ALTERNATIVES TO COURT

Introduction

JA Cohen lsquoChinese Mediation on the Eve of Modernisationrsquo 54 Cal Law Rev (1966)1201

A Chinese proverb statesldquoIt is better to die of starvation than to become a thief it is better to be vexed to death than to bring a lawsuitrdquo In the Peoples Republic of China arbitration has always been popular in the Peoplersquos Republic of China (PRC) fitting as it does with Confucian values and in particular with the belief that a formal dispute breaches the fundamental principle of business arrangements ndash that both parties should find a benefit Arbitration is found more useful when the court system is inconsistent and difficult to navigate

The need for alternative dispute resolution (ADR)

Businesses spend well over a third of their legal budget on litigation and every major dispute costs an average of 477 working days in management time

These are some of the findings from a survey of business disputes conducted jointly with the Centre for Effective Dispute Resolution (CEDR) and solicitors CMS Cameron McKenna

The court system is under pressure

The public are much more likely to seek a legal remedy when they have a grievance they are more litigious People from all walks of life keen to enforce their rights students are taking legal action for poor teaching and the state be it hospitals the police or government are frequent targets from many groups and individuals ADR has long been a more appropriate form of dispute resolution and it has been encouraged more vigorously since the Woolf Reforms

Some reasons why ADR is preferred to court action

ADR has advantages over court action where a party wants to

maintain a relationship with the other side once the dispute is over

to stay in control of the process and not hand

it over to the judge be reassured about the costs or the delay in

waiting for a trial keep the dispute and settlement to be

confidential achieve an outcome that can be agreed which

a judge could not award look for a settlement rather than take the risk

of a judge finding against them to continue to be neighbours or businesses

who deal in the same local area or type of work unbiased

use a system that is voluntary use a system that encourages early settlement

of disputes use a system that is less stressful than going to

Court use a system that is less formal than a trial by

judge

Defining ADR

Definition of ADR ADR is a process - alternative to court action - where the parties choose an independent third-party and agree on the timetable rather than having these imposed by someone else It is a process of adjudication and parties may or may not agree at the outset to be bound by the decision

Lord Justice Dyson in Halsey v Milton Keynes General NHS Trust [2004] CA

The term alternative dispute resolution is defined in the Glossary to the CPR as a collective description of methods of resolving disputes otherwise than through the normal trial process In practice however references to ADR are usually understood as being references to some form of mediation by a third party

Other definitions of ADR Alternative dispute resolution (ADR) is a term for describing the processes of resolving disputes in place of litigation and includes mediation conciliation expert determination and early neutral evaluation

Lord Woolf in his Access to Justice Interim Report June 1995 says

In recent years there has been both in this country and overseas a growth in alternative dispute resolution (ADR) and an increasing recognition of its contribution to the fair appropriate and effective resolution of civil disputes litigation is not the only means of achieving this aim and may not in all cases be the best

Distinguishing feature of arbitration

Conciliation mediation and arbitration are methods of resolving disputes Generally arbitration is distinguished by the fact that the arbitration decides the dispute whereas conciliation and mediation only aim to assist the parties to reach a settlement of the dispute

ADR and the courts

Minimum intervention by the courts

In Lesotho Highlands Development Authority-v- Impregilo SpA and Others [2005] UKHL their Lordships refused to disturb the award made by a Tribunal They upheld the principle ndash of ldquogreat importancerdquo - of minimal intervention in arbitration proceedings

History of ADR ADR has been around for all time The interesting thing is that smaller societies tend to work on a mutual concession and compromise basis to solve disputes ADR appears to have existed in the oldest legal system that of Hammurabi in Babylon (now Iraq) certainly it was used in ancient Greece where the mediator was called proxenetas Roman law recognised mediation where it was known by a variety of names

As society and individual problems become more complex the legal formality of the court becomes more important

Arbitration International has offered ADR services since 1892 Note The importance of ADR to the English Legal System can be defined by the Woolf reforms and the Access to Justice Act 1999 and certainly by the overriding objective contained in the Civil Procedure Rules 1999

