Need clear, easy-to-follow notes for the SQE? My lecture notes cover all the key topics for SQE1 and SQE2, including FLK, legal skills, and practice areas like contract law, equity and trusts, and criminal litigation.
Chapter 1 – Different options for dispute resolution
Alternative dispute resolution
- ADR = settling disputes outside of the traditional litigation process
- Negotiation, arbitration and mediation
Nature of ADR
- Voluntary, confidential and without prejudice
o If fails, court will not be made aware of the ADR until after the court has dealt
with issues of liability and the award of damages
o Parties choose the process and can withdraw at any time before a settlement
is reached
o Do not have to accept the proposed solution
- Arbitration
o Voluntary, but only in sense of parties either voluntarily enter into an
arbitration agreement, or agree to decide the matter in this way once a
dispute arose
o If arbitration agreement is entered into, one party may force the other to
arbitrate against their will, provided that the original contractual agreement
to arbitrate is valid
Failure to engage with ADR
- If client is willing (or has already agreed) to participate in ADR, it should be used
unless:
o It is obviously inappropriate
E.g. because an injunction is required
o The other party is unlikely to cooperate in the process
o The other party cannot be trusted to comply with an award
- No point in engaging with ADR if it will inevitably fail
o However if a party decides not to engage, they must be made aware of the
penalties that may be imposed for this failure
Unless they can justify their stance to the court
Sanctions allowed Halsey v Milton Keynes NHS Trust
Factors that the court considers are:
o Nature of the dispute
o Merits of case
o Extend of attempting other settlement methods
o Costs of ADR (disproportionately high or not)
o Whether any delay through setting up and attending
the ADR would have been prejudicial
o Whether the ADR had a reasonable prospect of success
, Burden is on other party to show that refusal is unreasonable
with the court rejecting any presumption in favour of
mediation
Laporte – even though a party was successful in defending litigation
proceedings, by not engaging in ADR (and without adequate
justification) the party was punished (only got back 2/3 of costs from
unsuccessful claimant)
Sanctions won’t always apply
Gore v Naheed and Ahmed - Allows parties to refuse if there is
little reasonable prospect of success, mediation would only
add to costs, and matter raised complex legal questions that
made it inappropriate for mediation
- Parties who choose to litigate may be encouraged (sometimes strongly) by the judge
to attempt ADR
o Although they cannot be ordered by the court to participate
o Importance that the court attaches to ADR is evidenced in CPR 1998
Dictate how a case is litigated
o failure to respond to a reasonable proposal to attempt settlement by ADR
may have a significant impact on any subsequent order for costs
- During the course of court proceedings, parties complete a directions questionnaire
o Solicitors must confirm that they have explained to their client:
The need to try and settle
The options available
The possibility of costs sanctions if they refuse to attempt to settle
Independent third party
- Essential feature of ADR
- Cannot impose a solution
o Therefore parties are less likely to be aggressive and more likely to open up
Likelihood of settlement is higher
- Trained to act as neutral
- Has appropriate industry and/or commercial knowledge required to understand the
dispute
o Can come up with ideas that the parties may not have thought of
o Able to problem-solve without either party losing face
Mediation
- Should be discussed at an early stage with the client
o If client is open, should be proposed to the opponent
Usually by letter or email
Procedure
- Parties agree on independent third party or body to mediate
- Mediator will be sent written statements from both parties
- Mediator will individually discuss matter with parties
o Without prejudice
, o Identify real areas of disagreement and most important points to each party
- Often face to face
Advantages
- Cost and speed
o Cheaper and quicker than arbitration and litigation
o However do have to pay for mediator and lawyers are often instructed
- Flexibility
o Parties choose the procedure
o No legal requirements
- Privacy
o Completely private
Good if reputation is an issue or possible future claims from other
litigants
- Preserving a business relationship
o Non-confrontational – ideal if parties want to work together in the future
- Commercial reality
o Solution/settlement may be more realistic and workable
E.g. arrangements that a court couldn’t order, e.g. discounts on future
orders
- Ability to withdraw
o If client is unhappy with progress, they can withdraw at any time
Disdvantages
- Many not be appropriate
o E.g. when a ruling on a point of law is required
o E.g. fraud or other commercially disreputable conduct
- Disclosure
o Risk that parties may resolve the dispute without knowing all the facts
May lead to a decision that is found to be unjust
o However business-wise, often better to come to a quick decision rather than
wasting time and/or money on litigation to get a (potentially) more correct
outcome
- Privacy
o If the client requires public vindication
E.g. wanting to repair reputation
- Ability to withdraw
o If the opposition withdraws, the client will have wasted time and money
Enforcement
- Not automatically binding
o Client cannot enforce
- However can enter into an agreement
o Non-compliance can lead to breach of contract
Arbitration
, - Substitute for litigation
- Once a party has agreed to it, they cannot take advantage of the normal court
process
- May arise in 2 ways:
o Parties are contractually bound to use arbitration
Many business contracts contain a clause requiring the parties to
submit to arbitration in the event of a dispute
o If such a clause doesn’t exist, parties may agree to arbitration once a dispute
has arisen
May choose their own arbitrator with the relevant expertise
- Largely governed by Arbitration Act 1996
o However only applies if the agreement to arbitrate is in writing
Procedure
- Dispute is referred to independent arbitrator
o Individual/body may be specified in original contract or may choose own with
relevant experience
- Process will be adopted
o Less formal than court procedure
- Once arbitrator has reached decision, it is binding on both parties to the dispute
Advantages
- Likely quicker and cheaper
o But have to pay for arbitrator
- Less formal procedures
- Decision made by impartial third party expert
- Takes place in private
- Often more practical solutions than the court has the power to order
- Decision is binding
Disadvantages
- Dispute may not receive the depth of investigation as litigation would
o Depending on procedures adopted
- Certain remedies aren’t available
o E.g. injunctions
- Unlikely to be the cheap alternative
o Arbitration expert or panel will need to be paid
o Parties represented by lawyers
- Very limited rights of appeal
Enforcement
- Can enforce through applying to the High Court under s66 Arbitration Act 1996
Litigation
- Neither party can withdraw without paying their opposition’s costs
- Breaks deadlock between parties
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