Procedure, Damages and Costs

Written by Aimee Talbot

Key developments in 2024 

Alternative Dispute Resolution received a boost in 2024, when the Civil Procedure Rules were amended to expressly empower the court to order ADR. These changes follow the December 2023 judgment in Churchill v Merthyr Tydfil [2023] EWCA Civ 1416, in which the Court of Appeal concluded that it was lawful for the court to order parties to engage in ADR, provided the process does not interfere with the parties' access to a judicial determination. 

On 1 October 2024, the overriding objective of the Civil Procedure Rules was amended to enable the court to promote or use ADR and the court's case management powers were expanded to expressly empower the court to order ADR.  In addition, the court's powers to penalise parties who refused to engage in ADR were bolstered by entitling the court to take into account, when making costs orders, a failure to comply with an order to engage in ADR or an unreasonable failure to engage in ADR. 

Like Churchill and the new pilot scheme automatically referring small claims to mediation, these amendments are part of the continuing shift to embed ADR as a natural part of the process of litigation.  The involvement of an independent third party at an early stage in the process should help shift entrenched parties and, whilst truly unwilling parties will not be forced to settle, these measures should lead to more settlements.  Overall, this is good news for insurers, who tend to be commercial and rational litigants. 

What to look out for in 2025 

The introduction of costs budgeting transformed civil litigation in 2013, and 2025 is likely to see the biggest change to budgeting since then. Just as 2023 was the year of fixed recoverable costs, 2025 is set to be the year of costs budgeting light.  This new approach, which is a work in progress by the Civil Procedure Rules Committee, will enable the court to take a "lighter touch" approach to costs management in mid-range cases where between £100,000 and £1 million is claimed. These mid-range cases have been identified by the Civil Justice Council as the class of cases most at risk of disproportionate costs being incurred. Of course, sub-£100,000 cases now have no need of budgeting, since fixed recoverable costs apply.  On the other end of the spectrum, we are also expecting that a lighter touch to budgeting will also be adopted for claims exceeding £1 million in the Business & Property Court.

While the details of the scheme are not yet known, we expect the scheme to be piloted for 5 categories of case, including QOCS claims, and a new form of Precedent H to be released. Depending on the details of the regime, this could lead to a modest increase in costs in the short term as litigators grapple with differing regimes during the pilot period and get to grips with the new rules, but overall a substantial decrease in the costs management process.  However, it remains to be seen whether the framework will enable the court to reach the "sweet spot" of adequately controlling costs without forcing the parties to incur disproportionate costs on budgeting. 

2025 may also be see more judgments dealing with the use of artificial intelligence in litigation. During the furore over the potential of the technology that has been ongoing since the release of ChatGPT in 2022, firms have been investigating and implementing the technology, which has particular potential for saving costs and time in the disclosure phase. As the use of this technology is in its relative infancy, we can expect judgments dealing with the use (or misuse) of AI in the coming year. 

Explore Annual Insurance Review 2025