Settlement Hearings: The Court’s Approach to ADR and Enforcement

Strong litigators position their clients to settle cases. That’s not a contradiction. It’s the whole point.

Most commercial disputes are not resolved at trial, they settle. A binding settlement agreement is entered into once both sides work out where the cost; benefit truly lies. The real question isn’t whether to litigate or negotiate. It’s whether you litigate well enough to make the other side want to settle, and whether you can agree terms both sides can live with.

In England and Wales, the courts are increasingly active in pushing parties towards this outcome. The Civil Procedure Rules now require you to consider Alternative Dispute Resolution (ADR) at every stage of a claim. Following Churchill v Merthyr Tydfil Borough Council in 2023, courts can order parties to engage in ADR. Refuse unreasonably and you face cost sanctions, even if you win if you act unreasonably you can be ordered to pay the losers costs as well as your own.

Our commercial litigation team act in a wide variety of commercial disputes, across the country. This guide explains the landscape: what ADR actually is, what happens at a settlement hearing, how the courts police participation, and why litigation readiness is what makes settlement work.

What Is ADR?

ADR stands for Alternative Dispute Resolution. It isn’t a single process, it’s a category of processes that run in parallel with litigation, not as a replacement for it. By aggressively pursuing litigation, your better position yourself to resolve your dispute via ADR.

In commercial disputes, the most common ADR routes are:

• Without prejudice save as to costs correspondence: confidential letters between the parties that can’t be used at trial other than when seeking recovery of costs.
• Negotiation meetings: off-the-record discussions, with or without clients present.
• Commercial mediation: a facilitated day-long session led by a neutral mediator.
• Arbitration: a private judicial process leading to a binding award, sitting outside the court process entirely.

ADR can run alongside court proceedings or stand in their place, but ADR isn’t a court process in itself. A settlement hearing, by contrast, sits within litigation, and it only happens after proceedings have been issued and the court is already involved.

The Legal Framework: The Duty to Consider ADR

Long before a case reaches court, the parties are expected to consider ADR.

The Pre-Action Conduct and Protocols, contained in the Practice Direction to the Civil Procedure Rules (CPR), require the parties to engage with settlement options before issuing a claim. The aim is to narrow the issues, share information, and see whether the dispute can be resolved without court involvement.

Once a claim is issued, the court’s case management powers under Part 3 of the CPR take over. The court can set timetables, impose sanctions for non-compliance, control disclosure, and, importantly, encourage or order the parties to attempt ADR. This happens at track allocation, at any case management conference, and at any point where the court thinks progress can be made without a trial.

Considering ADR isn’t optional. And it isn’t something you do once at the outset and tick off.

The Court’s Evolving Approach — From Halsey to Churchill

For nearly two decades the leading case on court-ordered ADR was Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576. Halsey held that the court could not compel parties to mediate, but could penalise a party in costs for unreasonably refusing to do so. The result was a regime of strong encouragement backed by the threat of cost orders.

That position changed in 2023. In Churchill v Merthyr Tydfil Borough Council [2023] EWCA Civ 1416, the Court of Appeal confirmed that courts can lawfully order the parties to engage in ADR, provided the order is proportionate and doesn’t breach the right to a fair trial. The Civil Procedure Rules were amended in 2024 to recognise this power expressly within the overriding objective.

In parallel, reforms to the Small Claims Mediation Service in May 2024 mean most money claims under £10,000 are now automatically referred to a free one-hour HMCTS mediation appointment. The public policy direction is clear: with more disputes resolved by agreement three are fewer disputes in the court system taking up time and money.

What Is a Settlement Hearing?

A settlement hearing is a specific, and in England and Wales, relatively rare, type of hearing. It only takes place after litigation has been commenced and the case is under the court’s management.

At a settlement hearing, the judge may flag the strengths and weaknesses of each side’s case and, in some instances, give a non-binding indication of the likely outcome at trial. The aim is to prompt both parties to reassess and open genuine settlement discussions. Everything said is on a “without prejudice” basis, so nothing can be relied on if the claim continues.

If no agreement is reached, the case carries on through the normal court process.

