Something significant changed in the UK's civil justice system on 1 October 2024 — and most businesses involved in commercial disputes are not yet aware of it.
The Civil Procedure Rules were amended to confirm the power of English courts to compel parties to engage in out-of-court alternative dispute resolution where such an order is proportionate and does not undermine the parties' right to a judicial hearing. For the first time, courts can order parties into ADR — and impose costs sanctions on those who refuse without good reason.
This is not a minor procedural adjustment. It fundamentally changes the risk calculation for any business that receives a commercial claim and assumes it can simply wait for court.
The changes to the Civil Procedure Rules followed the landmark Court of Appeal decision in Churchill v Merthyr Tydfil Borough Council in 2023, which reversed the longstanding position that courts could not compel parties to engage in ADR.
The court's general powers of management now include the power to order the parties to engage in alternative dispute resolution. When giving case management directions in claims allocated to the fast track, the intermediate track, or the multitrack, the court should consider whether to order or encourage the parties to engage in ADR.
The costs provisions are the sharpest teeth in the new rules. When considering costs in a claim, the courts must now consider whether a party failed to comply with an order for alternative dispute resolution, or unreasonably failed to engage in alternative dispute resolution. In plain terms: if a court orders ADR and a party refuses, or if a party unreasonably declines to engage in ADR even without a court order, they risk a costs sanction — even if they ultimately win the case.
A costs sanction is not a minor administrative inconvenience. It means the court can deprive a winning party of some or all of its costs — or order it to pay the other side's costs — on the grounds that its refusal to engage in ADR was unreasonable.
Recent cases have made the position clear. In Northamber PLC v Genee World Ltd, costs sanctions were applied following the defendants' failure to respond to an offer to mediate and their breach of a court order that required them to explain this failure.
And in Henderson & Jones Ltd v Salica Investments Ltd in 2025, the court imposed enhanced interest at 8% above base rate for over 12 months on a judgment sum after the defendant ignored a settlement offer and refused mediation outright, arguing the case was too complex for ADR. The court rejected that argument, holding that mediation is suitable for almost all commercial disputes and that complexity alone is not a justification for refusal.
The financial consequences of unreasonable refusal are real, significant, and increasing.
The practical implications are straightforward. If you are involved in a commercial dispute — whether as the party bringing a claim or the party on the receiving end — you now need to take ADR seriously from the outset, not as an afterthought.
Courts are very likely to seek assurance that parties have considered ADR options and may increasingly require parties to attempt ADR before allowing cases to progress to full litigation.
For the party bringing a claim, proposing ADR early and in writing creates a record. For the party receiving a claim, see our guide on why agreeing to Dispute Neutral is the rational choice. If the other side refuses without good reason, that refusal can be used against them on costs.
For the party receiving a claim, ignoring an ADR proposal — or refusing it without a proper explanation — carries real financial risk even if the underlying claim is eventually defeated.
Separately, the Digital Markets, Competition and Consumers Act 2024 introduced a new mandatory accreditation framework for ADR providers handling consumer contract disputes. The DMCC Act regulations came into force on 6 April 2026, replacing the previous voluntary ADR accreditation framework.
This is an important development for businesses with consumer-facing operations — it changes the obligations around signposting consumers to accredited ADR providers and the standards those providers must meet.
The DMCC Act ADR regulations apply to consumer contract disputes. The CPR changes from October 2024 apply to civil litigation generally — including commercial disputes between businesses. Both are significant, but they address different contexts. For businesses dealing with B2B commercial disputes — unpaid invoices, trade debts, professional fees, and similar — the CPR changes are the more directly relevant development.
Not all ADR is the same. Mediation requires both parties to agree on a settlement — and if they cannot, the dispute remains unresolved. A private neutral decision process is different: an independent neutral reviews the documents and written submissions from both sides and issues a binding determination. Both parties agree in advance to be bound by the outcome.
This distinction matters in the context of the new CPR rules. A binding neutral decision process satisfies the court's expectation that parties engage meaningfully with ADR — and produces a definitive outcome rather than a process that might not resolve anything.
For commercial disputes under £150,000 in England, Wales, and Northern Ireland, Dispute Neutral provides exactly this — a private, fixed-fee, binding neutral decision in 10 business days. See our companion page on why Dispute Neutral is a strong fit for the current ADR landscape for more detail.
Yes. Since 1 October 2024, the court's general powers of management include the power to order the parties to engage in alternative dispute resolution where it is proportionate and does not impair the right to a judicial hearing. The court has discretion on when to exercise this power, but parties should expect it to be used more frequently as judges become familiar with the new rules.
Failure to comply with an order for ADR may result in costs sanctions on the party that refuses to engage. This means you could be required to pay the other side's costs — or be deprived of your own costs — even if you win the case on the merits. The financial consequences can be substantial, particularly in fast and multi-track claims where legal costs are significant.
The DMCC Act ADR provisions that came into force on 6 April 2026 specifically govern consumer contract disputes — disputes between a business and a consumer. They do not directly apply to B2B commercial disputes. The more relevant development for business-to-business disputes is the October 2024 CPR changes, which apply to civil litigation generally and give courts the power to mandate ADR in commercial claims.
Yes. Expert determination and other binding neutral decision processes are recognised forms of ADR. Engaging in a private neutral decision process — and doing so genuinely and in good faith — satisfies the court's expectation that parties explore non-court resolution. Unlike mediation, a binding neutral decision process produces a definitive outcome, which means the dispute is actually resolved rather than merely attempted.
A private, fixed-fee neutral decision process gives both parties a binding outcome in 10 business days — faster, cheaper, and more proportionate than court, and fully consistent with the court's expectation that parties explore ADR before and during litigation.
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