What are the risks of saying “No” to ADR?

Costs Risks: Even Winners Can Be Penalised

The courts have made it clear that refusing to mediate can carry financial consequences.

– In Halsey v Milton Keynes General NHS Trust [2004], the Court of Appeal held that an unreasonable refusal to mediate may justify a costs sanction, even for the successful party.

– Later cases strengthened that position. In PGF II SA v OMFS Company 1 Ltd [2013], the Court of Appeal confirmed that simply ignoring an offer to mediate was itself unreasonable, leading to a costs penalty.

– And in Smith v Campbell [2026] EWHC 144 the High Court did not award the successful party any costs as a result of its unreasonable refusal to mediate.
So, even if your legal case is strong, declining ADR can still be expensive.

The Courts Expect a Pragmatic Approach

Since 1 October 2024 the Civil Procedure Rules (“CPR”) have stated that the court may give directions “ordering or encouraging the parties to engage in alternative dispute resolution (ADR)” (as summarised in our previous article: What the compulsory ADR changes mean for litigation from 1 October 2024).  And the courts want disputes resolved efficiently and proportionately.

– As ADR supports that aim, a refusal to mediate may be seen as unhelpful or disproportionate. In recent cases, including the Court of Appeal in Northamber plc v Genee World Ltd [2024], judges have emphasised that parties are expected to provide clear and sensible reasons for declining ADR.  And the parties’ approach to ADR can influence, case management decisions, how the court views conduct and costs orders.

– Any refusals to engage in ADR should therefore be reasonable, clear and genuine (and also kept under review).  Some examples of when it may be reasonable to say “no” to ADR include urgent injunctions, clear points of law that need a ruling, where mediation has already been tried, and/or where the costs involved would be disproportionate.

– However, providing a pragmatic approach is adopted and/or there is some other good reason, the court will not always penalise parties for saying “no” to ADR, especially if the court does not believe that ADR would realistically succeed.  This was confirmed in two recent decisions. In Grijns v Grijns [2025] EWHC 2853 (Ch) where unreasonable conduct by the other side, especially the dishonesty by that party, justified declining mediation without penalty. And subsequently in Belson & Ors v Belson & Ors [2025] EWHC 2989 (Ch) the failure of the other side to produce evidence that he was under a duty to provide pursuant to a Consent Order, also justified declining mediation.

So, showing a willingness to engage in ADR (and keeping your good reasons for declining ADR under review) will help demonstrate the constructive approach the courts expect.

The Courts may direct ADR anyway

Whilst the Court of Appeal’s decision in Churchill v Merthyr Tydfil CBC [2023] didn’t go as far to make ADR mandatory in all cases, it did confirm that the courts can stay proceedings or direct parties to engage in ADR where appropriate (as summarised in our previous article).  And by appropriate we mean that doing so is likely to resolve the dispute fairly, quickly and at a reasonable and proportionate cost.

So, a refusal may not ultimately prevent mediation or ADR — it may simply delay it and result in judicial intervention (and the potential consequences that may accompany such an intervention).

ADR Often Delivers Better Commercial Outcomes

In our experience, ADR (and mediation in particular) frequently unlocks practical, flexible solutions that the court cannot order.

So, let’s not forget that ADR and mediation have substantial potential advantages too, including privacy, faster resolution, creative settlement options and (perhaps more often than you would expect) opportunities to preserve relationships.
And even where settlement feels unlikely, ADR can still be successful and often helps to narrow issues and reduce risk.

Comment

Engaging in ADR doesn’t mean weakening your case. It shows the court — and the other side — that you’re taking a balanced, commercially sensible approach.  And even where settlement feels unlikely, exploring ADR usually protects your position rather than undermines it.  ADR also consistently resolves the most difficult and hardly fought disputes, and as it can also deliver better commercial outcomes (as noted above), saying “no” to ADR always requires careful consideration.

If you need help with a dispute, please get in touch.