What Is Dispute Resolution and When Should You Use It?

Updated for 2026

Key Points

- Dispute resolution covers every method of settling a legal disagreement, from direct negotiation between the parties to a full trial before a judge; most disputes are resolved without reaching court.

- The courts in England and Wales now have an express power to order parties to engage in alternative dispute resolution (ADR), following Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 and CPR amendments that took effect on 1 October 2024.

- From 22nd May 2024, defended money claims valued at up to £10,000 are automatically referred to the HMCTS Small Claims Mediation Service for a free one-hour session before the case can proceed to a hearing.

- Refusing to engage in ADR without good reason exposes a party to adverse costs orders; silence in response to a mediation invitation can itself amount to an unreasonable refusal.

- Civil claims are now allocated to one of four tracks: Small Claims (up to £10,000), Fast Track (£10,001 to £25,000), Intermediate Track (£25,001 to £100,000, introduced 1 October 2023), or Multi-Track (above £100,000 or otherwise complex).

Forms of Alternative Dispute Resolution

Alternative dispute resolution is an umbrella term for any process that allows parties to resolve a dispute without a full court hearing. The main forms available in England and Wales are as follows.

- Negotiation is the simplest method: the parties, usually through their solicitors, exchange offers and counter-offers until they reach a binding settlement. No neutral third party is needed, and the parties retain complete control. Negotiation can take place at any stage and remains the most common way in which civil disputes are resolved.

- Mediation involves a neutral, trained mediator who works with both sides, usually in separate rooms, to help them reach a voluntary settlement. Mediators have no power to impose a decision; they facilitate communication and help each party test the strength and weakness of their own position. According to the Eleventh CEDR Mediation Audit (2025), mediators report that 70% of cases settle on the day, with a further 17% settling shortly afterwards, giving an overall settlement rate of approximately 87%.

- Arbitration gives the parties a private decision-maker whose award is binding and enforceable as a court judgment. It is most common in commercial contracts, construction disputes, and international trade, where parties have agreed in advance that any dispute will go to arbitration. The process is governed by the Arbitration Act 1996.

- Adjudication is a statutory right under the Housing Grants, Construction and Regeneration Act 1996 for parties to construction contracts to refer a dispute to an independent adjudicator for a decision within 28 days. That decision is binding in the interim and enforced while any court or arbitration challenge is pursued.

- Early neutral evaluation (ENE) is a process in which an independent evaluator, often a retired judge or senior practitioner, gives a non-binding assessment of the likely outcome if the matter were litigated. In financial remedy proceedings, the equivalent process is a Financial Dispute Resolution (FDR) appointment, a judge-led meeting at which the court indicates the likely outcome, which often produces settlement.

- Expert determination is used where the dispute turns entirely on a technical question, such as the valuation of a business or a property. The parties appoint an independent expert whose determination is binding, without the need for any court process.

The Courts Can Now Order ADR

For many years, courts in England and Wales operated under the principle drawn from Halsey v Milton Keynes General NHS Trust) [2004] EWCA Civ 576, which suggested that compelling unwilling parties to mediate would breach their right of access to the court. That position was departed from by Churchill v Merthyr Tydfil County Borough Council] [2023] EWCA Civ 1416, in which the Court of Appeal held on 29 November 2023 that a court can lawfully stay proceedings for, or order, the parties to engage in a non-court-based dispute resolution process, provided the order does not impair the claimant's right to proceed to a judicial hearing and is proportionate to the aim of settling the dispute fairly, quickly and at reasonable cost.

Parliament moved swiftly. The Civil Procedure (Amendment No. 3) Rules 2024 came into force on 1 October 2024 and embedded Churchill into the rules. The overriding objective in CPR 1.1(2) now expressly includes "promoting or using alternative dispute resolution". CPR 1.4(2)(e) now requires active case management to include ordering or encouraging ADR, and CPR 3.1(2)(o) gives the court a general power to order it. When giving case management directions, the court must consider whether to order or encourage ADR. CPR 44.2(5) requires the court, when exercising its costs discretion, to have regard to whether a party failed to comply with an ADR order or unreasonably failed to engage in ADR.

The cost consequences of refusing to engage are severe. Even before the October 2024 amendments, the Court of Appeal had held in PGF II SA v OMFS Company 1 Limited] [2013] EWCA Civ 1288 that silence in response to a proper invitation to mediate can amount to an unreasonable refusal. A party that ignores a mediation invitation, or declines without adequate justification, risks losing a substantial proportion of its costs even if it wins the case. The post-2024 regime makes that risk greater still.