Most commercial disputes are resolved through ADR well before this point, via negotiation, mediation, or correspondence, without ever reaching a formal settlement hearing.

When and Why Courts Direct Settlement and ADR

Courts push parties toward ADR or a settlement hearing when they see a realistic prospect of resolution without a full trial. That tends to be in:

• Smaller-value or straightforward claims
• Disputes that turn on commercial positioning rather than legal novelty
• Cases where the parties have an ongoing relationship worth preserving
• Matters where the cost of continuing would be disproportionate to what is in dispute

Where the case involves novel points of law, serious factual disputes that can only be tested at trial, or a party that needs to be held accountable on the public record, the court will let the claim run its course.

Mediation vs Arbitration Are Two Very Different Things

Mediation and arbitration are both ADR. They are not interchangeable.

Mediation is facilitative. A mediator helps the parties identify common ground, explore compromises, and negotiate their own voluntary agreement. The mediator doesn’t decide anything. If no deal is reached, the parties walk away with the status quo intact.

Arbitration and Adjudication judicial or pseudo judicial. The arbitrator is effectively a private judge. They set the procedure, take evidence from both sides, consider the arguments, and issue a legally binding award. Arbitration is not part of the court process, it is a parallel system, usually chosen because the parties’ contract required it. An arbitral award generally cannot be overturned by a court; the grounds for challenge are narrow. An adjudicator occupies a similar role and position- dealing with a dispute between parties in the construction sphere quickly.

In most commercial disputes, mediation is the ADR route of choice, with negotiation and without-prejudice correspondence running in the background throughout.

Judicial Pressure and the Limits of Compulsion

Since Churchill, courts have an express power to direct ADR. That power is not unlimited.

Any order must be:

• Proportionate to the dispute
• Appropriate to its stage and subject matter
• Consistent with the right to a fair trial

The court orders participation, not settlement. You can attend a mediation, engage in good faith, and still walk away. What you can’t do is refuse to engage at all without a reason that will stand up to scrutiny.

Where a contract includes an ADR clause. for example, a requirement to mediate before litigating, the court will generally enforce it by staying the proceedings until the clause has been complied with.

Cost Consequences of Refusing ADR

Even before Churchill, the costs risk of refusing to engage in ADR was real. Halsey set out the principle: a party who unreasonably refuses to participate in ADR can be penalised in costs, even if they win at trial.

Under CPR Part 44, the court has wide discretion over costs and will look at:

• Whether ADR was attempted
• Whether any refusal was reasonable
• The likelihood that ADR would have succeeded
• The overall conduct of the parties

The practical effect is a cost sanction, a penalty, against a party whose refusal can’t be defended. That risk, on top of the risk of losing the case on its merits, is usually enough to bring even a reluctant party to the table.

Settlement Agreements Following ADR

When ADR produces a deal, the deal is recorded in a settlement agreement. The ADR process itself, mediation in particular, is non-binding. The resulting agreement is not. Provided it’s drafted with contractual intent, it’s enforceable like any other contract.

Where proceedings have already been issued, the parties often use a Tomlin order to record the terms. A Tomlin order stays the proceedings on terms set out in a confidential schedule; if either side fails to comply, the other can return to court to enforce without starting a fresh claim.

Settlement agreements in ADR are usually confidential, and the costs of the process are often shared between the parties unless the agreement says otherwise.

Strategic Considerations — Why Litigation Readiness Makes ADR Work

Here’s the part most guides skip.

People worry about time and money. Litigation is scary because it’s unknown, and because there’s a loss of control. That fear drives two outcomes: either parties settle far too early on weak terms, or they dig in and spend far more than they needed to because the process runs away with them.

The answer is not to avoid litigation. It’s to be ready for it.

When your solicitor understands your commercial position, is fluent in the mechanics of the claim, and, crucially, is willing to back their own advice through a Conditional Fee Agreement or Damages Based Agreement where the case supports it, the fear of the unknown drops away. Risk and reward are shared. You’re in the fight on terms you can sustain.