ADR in place of court action - the Civil Procedure Rules

ADR is a suitable alternative to litigation for many disputes The use of ADR in place of litigation is promoted by the Civil Procedure Rules the courts and the government The Civil Procedure Rules - Rule 1(4) (2) (e) - contains a procedural code with the overriding objective of enabling the court to deal with cases justly The court must further the overriding objective by actively managing cases and this includes encouraging the parties to use an ADR procedure if the court considers that appropriate and facilitating the use of such a procedure Under the 1999 Civil Procedure Rules a judge can stay (stop) cases so the parties can try arbitration or other mediation methodsRule 24(1) permits the court to adjourn proceedings while the parties in dispute try to settle the case by alternative dispute resolution The practice direction for pre-action protocols has been amended from 6th April 2006 to reinforce the principle that parties must think about ADR before taking a case to court Failure by the parties to do so may place the party who refuses to consider ADR at risk of adverse consequences in costs

Reduction in the number of trial Some types of cases have fallen considerably for

cases example trials for defamation have fallen from 96 in 2000 to 66 in 2005

ADR in The Commercial Court The Commercial Court encourages the use of ADR in appropriate cases including mediation conciliation and (non-binding and without prejudice) early neutral evaluation by a Commercial Court judge

ADR providers

Lord Woolf and CEDR Lord Woolf ndash the former Lord Chief Justice - is a special advisor at the Centre for Effective Dispute Resolution (CEDR) on the panel of the most senior dispute resolution experts

Ministry of Justice (MoJ) launched the National Mediation Helpline in 2004

The MoJ in conjunction with the Civil Mediation Council provides a service which puts parties in contact with available mediators from a range of service providers CEDR has contributed to the development and implementation of the service and is one of the recommended mediation providers

Proportionate Dispute Resolution Proportionate Dispute Resolution is part of the government 5 year plan to remove many more disputes from the court system Full details can be found on the MoJ website

Government and Lord Chancellors commitment to ADR

The government is committed to settling legal disputes by ADR methods whenever the other party agrees to it The Lord Chancellor has said that there are often lsquoalternative ways of settling the issues at stake which are simpler cheaper quicker and less stressful to all concerned than an adversarial court case Alternative dispute resolution techniques have evolved as an attractive alternative to formal judicial proceedings They are a valuable way to access justice mdash providing services and remedies and costs which are

proportionate to the issues at stakersquoLord Chancellorrsquos Department Press Notice 11701 Government Pledges to Settle Legal Disputes out of Court (23 March 2001) The savings in the Governments legal costs in 2004 are estimated to be pound146 million an increase of 128 on 2003

ADR web sites Civil Justice site with growing content contains full details of relevant cases

Forms of ADR

Alternative Dispute Resolution (ADR) includesNegotiation

Early Neutral Evaluation (ENE)Arbitration

Mediation and ConciliationSmall ClaimsOmbudsmen

Tribunals are also an alternative to courts and are treated as a separate category

Complexity ADR has become a growth industry and is a highly diverse subject with different forms of ADR for seemingly the whole range of legal disputes Among the lesser forms of ADR are Adjudication (non-binding interim expert arbitration)Early neutral evaluation (opinion on merits of a claim)Expert determination (binding decision by expert in the field) Med-arb (a combination of mediation and arbitration)Med-rec (mediation with recommendations)

Expert determination Expert determination requires an independent expert in the subject of the disagreement to decide the case The expert is chosen jointly by the parties and his decision is binding Early neutral evaluation requires a neutral professional to give an appraisal of the merits

of the case The appraisal is non-binding

Other ADR information

State funding Legal Aid is available for some forms of ADR but never for Small Claims

Heilbron Report 1993 The HeilbronHodge report (chaired by Judge Heilbron) concentrated on key aspects for reform In doing so it demonstrated a consensus among the barrister and solicitors litigation was in urgent need of reform It accepted a need for a change of culture and a radical reappraisal of the approach to litigation by all those who participate in legal proceedings

Relevant cases

Cowl v Plymouth City Council [2001] Cable amp Wireless Plc v IBM UK Ltd [2002] Dunnett v Railtrack Plc [2002] Hurst v Leeming [2003] Halsey v Milton Keynes General NHS Trust Steel v Joy and Halliday [2004]

Daniel Atkinson (adjudicator) Claims are essentially statements of entitlement whereas a dispute often arises because of technical or legal uncertainty

Negotiation

Arguably the most important form of ADR

Most cases settle before coming to court or other forms of dispute resolution Although not strictly speaking ADR because it usually occurs before court action and not as an alternative

