Costly Mistakes: The Price of Bypassing Mediation and Arbitration Options

On 8 and 29 April 2024 changes to the Family Procedure Rules are being implemented which will impact on anyone considering applying to the Family Court.  Sophie Key, Solicitor in our Family Team, considers the changes and how they will impact clients.

The Family Procedure Rules impose a procedural code and set out how all cases are to be conducted within the Family Court.  This includes cases relating to children and finances in connection with divorce.

So what is changing?

• There is a renewed emphasis on non-adversarial dispute resolution methods.  Under new Rule 3.3(1A), the Court can now require parties to file and serve (lodge at Court and send to the other party) a form setting out their views on using Non-Court Dispute Resolution (NCDR) as a means of resolving matters raised in the proceedings.  This will be an ‘open’ statement meaning the Court will be aware of the parties’ positions throughout the proceedings.  This is likely to be of significant relevance to the issue of costs.

• The definition of Non-Court Dispute Resolution has been expanded to mean ‘methods of resolving a dispute other than through the court process, including but not limited to mediation, arbitration, evaluation by a neutral third party (such as a private Financial Dispute Resolution process) and collaborative law’.

• From 29 April 2024, the court may adjourn proceedings to encourage parties to undertake non-court dispute resolution where the timetabling of proceedings allows sufficient time”.  The agreement of the parties will no longer be required.  In light of the current significant wait between hearings (meaning this can be easily facilitated), it is likely this will be adopted.

• Failure to engage in NCDR will allow the Court to depart from the starting position that there should be no order as to costs.  Those parties who readily dismiss alternatives to litigation may well face financial sanctions. 

• The rules will remove some of the current exemptions to attending mediation before making an application to Court meaning it will be more difficult to bypass the NCDR requirement before issuing proceedings.  A new statutory requirement will be imposed on mediators to indicate to those who attend a Mediation Information and Assessment Meeting (MIAM) which form(s) of NCDR may be the most suitable for resolving the dispute and why, and to provide the parties with information about the NCDR in question.

Whilst not quite making non-court dispute resolution compulsory the position is very clear:  making applications to Court without a proper consideration of non-court dispute resolution methods – or considering the use of such methods during proceedings (where time allows) – is likely to result in costs penalties.    

It will become clear over the months to come whether the amendments to the Family Procedure Rules will signify a real change and an increased uptake in NCDR.  At Hatch Brenner we have always encouraged clients to consider the use of alternative dispute resolution methods such as mediation and arbitration, where appropriate.  Court proceedings are often the last resort for resolving an issue, not least due to the cost, delay and stress involved.  Court proceedings are not always what is best for clients, and it is clear from the new Rules that the lawmakers agree.