And here’s what the other side sees: a party that is positioned, funded, and credibly ready to take the dispute all the way. That is what creates the zone of settlement. It’s what moves a reluctant defendant from delay tactics into a serious conversation about numbers.

ADR on its own doesn’t save time or money. Litigation-ready ADR does.

Advantages and Risks of Negotiated Settlement

Settlement has genuine upsides:

• Control: the parties shape the outcome rather than handing it to a judge
• Flexibility: tailored, commercial terms that a court couldn’t order
• Confidentiality: reputations and sensitive information stay off the public record
• Preserved relationships: valuable in long-term commercial, construction, or shareholder contexts

The picture isn’t as clean as “ADR is always quicker and cheaper,” though, not in commercial disputes. A mediation day costs money. A failed mediation costs money and time. Settlement reached before full disclosure can leave value on the table. A party negotiating from a weak position, without clear advice on prospects, usually ends up agreeing to something they regret.

Good settlements come from good litigation positioning. Bad settlements come from panic.

The Future of ADR in the UK Courts

Public policy is firmly on the side of more ADR, not less. With court backlogs in some parts of the system, rising costs, and a government aim to reduce the volume of claims absorbing judicial resource, the direction of travel is clear.

Expect more mandatory ADR, particularly in lower-value claims, and more active case management that builds settlement opportunities into the litigation timetable rather than leaving them outside it. ADR is no longer an alternative to the court process. It is becoming a feature of it.

For commercial parties, the practical takeaway is simple: ADR will be pushed at you at every stage, and refusing to engage will cost you. Better to arrive at it well advised, well-positioned, and ready to use it.

How Helix Law Supports Clients in Settlement Hearings and ADR

At Helix Law, we are specialist litigation solicitors. We act for shareholders, businesses, directors, landlords, investors, and construction firms across England and Wales.

Our approach starts from a simple view: ADR works when you’re in a strong litigation position, and not otherwise. So we start with clear advice on your prospects, strengths, and weaknesses. Then we position you so an opponent understands their downside risk. Then we consider strategic use of ADR, negotiation, without-prejudice correspondence, mediation, as a tool to close out the dispute on favourable terms.

We back our advice. In qualifying commercial, property, and construction disputes over £10,000, we offer No Win No Fee (CFA) and Damages Based Agreement (DBA) funding; not always, but where it stacks up for you and for us. That shared risk and reward illustrates we take the fight as seriously as you do.

People frequently tell us we’re approachable and offer great advice. They also say they wouldn’t want to litigate against us. We aim to respond to all queries within an hour.

Frequently Asked Questions

Are settlements always confidential?

Most settlement agreements include a confidentiality clause, and ADR discussions themselves are usually “without prejudice” meaning they are privileged (a type of legal confidentiality), and private. Confidentiality is not automatic, though, it depends on the terms of the agreement. Where court proceedings have been issued, a Tomlin order can keep the settlement terms off the public record.

What happens if one party refuses to attend mediation?

The court can order the parties to engage in ADR and can impose cost sanctions, effectively a penalty, on a party that unreasonably refuses. Even a successful party at trial can be denied part of its costs if the court decides the refusal was unjustified. A clear, reasoned basis for any refusal is essential.

Are settlement agreements legally binding?

Yes, provided they are drafted with contractual intent and meet the usual requirements for a binding contract. Once signed, they are enforceable like any other commercial agreement. In employment matters, settlement agreements must meet specific statutory requirements to be valid.

Contact Helix Law for Advice on Your Case

Settlement hearings and ADR are most powerful when you arrive prepared, advised, and ready to litigate if the deal isn’t right. Our clients arrive at ADR negotiations thoroughly briefed and prepared; commercially aware of the risks and opportunities; the cost and benefit of the different potential outcomes. The courts now expect you to engage in ADR at every stage; the cost consequences of refusing are real; and the outcome you reach will track the strength of your position going in.

Helix Law’s specialist litigation team can help you assess your position, build leverage, and negotiate the outcome your case deserves. If you are involved in a dispute, we’d love to assist you. The best way to contact us is to complete the form with your details and we will take it from there.