Suppose a Solihull manufacturer brings a £60,000 breach of contract claim against a supplier. The supplier's solicitors invite mediation; the manufacturer's team does not reply. The case proceeds to trial and the manufacturer wins. Under the current rules, the judge must consider the manufacturer's silence when assessing costs. The manufacturer, having won on the merits, may still be denied a portion of its costs or ordered to pay the supplier's costs for the period during which ADR was refused.

The HMCTS Small Claims Mediation Service

For smaller disputes, the process has changed still more fundamentally. Since 22 May 2024, parties to defended money claims valued at up to £10,000, where the only remedy sought is a sum of money, are automatically referred to the HMCTS Small Claims Mediation Service before the claim can proceed to a hearing. The session, a free one-hour telephone appointment, is generally arranged within 28 days. If parties do not settle, the case continues to trial without delay.

Businesses dealing with unpaid debts and contract disputes or individuals disputing payments for goods and services now encounter mediation as a compulsory gateway in the small claims process. The parties are required to attend; they are not required to settle. Even so, the structured conversation a mediator facilitates often produces outcomes that correspondence alone does not.

Civil Litigation and Track Allocation

Where ADR fails or is unsuitable, civil litigation remains available. Once a defendant files a defence, the court issues a directions questionnaire and the claim is allocated to one of four tracks under CPR Part 26.

The Small Claims Track covers most money claims up to £10,000 and provides an informal hearing at which legal costs are generally not recoverable between the parties. The Fast Track covers claims valued between £10,001 and £25,000 that can be tried within one day. The Intermediate Track, introduced by the Civil Procedure (Amendment No. 2) Rules 2023 with effect from 1 October 2023, covers most civil claims valued between £25,001 and £100,000, subject to the trial being completable within three days, no more than two expert witnesses per party giving oral evidence, and no more than three parties. Claims on the Intermediate Track are assigned to one of four complexity bands, which govern the fixed recoverable costs at each stage. The Multi-Track is reserved for claims above £100,000 or claims of significant complexity, where flexible case management and costs budgeting apply.

The introduction of the Intermediate Track was a material change for those involved in mid-value disputes. A claim for £75,000 arising from a disputed commercial contract that would previously have attracted open-ended Multi-Track costs management is now, in most cases, an Intermediate Track claim with fixed costs consequences. Parties need to plan costs recovery accordingly from the outset.

If your dispute involves civil litigation or a question about which track applies, Pearcelegal's dispute resolution team in Solihull can advise on allocation, costs exposure, and the most proportionate path to resolution for your specific circumstances.

Frequently Asked Questions

Can a court force me to mediate?

Yes, since Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416 and the CPR amendments of 1 October 2024, a court can order parties to engage in ADR, including mediation, provided the order is proportionate and does not prevent a party from proceeding to a judicial hearing if ADR fails.

What happens if I refuse to mediate?

Refusing to mediate without good reason is treated as relevant conduct when the court assesses costs. Even a winning party can have its costs reduced, or be ordered to pay the other side's costs, if it unreasonably declined to engage in ADR. Silence in response to a mediation invitation can itself count as an unreasonable refusal under PGF II SA v OMFS Company 1 Limited [2013] EWCA Civ 1288.

How much does mediation cost?

For defended money claims up to £10,000 in the county court, the HMCTS Small Claims Mediation Service is entirely free. For higher-value disputes, mediator fees vary by case value and complexity and are typically shared equally. The cost is generally a fraction of what full litigation would cost.

What is the difference between mediation and arbitration?

Mediation is a facilitated negotiation: the mediator has no power to impose a decision and any settlement is reached voluntarily. Arbitration produces a binding award enforceable as a court judgment; the arbitrator decides the dispute on the evidence. Arbitration is generally appropriate where the parties' contract contains an arbitration clause or where they agree to it as a substitute for litigation.

Which track will my claim be allocated to?

Track allocation depends primarily on the financial value of the claim and its complexity: up to £10,000 is Small Claims, £10,001 to £25,000 is Fast Track, £25,001 to £100,000 is Intermediate Track, and above £100,000 is Multi-Track, though the court also considers trial length, complexity, and the number of parties. A solicitor can advise which track is likely and what the costs consequences will be.

About the Author

Stephanie Howard (SRA number 432274) is a Director of Pearcelegal and Head of the firm's Family and Litigation department. Admitted as a solicitor in 2015, she advises on the full range of family work, including divorce, financial remedy proceedings, child arrangements, civil partnerships and cohabitation disputes, alongside general civil litigation and contentious probate. Stephanie joined Pearcelegal in 2014, was promoted to Associate in 2021, took over the Family and Litigation team in 2023 and was appointed a Director in April 2026. She is regulated by the Solicitors Regulation Authority (SRA ID 432274).

Last reviewed: 8th June 2026.