Self help Often disputes are resolved by the parties themselves For example faulty goods will usually be exchanged without argument Neighbours can resolve differences over boundaries or noise Some parties will even tackle otherwise legal issues by doing it themselves for example DIY Divorce

Conducted initially by solicitors A claimants solicitor will contact the defendants solicitor and attempt to resolve a dispute without the need for court action or other forms of ADR

Specialist barristers One of the parts of training of all barristers is in negotiation this can range from quite simple deals to complex and sophisticated techniques If successful can be much cheaper than engaging in litigation

At the door of the court Much court time is saved by barristers negotiating a deal immediately before proceedings start This is not always a technique of lawyers sometimes parties get cold feet and will grasp a deal if it is offered

Arbitration - introduction

Arbitration The first and oldest of alternative dispute procedures Issues of speed and cost play a part Here the parties in question refer the problem to a 3rd party for a decision (resolution) rather than going to court Where commerce is concerned parties tend to try to avoid going to court despite well-developed contract law NB ndash most businesses want to establish long-term relationships with other business people so they do not want to jeopardise their relationships by going to

law The benefits of arbitration include its confidentiality flexibility speed and the expertise of many arbitrators It is usually but not always cheaper than court

Definition of arbitration Arbitration is a process used by the agreement of the parties to resolve disputes In arbitrations disputes are resolved with binding effect by a person or persons acting in a judicial manner in private rather than by a court of law that would have jurisdiction but for the agreement of the parties to exclude it

Is Arbitration ADR It is not unusual for arbitration to be classed as a form of ADR but this is potentially misleading In many important respects arbitration has more in common with court-based litigation than other forms of ADR Arbitration has a statutory basis which is not a common feature of all ADR (Others include Family mediation and tribunals) Nevertheless ADR is promoted by the Civil Procedure Rules

Arbitration awards are binding

The arbitrator does this by making an award and giving the reasons for doing so Neither party may then start a court action in relation to the same dispute The courts will not interfere with the decision unless the arbitrator acted improperly or unless fresh evidence is introduced

Costs can be awarded following Arbitration

An arbitrator has discretion not to award costs but usually awards reasonable costs to the winning party

Appeal against award The only right to appeal against an arbitratorrsquos decision is through the High Court on a count of

ldquoserious irregularityrdquo such as a violation of natural justice the excess of jurisdiction or a visible error of law

Private Arbitration can be conducted in private and confidentially Going to court is a sure way to wash dirty linen in public

Parties select the judge the venue the rules are less rigid than court

Arbitration lets parties choose their own judges ndash each party usually nominating one arbitrator who between them choose a third Because the majority rules decisions canrsquot be skewed by a rogue appointee Parties can choose a neutral venue for the hearing and a neutral language if necessary Although arbitration takes place under strict rules the process and basis for decision are not as rigidly defined as in court For example rules of evidence are not as strict and parties can usually have a say in how they want the hearing to be conducted

Time saving Arbitration can save time ndash and to businesses time means money ndash because the arbitrators can tailor the procedure to the dispute and rights of appeal are more limited And if both sides agree they can forego appeals completely

Legislative control distinguishes Arbitration from other ADR

Arbitration Act 1996 The 1996 Act provides that the arbitration procedure is carried out in a judicial manner in line with Natural Justice arbitrators are required to give reasons for decisions and awards Arbitration is voluntary but the courts do maintain a supervisory role All arbitration proceedings are open to challenge by Judicial Review The courts will move against any attempt to reduce

law The benefits of arbitration include its confidentiality flexibility speed and the expertise of many arbitrators It is usually but not always cheaper than court

Definition of arbitration Arbitration is a process used by the agreement of the parties to resolve disputes In arbitrations disputes are resolved with binding effect by a person or persons acting in a judicial manner in private rather than by a court of law that would have jurisdiction but for the agreement of the parties to exclude it

Is Arbitration ADR It is not unusual for arbitration to be classed as a form of ADR but this is potentially misleading In many important respects arbitration has more in common with court-based litigation than other forms of ADR Arbitration has a statutory basis which is not a common feature of all ADR (Others include Family mediation and tribunals) Nevertheless ADR is promoted by the Civil Procedure Rules

Arbitration awards are binding

The arbitrator does this by making an award and giving the reasons for doing so Neither party may then start a court action in relation to the same dispute The courts will not interfere with the decision unless the arbitrator acted improperly or unless fresh evidence is introduced

