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Summary SQE2 Dispute Resolutions
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Dispute ResolutionADR - Alternative Dispute Resolution
The importance the court attaches to proposals for ADR is evidenced by the provisions of the civil
procedure rules 1998 which dictate how a case is litigated; and a failure to respond to a reasonable
proposal to attempt settlement by ADR may have a significant impact on any subsequent order for
costs.
In the leading case of Halsey v Milton Keynes General NHS Trust, the C of A held that the courts
may impose a cost sanction on a party if they unreasonably refuse to take part in ADR. The court
listed a number of factors which may be taken into account when determining this question:
- The nature of the dispute
- The merits of the case
- The extent to which other settlement methods have been attempted
- Whether the costs of the ADR would be disproportionately high
- Whether any delay in setting up and attending the ADR would have been prejudicial; and
- whether the ADR had a reasonable prospect of success
The burden is on the other party to show that the refusal is unreasonable.
During the course of court proceedings the parties complete what is known as the directions
questionnaire and, to ensure that clients are fully aware of the importance and implications of ADR,
solicitors are required to confirm that they have explained to their client:
- They need to try to settle
- The options available
- The possibility of cost sanctions if they refuse to attempt to settle
The message is clear - client should always consider ADR and engage in the process unless there
are convincing reasons not to do so; and even then, they should be prepared to justify the decision
before a sceptical judge if necessary.
Mediation
Mediation is becoming increasingly popular. At the early-stage, the availability of mediation as an
option should be discussed with the client. If I was winning the mediation should be proposed,
usually by letter, the opponent.
In typical mediation, the parties will agree an independent third person or body to act as a go-
between. The mediator will be sent written statements from both parties and, therefore, will discuss
the case with them on a without prejudice basis.
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,Advantages:
- Ability to withdraw so parties can be safe in the knowledge that they can still commence or
continuous proceedings in court
- Cost and speed
- Flexibility
- Privacy
- Preserving a business relationship
- Commercial reality in the sense that settlement terms can be more creative. The court is only
able to award a remedy that has been claimed and is legally within their discretion. Mediation
allows parties to b creative in the terms for settlement e.g. apologising or agreeing to continue
trading with each other on renewed terms
- Increases the likelihood of a later negotiated settlement, even if unsuccessful. Even if an
agreement is not reached, it helps parties to understand each other's position to the point
settlement could take place by negotiations between party solicitors after mediation.
Disadvantages:
- In cases mediation is simply not appropriate e.g. A ruling of a point of law is needed or an
injunction
- Disclosure = as there is no formal procedure for the disclosure of documents and evidence,
there is a risk that parties parties may resolve the dispute without all the facts. This may lead to
an unjust result. Although, it should be noted that many business clients take the view that a
quick decision, even if not completely accurate is better than spending more time on a dispute
just to potentially get a more correct outcome.
- Privacy is not an advantage if the client is looking to public vindication by way of their day in
court
- Ability to withdraw can be a disadvantage the party he wants to continue with the process
especially when they have wasted time and money and still not received a resolution
- Enforceability of verbal agreements. Unless there is a written agreement (essentially a contract)
between the parties, then it is not enforceable through the courts
Enforcement
Even when an agreement is met it is not automatically binding as the client cannot enforce this like
a court judgement. However, if the parties do agree terms suggested as a result of the mediation,
they have entered into a contract and will be in breach of the contract if they do not carry it out
Arbitration
Arbitration may arise in two ways:
1. The Parties may be contractually bound to use arbitration in the event of a dispute
2. The parties might agree to arbitration was the dispute has arisen
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,The parties are not entitled to refer the matter to court if they are not satisfied with the outcome;
this is an important distinction between arbitration and mediation. The decision taken by arbitrator
is legally binding on the parties, in the same way that a court judgement would be. If you were
asked what type of ADR would be most suited to a particular dispute and one of the clients key
objective is flexibility to attend court if ADR does not work out, disregard arbitration as an option.
Advantages:
- Cost
- Speed/expertise of arbitrators
- Less formal/private
- Involvement of an expert to determined the issue
- Preservation of business relationship
- Commercial reality
- Enforcement = NY Convention = binding decision
Disadvantages:
- Limited disclosure leaving open the possibility that information can be withheld
- Some remedies are not available e.g. injunctions
- Powers are more limited. The power the arbitrator has to deal with the obstructive or awkward
parties are significantly less than those of the court. Therefore, the process requires a degree of
good-faith between the parties.
- Cost advantage over litigation is potentially small
- Limited scope to challenge decision. Section 68(2) Arbitration Act 1996 provides that a challenge
to a decision will only be successful where the applicant can prove that there is a seriously
irregularity in the proceedings, the tribunal or the award which causes substantial injustice to the
applicant. The application must be made within 28 days of the awards being made. The criteria
are therefore very narrow. A seriously irregularity can include when the arbitrator has made a
mistake on a particular point of law.
Litigation
If the parties either cannot or will not engage in ADR, they will be left with no alternative but to
proceed by way of litigation through the courts. Once they have done so, neither party can
withdraw without paying the opponent’s costs. If the parties are unable to negotiate a settlement,
the court will impose its own solution that may be enforced by the successful party. Indeed, this is
the main advantage of litigation as it breaks the deadlock between the parties, albeit at a cost.
Advantages:
- Strict rules that govern the behaviour of the parties. The CPR provides a rigid framework of rules
that the courts expect parties to comply with. If one party does not conduct themselves within
the confines of these rules, the court can impose sanctions.
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, - Disclosure = parties are required to put their cards on the table and produce all available
evidence that relates to the claim at the earliest stage possible, even if it adversely affects a
party’s claim. Failure to disclose a key piece of evidence by the deadline for disclosure will result
in that piece being excluded unless the course specifically gives permission for it to be used.
- Outcome maybe easier to predict if there are similar previously decided cases e.g. precedents
- Decisions are binding on the parties
- The parties have a right to apply for leave or permission to appeal
- Enforcement. The successful party can apply to the court to enforce the terms of that order even
if the losing party fails to comply
Disadvantages:
- Time-consuming
- Complex to conduct without legal representation
- Costly
- Adversarial meaning there is often very little chance of the preservation of relationships between
parties after litigation has concluded
The Civil Procedure Rules
Civil litigation is governed by the Civil Procedure Rules 1998 (CPR), which dictate the procedure
that must be adopted when pursuing a claim through the courts.The CPR consist of 89 Parts each
of which deal with one aspect of civil procedure. It's essential that the CPR are complied with by
litigating parties or their representatives. Failure to comply with a rule could result in a sanction or
penalty, being imposed by the court on the offending party.
Judges
Much of the County Court and High Court work is dealt with by district judges, although for matters
proceeding in the Central Office in London they are referred to as masters. These judges deal with
the majority of interim applications and also have jurisdiction to hear trials where the amount
involved does not exceed £25,000. Trials for amounts in excess of this figure are heard by circuit
judges in the County Court and by High Court judges in the High Court.
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