EW Misc 19 (CC), the successful defendants saw their recoverable costs reduced by 25% because they had rejected offers to mediate without a compelling reason. The court noted that no party can be 100% certain of success, and rejecting resolution attempts is a “misguided” strategy.
The risk can also be high for those in fiduciary roles. In Fernandez v Fernandez [2025] EWHC 2530 (Ch), an executor who delayed responding to mediation proposals and rejected 26 proposed dates faced severe consequences. Here, the judge ruled the executor could not indemnify himself from the estate, leaving him personally liable for approximately £80,000 in costs. For solicitors advising executors or trustees, ENE is an essential tool to show that all reasonable steps were taken to resolve the dispute before depleting estate assets in litigation.
The Transparency Trigger: PD 51ZH
From 1 January 2026, Practice Direction 51ZH, (the Access to Public Domain Documents Pilot) was launched. In the Commercial Court and the Financial List, this pilot creates a presumption that documents referred to in open court, including witness statements and expert reports, will be accessible to the public by default via CE-File.
This change limits the privacy traditional litigation once offered. ENE, conducted on a “without prejudice” and confidential basis, provides a potential sanctuary by allowing parties to obtain a judicial evaluation of their case without the risk of sensitive documents becoming public. This is anticipated to be new driver for parties choosing judicial ENE as part of their toolbox.
Strategic Conclusions for Practitioners
Noting the transition from “encouragement” to one of “compulsion” regarding ADR, practitioners should adopt the following steps:
- Respond to every offer: Never leave an invitation for ENE/mediation unanswered. Silence is now treated as a breach of conduct rules.
- Use ENE to break deadlocks: If a dispute hinges on a point of law or a technical contract term, facilitative mediation may fail. ENE provides the judicial steer required to find a solution.
- Advise on privacy: For commercial clients, highlight that PD 51ZH makes open court hearings a public record. ENE remains a confidential method to test the strengths of a case.
- Propose ADR early: Do not wait for the Case Management Conference. Proposing ENE early allows you to define the issues and, if the other side refuses, provides a basis for future costs protection.
As the Master of the Rolls has stated, the goal is now “resolution rather than dispute”. ENE is no longer an optional extra; it is a core component of competent litigation conduct.
Dr Peter Fields is co-author of A Practical Guide to Effective Dispute Resolution: Methods and Clauses, Sweet & Maxwell, 23 Sept. 2024