Costs can be awarded following Arbitration

An arbitrator has discretion not to award costs but usually awards reasonable costs to the winning party

Appeal against award The only right to appeal against an arbitratorrsquos decision is through the High Court on a count of

ldquoserious irregularityrdquo such as a violation of natural justice the excess of jurisdiction or a visible error of law

Private Arbitration can be conducted in private and confidentially Going to court is a sure way to wash dirty linen in public

Parties select the judge the venue the rules are less rigid than court

Arbitration lets parties choose their own judges ndash each party usually nominating one arbitrator who between them choose a third Because the majority rules decisions canrsquot be skewed by a rogue appointee Parties can choose a neutral venue for the hearing and a neutral language if necessary Although arbitration takes place under strict rules the process and basis for decision are not as rigidly defined as in court For example rules of evidence are not as strict and parties can usually have a say in how they want the hearing to be conducted

Time saving Arbitration can save time ndash and to businesses time means money ndash because the arbitrators can tailor the procedure to the dispute and rights of appeal are more limited And if both sides agree they can forego appeals completely

Legislative control distinguishes Arbitration from other ADR

Arbitration Act 1996 The 1996 Act provides that the arbitration procedure is carried out in a judicial manner in line with Natural Justice arbitrators are required to give reasons for decisions and awards Arbitration is voluntary but the courts do maintain a supervisory role All arbitration proceedings are open to challenge by Judicial Review The courts will move against any attempt to reduce

ldquoserious irregularityrdquo such as a violation of natural justice the excess of jurisdiction or a visible error of law

Private Arbitration can be conducted in private and confidentially Going to court is a sure way to wash dirty linen in public

Parties select the judge the venue the rules are less rigid than court

Arbitration lets parties choose their own judges ndash each party usually nominating one arbitrator who between them choose a third Because the majority rules decisions canrsquot be skewed by a rogue appointee Parties can choose a neutral venue for the hearing and a neutral language if necessary Although arbitration takes place under strict rules the process and basis for decision are not as rigidly defined as in court For example rules of evidence are not as strict and parties can usually have a say in how they want the hearing to be conducted

Time saving Arbitration can save time ndash and to businesses time means money ndash because the arbitrators can tailor the procedure to the dispute and rights of appeal are more limited And if both sides agree they can forego appeals completely

Legislative control distinguishes Arbitration from other ADR

Arbitration Act 1996 The 1996 Act provides that the arbitration procedure is carried out in a judicial manner in line with Natural Justice arbitrators are required to give reasons for decisions and awards Arbitration is voluntary but the courts do maintain a supervisory role All arbitration proceedings are open to challenge by Judicial Review The courts will move against any attempt to reduce

their jurisdiction over the lsquolawrsquo generally TheArbitration Act allows question of law to be authoritatively determined by the High Court

Small Claims Procedure uses arbitration

Arbitration is also available in the county court under the small claims procedure The provisions of the Arbitration Act 1996 extend to small claims arbitration in the county court and consumer arbitration agreements

Scott-Avery clauses - arbitration clauses - ouster clauses

Arbitration clauses normally required

Picture courtesy of RH Pardy Removals who resolve disputes by arbitration

In order for arbitration to take place section 5 Arbitration Act 1996 requires that there must be an agreement to arbitrate in writing The clause may provide for an arbitrator to be appointed by agreement between the parties or it may need to provide one (usually where the parties cannot agree on an arbitrator) Arbitration clauses are now common in contracts particularly in consumer contracts The Chartered Institute of Arbitrators is an example of a body that could be used should a dispute arise Others include trade organisations for example in a home removal contract it will be common for disputes to be contractually resolved by the British Association of Removers

Can be part of initial contract The power and possibility of arbitration can be secured by slipping one innocent-looking clause into a contract ndash completely standard - utterly unobjectionable and almost invisibly levelling the playing field the Scott v Avery clause

The Scott-Avery clause named after the case Scott v Avery (1865)

All contracts made with The Grain And Feed Trade Association (GAFTA) - the only worldwide trade association - include a Scott-Avery clause which reads

neither party [] shall bring any action or other legal proceedings against the other of them in respect of any such dispute until such dispute shall first have been heard and determined by the arbitrator(s) [ ] in accordance with the Arbitration Rules and [ ] an award from the arbitrator(s) [ ] shall be a condition precedent to [ ] any action or other legal proceedings [ ]

