Alternative Dispute Resolution (ADR) In Chapter 36 of his Final Report Jackson LJ wrote:
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1 Alternative Dispute Resolution (ADR) In Chapter 36 of his Final Report Jackson LJ wrote: 4.2 I recommend that: (i) There should be a serious campaign (a) to ensure that all litigation lawyers and judges are properly informed about the benefits which ADR can bring and (b) to alert the public and small businesses to the benefits of ADR. (ii) An authoritative handbook should be prepared, explaining clearly and concisely what ADR is and giving details of all reputable providers of mediation. This should be the standard handbook for use at all JSB seminars and CPD training sessions concerning mediation. There is growing pressure from the judiciary and court users for greater use of ADR. The Jackson ADR Handbook Is now in its second edition, written by three distinguished authors 1 under the banner of the Judicial College, the Civil Justice Council and the Civil Mediation Council. The Book deals with the general principles of Alternative Dispute Resolution (ADR) as well as the range of ADR options. These include: Offer and Acceptance (offers other than under Part 36); Negotiation; Mediation; Early Neutral Evaluation; Expert Evaluation; Adjudication; and Arbitration. All of these processes may be used in connection with the resolution of costs disputes. When the Court exercises its discretion under r.44.2, it has to have regard to all the circumstances including the conduct of the parties both before and during the proceedings. Conduct includes a refusal to agree to ADR. The factors to be taken into account include: the nature of the dispute; the merits of the case; the extent to which other settlement methods have been attempted; whether the costs of ADR are disproportionately high; whether any delay in setting or attending the ADR would be prejudicial; and whether ADR has a reasonable prospect of success. 2 1 Susan Blake, Julie Browne and Stuart Sime. 2 See Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576; [2004] 1 WLR 3002.
2 The Advantages of ADR The advantages of ADR include: lower costs (provided that the ADR process is entered into sufficiently early); the speed of resolution of the issues; the choice of forum and process; the flexibility of process (the parties may agree how they wish to proceed; a wider range of issues/outcomes may be considered; and shared future interests may be protected. In ADR the parties may have been unable to agree on the contentious issues but may wish to maintain a potentially lucrative business relationship. Offers other than Part 36 Offers It is open to either party in litigation to make offers which do not comply with the requirements of Part 36. These may be open offers or offers without prejudice save as to costs. The latter are generally known as Calderbank offers, which arose in the Family Division where there was no provision for payment into Court, but the parties could be at risk as to costs, particularly in respect of financial arrangements. Fraud and dishonesty in making offers The Supreme Court endorsed the broad approach to dishonesty that fraud unravels all. The Court emphasised the fundamental principle that parties have a duty to provide full and frank financial disclosure to one another and the Court in financial remedy proceedings. The Court and the parties must have all relevant information before them to enable an informed decision to be made about what constitutes a fair financial outcome. 3 This principle will clearly apply in all negotiated settlements. Negotiation Negotiation needs no explanation. It is the method by which the majority of civil cases are still settled. Negotiation may be between the parties themselves; between their lawyers; between experts, reporting back to the lawyers/clients; or any combination of the above. Mediation Mediation is conducted by an independent third party (who is normally an accredited mediator) whose function it is to try to bring the parties together so that a settlement or compromise may be achieved. It is a confidential process, which can usually be arranged to take place within a reasonably short timescale. Lord Justice Jackson, in Chapter 36 of his Final Report, stated 4 : 3 Sharland v. Sharland [2015] UKSC 60, [2016] A.C. 871; [2015] 3 W.L.R. 1070; [2016] 1 All E.R Paragraph 3.2.
3 Mediation is not, of course, a universal panacea. The process can be expensive and can on occasions result in failure. The thesis of this chapter is not that mediation should be undertaken in every case, but that mediation has a significantly greater role to play in the civil justice system than is currently recognised. There are several types of mediation, the most usual being facilitative and evaluative. In facilitative mediation the mediator tries to help the parties reach a position with which they can live. There is often a matter of pride which prevents a party from compromising for fear of appearing weak. The cloak of confidentiality helps in this regard. Evaluative mediation requires a rather more robust approach by the -mediator. Mediators frequently find that although they start out on the facilitative track they end up going down the evaluative route. Each party ultimately asks: What do you think would happen on assessment? or What do you think it is worth. Many mediation agreements contain a clause to the effect that if the parties fail to agree, the mediator may be asked to give a non-binding opinion as to the final outcome. The main benefits are that a neutral third party may be able to help each side see the strengths and weaknesses of its case. A skilled mediator may help parties step outside the adversarial framework and entrenched positions so the mediation may work even where a negotiation has failed. A skilled mediator may make possible offers and concessions look more acceptable. A robust and experienced mediator can help to find a way forward even in a relatively intractable dispute. The structure of a mediation allows a lawyer and a client time to review offers and options in a way which may not be possible in -negotiation. Mediation can be used to allow a party to make a statement about something of particular personal importance. Experience suggests that mediation generally achieves good success rates and party satisfaction. Early Neutral Evaluation Early Neutral Evaluation (ENE) is carried out by an independent person, who is normally experienced in the particular field of the issue under dispute. That person may be appointed by one or all parties. The Technology and Construction Court Guide and the Commercial Court Guide both deal with ENE. 5 ENE may be carried out by the Court with the consent of the parties. In Seals v. 5 See Technology and Construction Court Guide paragraphs ; the Admiralty and Commercial Court Guide, paragraphs G2.1 G2.6.
