Public Liability Claims and Alternative Dispute Resolution

When someone brings a public liability claim for injury or loss caused by another's negligence, the dispute does not always proceed directly to court. The legal system in England and Wales increasingly expects parties to consider and, where appropriate, use Alternative Dispute Resolution (ADR) to resolve their differences before or during litigation. ADR encompasses a range of processes such as mediation, arbitration, early neutral evaluation and structured negotiation. This article explains what ADR is, how it fits into the public liability claims process, relevant rules and procedures, the impact of recent civil procedure changes, and practical guidance for claimants and defendants.

What Is Alternative Dispute Resolution?

Alternative Dispute Resolution refers to methods of settling disputes outside formal court proceedings. The main forms of ADR relevant to public liability cases include:

• Mediation: A neutral third party facilitates negotiations between the claimant and defendant to reach a mutually acceptable settlement.
• Arbitration: A neutral third party hears evidence from both sides and makes a binding decision.
• Early Neutral Evaluation: An independent expert provides an informed opinion on the likely outcome.
• Negotiation: Direct or assisted discussion to settle terms without a third party.

ADR aims to offer a faster, more flexible and cost‑effective alternative to full court litigation, preserving confidentiality and allowing parties more control over the outcome.

ADR in Pre‑Action Protocols and the Civil Procedure Rules (CPR)

Before formal proceedings are issued in a public liability claim, parties must usually comply with the Pre‑Action Protocol for Personal Injury Claims and related parts of the Civil Procedure Rules (CPR). These are procedural expectations designed to structure information exchange, encourage resolution and make litigation a last resort.

Under the Pre‑Action Protocol for personal injury, parties are expected to consider whether negotiation or another form of ADR might allow them to resolve their dispute without issuing proceedings. Typical ADR options include mediation, arbitration and early neutral evaluation.

The Protocol expressly states that litigation should be a last resort and that both sides should consider ADR before going to court. It recognises that no party can be compelled to mediate, but an unreasonable refusal to consider ADR may be taken into account by the court when deciding on costs if litigation follows.

Recent Changes to the Civil Procedure Rules and ADR

Significant amendments to the Civil Procedure Rules came into force on 1 October 2024, reinforcing the role of ADR in civil litigation, including public liability claims. These changes were introduced in response to the Court of Appeal decision in Churchill v Merthyr Tydfil County Borough Council, which confirmed that courts have the power to stay proceedings to enable ADR and can order parties to engage in ADR provided it is proportionate and does not undermine access to a trial.

Key developments include:

• CPR 1.1: The court's overriding objective now includes “promoting or using alternative dispute resolution” to allow disputes to be resolved justly and at proportionate cost.
• CPR 1.4 and 3.1: The court's active case‑management obligations explicitly include ordering or encouraging the use of ADR.
• Track‑based considerations: When managing claims on the fast, intermediate or multi‑track, the court must consider whether to encourage or order ADR.
• CPR 44: When assessing costs, courts must consider whether a party failed to comply with an ADR order or unreasonably refused to engage in ADR.

These amendments mean that ADR is now an integrated part of the civil justice process rather than an informal option, although judges retain discretion about when and how it should be used.

When and How ADR Is Used in Public Liability Claims

Early Stages: Before Court Proceedings

In the pre‑action period, ADR may be considered whenever the claimant and defendant believe it could lead to settlement without litigation. A claimant's Letter of Claim (the formal pre‑action notification) often includes a proposal for ADR, such as mediation, or an explanation if ADR is not being proposed at that stage. Inclusion demonstrates compliance with the Pre‑Action Protocol and a willingness to explore resolution.

After Proceedings Are Issued

Once court proceedings have been initiated, ADR can still be considered at any stage. Parties might agree on mediation sessions, or the court may stay proceedings temporarily to enable ADR. Judges can also encourage or order ADR as part of case management directions.

Small Claims and Pilot Schemes

Specific procedural provisions, such as the Practice Direction 51ZE, support automatic referral to mediation for certain small claims under online claims procedures, although this is separate from personal injury and public liability cases.

Benefits of ADR in Public Liability Disputes

Engaging in ADR can provide multiple advantages:

• Cost savings: Litigation can be expensive; ADR often reduces legal fees and costs.
• Speed: ADR can resolve disputes more quickly than waiting for a trial date.
• Confidentiality: Unlike court hearings, ADR processes are typically private.
• Control and flexibility: Parties can shape the procedure and outcome rather than relying on a court decision.

These benefits make ADR particularly attractive in disputes where the issues are moderately complex but where the parties want to preserve relationships or avoid extensive litigation costs.

Risks and Limitations

Despite its advantages, ADR may not be suitable in every public liability case:

• Imbalance of power: If one party is significantly stronger, they may use ADR to delay or deflect accountability.
• No binding outcome (mediation): Mediation does not automatically produce a binding decision unless the parties agree terms; some may still prefer the certainty of a court judgment.
• Costs of ADR: Professional mediator or arbitrator fees may be incurred, though these are often shared between parties.

If ADR fails to resolve the dispute, litigation may still proceed, and the ADR attempts will form part of the procedural history that the court may consider, especially on costs.

Costs and ADR

Under the Civil Procedure Rules, both compliance with ADR orders and conduct regarding ADR can influence costs awards. For example, failing to engage in court‑ordered ADR without reasonable justification may negatively affect a party's position on costs, meaning the court could order them to pay a larger portion of the other side's legal costs.

Practical Steps for Claimants and Defendants

Considering ADR Early

• Include a clear proposal for ADR, such as mediation, in the Letter of Claim or early correspondence.
• Suggest specific ADR forms appropriate to the dispute's complexity and value.

Preparing for Mediation

• Compile relevant evidence, legal arguments and loss calculations upfront.
• Agree on a neutral mediator with appropriate experience.

Engaging with Court‑Ordered ADR

• Comply with any directive to participate in ADR and attend sessions in good faith.
• Maintain records of ADR correspondence and efforts as part of case management.

Engaging constructively with ADR enhances prospects of resolution and demonstrates reasonable conduct, which can favourably affect court cost decisions if litigation continues.

Common Questions

Is ADR compulsory in public liability claims?
ADR is not universally compulsory, but courts can now encourage or order participation where appropriate, and failure to engage can impact costs.

Do I lose my right to go to court by using ADR?
No. ADR does not remove the right to a judicial hearing. It is a process to resolve disputes early, but if it fails, litigation remains available.

What if the other party refuses ADR?
A party cannot be forced into mediation, but a refusal without reasonable grounds may be taken into account by the court when deciding costs.

Key Takeaways

Alternative Dispute Resolution (ADR) plays an important and growing role in resolving public liability disputes in England and Wales. Embedded in Pre‑Action Protocols and increasingly supported by amendments to the Civil Procedure Rules, ADR encourages negotiation, mediation and other out‑of‑court processes as effective alternatives to litigation. While disputes can still proceed to trial, constructive engagement with ADR may save time, reduce costs, preserve relationships and positively influence costs decisions. Understanding the procedures, options and obligations around ADR is essential for claimants and defendants engaged in public liability claims.