Arbitration in Employment cases

ADR in employment cases The purpose of s 32 of and Sch 2 to the Employment Act 2002 was plainly to encourage conciliation agreement compromise and settlement rather than to precipitate the issue of proceedings similar to the intended effect of the pre-action protocols introduced under the CPRShergold v Fieldway Medical Centre (2005) EAT

Advisory Conciliation and Arbitration Service (ACAS)

The Advisory Conciliation and Arbitration Service (ACAS) was created by the Employment Protection Act 1975 to help in trade disputes and to improve industrial relations

Unfair dismissal - ACAS will arbitrate (or arrange mediation)

It is simpler and quicker to use the ACAS arbitration service than to apply to an Employment Tribunal in unfair dismissal cases Such cases could arise out of breaches of the Employment Rights Act 1996

Parties agree to be bound The feature of arbitration is that the parties in dispute agree to accept the decision of an independent third party the arbitrator as binding (under section 58 Arbitration Act 1996) and agree to waive other rights of action

Freedom to arbitrate or not Section 1 of the Act states thatthe object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense This lays out the principle that people should be free

to agree how their disputes are resolved and that the court should not intervene In fact the courts will usually not only refuse to interfere but actually enforce the arbitration agreement

ACAS is free The Advisory Conciliation and Arbitration Service (ACAS) provides free independent and impartial arbitration to employers and employees

Arbitration in international disputes

Agreed rules suits different legal systems

In International Arbitration there are reassuring internationally agreed rules

There are many versions each approved by a different but unimpeachably neutral body such as the ICC LCIA or American Arbitration Association

This is particularly helpful when one party is used to an adversarial court system as in the UK Australia or USA and the other is used to an inquisitorial system as in many European countries

UNCITRAL Arbitrators may use their own Rules or in international disputes the UNCITRAL (United Nations Commission on International Trade Law) Rules Awards using UNCITRAL are enforced by international agreements such as the Geneva Convention (1927) and the New York Convention (1958)

Use of specialist arbitrators ensures knowledge of actual practice in the area under consideration

Enforcing arbitration in other countries

Court judgments may be easily obtained in one country but not so easily enforced in another Often the claim has to be proved again where the debtor or his assets are

The 1958 New York Convention provides that arbitral awards made in one signatory state can be enforced in 144 (up from 137 in 2004) other signatory states more easily than court judgments

Binding arbitration is inflexible The use of arbitration has proved successful in many cases However the binding nature of arbitration is inflexible and for this reason other types of ADR may be more suitable

Mediation and conciliation

Mediation ADR ndash alternative dispute resolution ndash is a key element in the reforms to the civil justice system introduced in 1999 mediation holds centre stage in ADR

Courts encourage ADR before action

The practice direction for pre-action protocols has been amended from 6th April 2006 to reinforce the principle that parties must think about ADR before taking a case to court

Courts increasingly take the view that litigation is a last resort and that claims should not be issued if a settlement is still possible

Parties may be required by the court to provide evidence that alternative means of dispute resolution were considered The court can apply cost penalties if parties have not done this

The practice direction makes it clear that it is impractical to give detailed directions on how to resolve disputes but suggests three key options

discussion and negotiation early neutral evaluation mediation

It adds that it is ldquoexpressly recognised that no party can or should be forced to mediate or enter into any form of ADRrdquo

Mediation is increasingly an integral part of the court system

Mediation is where a 3rd person acts a go between and negotiates in an attempt to reach a common resolution between the parties

It is increasingly being seen as compulsory Not only is mediation used to resolve civil proceedings but also it is being widely used to resolve neighbourhood disputes Children in primary schools as young as 10 have even been trained to be peer mediators to help others untangle their playground quarrels Mediation UK is a voluntary body which attempts to use mediation to resolve local disputes

Compulsory mediation in the Family Court

The Constitutional Affairs select committee in a report published in June 2006 said that the Family Resolutions Pilot Project had been a lsquofailure in diverting parents away from the courts because mediation was not compulsory They said that there should be a compulsory preliminary meeting with a mediator

Those seeking legal aid are expected to use mediation but privately funded couples are not

The committee took evidence from the President Sir Mark Potter and other senior judges and officials

