Dec 2023
On 29 November 2023, the English Court of Appeal delivered an important judgment in Churchill v Merthyr Tydfil County Borough Council et al [2023] EWCA Civ 1416 (“Churchill”) which aligns with a wider trend in embracing a variety of forms of alternative dispute resolution (“ADR”), such as arbitration, expert determination and mediation.
The principal issue in Churchill was whether, and in what circumstances (if any), a court might order parties to court proceedings to engage in an out-of-court dispute resolution process. In the context of Churchill, the relevant ADR mechanism was a local authority’s internal complaints procedure, which Mr. Churchill was not contractually bound to follow.
Mr. Churchill had filed a claim against the local authority and, in response, the council had applied for a stay of proceedings on the basis that Mr. Churchill failed to utilise an available complaints procedure prior to filing the claim. The first instant judge dismissed the stay application and followed the principle from an earlier English Court of Appeal decision in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 (“Halsey”), where Dyson LJ formed the view that “to oblige truly unwilling parties to refer their disputes to mediation would be to impose an unacceptable obstruction on their right of access to the court“.
On appeal in Churchill, the English Court of Appeal declined to follow Halsey as it considered the above statement made by Dyson LJ to be obiter dicta (i.e. not forming part of the binding reasoning of the case). The English Court of Appeal held that it has jurisdiction to stay proceedings for parties to engage in out-of-court ADR and it can also order the parties to engage in ADR processes, as appropriate.
The Court of Appeal commented that it will “only stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process provided that the order made does not impair the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost.”
Due to the advanced stage of the proceedings, among other things, the English Court of Appeal in Churchill declined to grant the stay or to order the parties to engage in ADR in those circumstances.
Key Takeaways
Although not binding, Churchill is likely to be highly persuasive in the Cayman Islands. It is clear that the Cayman Courts, like the English Courts, expect parties to consider alternatives before reaching for more drastic remedies and resorting to litigation.
We also note that:
- the procedural rules of the Cayman Courts are designed with the overriding objective of enabling the Courts to deal with every matter in a “just, expeditious and economical way”;
- to achieve this objective, in August 2022, the Chief Justice of the Cayman Islands issued Practice Direction no.3 of 2022 on “Judicial Mediation Guidelines”, which encourages litigants to engage in mediation. For more information on judicial mediation in the Cayman Islands, see our previous article “Judicial Mediation in the Cayman Islands: Some New Judicial Guidelines”;
- the Cayman International Mediation and Arbitration Centre (“CI-MAC”) opened in 2022 to offer modern technology, together with full-service support for arbitration and mediation; and
- further, the recent decision of the Judicial Committee of the Privy Council (“JCPC”) in FamilyMart China Holding Co Ltd (Respondent) v Ting Chuan (Cayman Islands) Holding Corporation (Appellant) (Cayman Islands) [2023] UKPC 33 is another signal of support for and deference to ADR. In FamilyMart (similar to many other recent decisions), the JCPC decided to stay winding up proceedings to allow certain issues to be arbitrated in accordance with an arbitration agreement entered into between the parties.
In light of the rise in ADR globally, litigants should be forewarned that there are out-of-court procedures available to assist with resolving disputes. Whether or not the parties have agreed to a particular form of dispute resolution, it may be open to the Cayman Courts to direct a particular course of action, at an early stage, as an alternative preliminary step.