4 Williams 6 Norris J concluded that the wide jurisdiction provided by r.3.1(2)(m), to the effect that the Court can make any order to manage cases and further the overriding objective, provided the power to order ENE. This did not therefore require the consent of the parties. Following this, r.3.1(2)(m) was amended to read: Except where these rules provide otherwise, the court may... (m) take any other step or make any other order for the purpose of managing the case and furthering the overriding objective, including hearing an early neutral evaluation with the aim of helping parties to settle the case. ENE is intended to be an advisory and evaluative process. ENE can take place within the Court system in which case it is usually carried out by a judge. There is no requirement for proceedings to be in progress, any party may appoint an independent third party to carry out an ENE. It is of course preferable and more conducive to settlement if all the parties can agree to the appointment. Expert Evaluation Expert evaluation may take different forms. This may be an evaluation similar to Early Neutral Evaluation or a Determination. As the name implies one or more neutral experts are appointed by the parties to evaluate or determine the issues between the parties. The evaluation/determination may be agreed to be binding between the parties or merely advisory, leaving the parties to proceed further if they so decide. Expert evaluation/determination is most commonly employed in cases of a technical nature (e.g. costs). The way in which matters proceed will be governed primarily by the terms of the contract by which the expert is appointed. The parties will usually agree that the determination will be final and binding and this is usually recorded in the contract. Adjudication Adjudication usually takes place in a specialist commercial field where the parties prefer a system adapted to the needs of their industry or business. It is most frequently used in construction disputes. It is used to resolve specific issues and is usually agreed by the parties to a contract as a means of resolving disputes which may arise by a process agreed to be binding on the parties. 6 [2015] EWHC 1829 (Ch), Morris J.
5 Construction industry adjudication is a creature of statute which requires all construction contracts to have a provision for adjudication. 7 The statutory requirement is for adjudication by an independent third person who produces a decision on the dispute which is binding on an interim basis until finally determined as appropriate by the Court, arbitration, or agreement. The adjudicator is required to give a decision within a limited time. The decision is enforceable through the courts and appeal is only possible on the grounds of lack of jurisdiction or breach of the rules of natural justice. Arbitration Arbitration is effectively a trial process outside the Court system. Arbitrations may be domestic or international. They may be conducted under the Arbitration Act 1996 or under the rules of any of the numerous arbitration providers. In many commercial contracts there are clauses providing terms for arbitration should a dispute arise. Arbitrators may be appointed by -agreement between the parties or, if no agreement is possible, by the President of the relevant professional body. If the arbitration requires three arbitrators, each side usually nominates one arbitrator and the third will be appointed by a neutral person e.g. the President of the professional body. The agreement to arbitrate may be made before or after the relevant dispute has arisen. There is a strong public policy in favour of upholding arbitration agreements, which is supported by the idea that an arbitration clause in a contract is separable from the rest of the substantive contract 8 and so continues to apply even if the substantive contract is avoided. Where Court proceedings are commenced in breach of an arbitration agreement, the defendant may apply to the Court to stay those proceedings. 9 From the 1 st September 2017, the Manchester Civil Justice Centre is running a mediation pilot scheme for cases valued at more than 10,000 allocated to the fast track and multi-track. The 7 Housing Grants Construction and Regeneration Act 1996 sections 108 and 108A. 8 Arbitration Act 1996, Section 7. 9 Arbitration Act 1996, Section 9.
6 pilot contains a table of fixed fees for a 2.5 hour mediation depending on the value of the dispute. 10 The pre-action protocol for debt claims came into effect on the 1 st October The purpose of the protocol is to encourage the engagement of and communication between the parties to allow information to be exchanged at an early stage and issues identified. By the parties engaging in the procedure, it is hoped that it will be possible to avoid commencing legal proceedings, and that costs can be kept reasonable and proportionate to the amounts involved. The protocol applies to any debt being claimed by a business against an individual but does not include business to business commercial debts. 11 In other developments the Civil Justice Council has issued its interim report on the future role of ADR in civil justice on the 17 th October The report sets out a number of recommendations and invites written responses by the 15 th December Whilst the report, by a majority, decided that making participation in ADR mandatory was too heavy handed, it did recommend that there should be a new emphasis on making sure parties address ADR properly when completing the directions questionnaire and in preparing for the case management conference. Judges should address this issue at the CMC and costs sanctions should be imposed at an interim stage, not just at the end of the case post-judgment. The report also supports the wider use of judicial early neutral evaluation. 12 On 12 th September 2017, the European Parliament adopted a resolution on the implementation of the EU Mediation Directive (2008/52/EC). The resolution provided that EU member states should step up their efforts to encourage the use of mediation in civil and commercial disputes. The Commission should assess the need to develop EU wide quality standards and consistency in the provision of mediation services while taking into account the fundamental right of access to justice and differences in mediation cultures. The Commission should assess the need for member states to create and maintain national registers of mediated proceedings. The European Parliament requested that the Commission undertake a detailed study on the
7 obstacles to the free circulation of foreign mediation agreements across the EU and on various options to promote the use of mediation as an effective and affordable way of solving domestic and international conflicts. The Commission should find solutions to extend the scope of mediation to other civil or administrative matters. In the case of family law, mediation might require the implementation of appropriate safeguards to limit the risks for weaker parties and prevent any possible abuse of process. 39 Essex Chambers LLP is a governance and holding entity and a limited liability partnership registered in England and Wales (registered number 0C360005) with its registered office at 81 Chancery Lane, London, WC2A 1DD. 39 Essex Chambers members provide legal and advocacy services as independent, self-employed barristers and no entity connected with 39 Essex Chambers provides any legal services. 39 Essex Chambers (Services) Limited manages the administrative, operational and support functions of Chambers and is a company incorporated in England and Wales (company number ) with its registered office at 81 Chancery Lane, London, WC2A 1DD. The material within this Paper is only intended to provoke and stimulate. It does not constitute advice. Detailed professional advice should be obtained before taking or refraining from taking action in relation to this material. Further updates plus regular newsletters can be obtained via Chambers website:
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