Early neutral evaluation Prior to court action parties can make use of early neutral evaluation (ENE) An independent third party considers the claims made by each side and gives an opinion - either on the likely outcome or on a particular point of law The opinion is non-binding the parties can use it if they wish in considering how they want to proceed with their case The opinion can be the basis for settlement

ENE can help to narrow the issues and focus the parties minds on realistic outcomes by giving them an objective view of their arguments Often the evaluator has been chosen because of his or

her expertise in the subject matter of the dispute but just as often the evaluator is a lawyer with litigation experience This experience can be particularly valuable when the purpose of using ENE is to get an opinion on a point of law or to get a more realistic view of the chances of success at trial

Works to obtain a mutually acceptable agreement between the parties

Mediation has emerged in the nineties as an increasingly popular form of dispute resolution Like conciliation it involves a third party who is neutral working with the parties to a dispute to facilitate their negotiations more effectively so that they can arrive at a mutually acceptable settlement The mediator will assist the parties in exploring options and measuring the strengths and weaknesses of their respective cases

Definition of mediation Mediation is an indeterminate concept because it can have different meanings depending upon the context in which it is used and on whether the emphasis is put on the process or the outcome There is no rigid definition of mediation and no rigid method of conducting it This is because the characteristics of mediation may also describe other alternative dispute resolution processes such as conciliation or arbitration

Mediation saves time costs and emotional strain

Mediation can save time and reduce the cost of resolving a dispute both financial and emotional Mediation can also assist the parties to re-establish trust and respect and can help prevent damage to ongoing relationships Mediation works best when it is voluntary although there are some examples of mandatory mediation projects where parties to a dispute are required to go through a mediation process as a prerequisite to being able to seek adjudication of a dispute by a judge or an arbitrator

Arguably the single most important change in the litigation landscape during the past decade

The use of mediation has increased dramatically and the process itself has rapidly evolved Parties can now choose from a wide selection of mediators and areas of specialisation Mediation is used to resolve discrete parts of a dispute and ever more imaginative and flexible solutions are being created to bring legal proceedings to an early conclusion

Cost penalties can be levied against parties that unreasonably refuse to mediate

National mediation helpline mediation provided by the Department of Constitutional affairs

To divert court action the national mediation helpline (0845 60 30 809) provides civil court users in England and Wales with information and advice on mediation If appropriate the helpline will refer the matter to one of the 6 national providers who are supporting this scheme

The helpline provides court users and the general public with access to information about mediation and if requested can make the necessary arrangements for a mediation appointment Some courts have their own mediation schemes which will continue

There is also a website which provides customers with information about mediation frequently asked questions a list of court based and associated schemes and information on costs Customers can complete a form online if they wish which will automatically go to the providers for action

Dunnett v Railtrack (2002) CA

The case concerned damage caused when horses strayed on to a railway line It is widely considered to constitute much-needed ammunition for those parties involved in litigation who were genuinely trying to negotiate a settlement rather than end up at trial

Held The principle was established that an adverse costs order could be made against a successful party if that party had refused to mediate

Criticism of Dunnett The decision put pressure on parties to attend (and pay for) mediation whether they wanted to or not and this risked compromise being encouraged rather than justice

In Dunnett the party that was penalised was Railtrack who had turned down the offer of mediation after it had been specifically suggested by the court Consequently Railtrack was deemed to have failed to assist the court in furthering the overriding objective in accordance with the Civil Procedure Rules (CPR 13)

Hurst v Leeming [2002] Ch Div The Dunnett principle was substantially broadened when Mr Justice Lightman set out when an action was suitable for mediation and gave examples of circumstances in which a court would be likely to hold that a refusal to mediate would be unacceptable

D Mr Leeming a barrister was sued for professional negligence by Mr Hurst a solicitor The claim was dismissed and Leeming applied for his costs but Hurst argued that Leeming should not be awarded his costs because he had refused to mediate Leeming won but only because of the particular character and attitude of Hurst Held Examples of circumstances in which a rejection of mediation would be acceptable included the scenario of a party being faced with a delusional or patently unreasonable opponent or one who had nothing to lose by going to mediation because he was bankrupt Lightman J made it clear that this case was exceptional and it would for example no longer be satisfactory to refuse to mediate by arguing that large

costs had already been incurred or that the allegations being made were serious

Of more concern was the fact that it was expressly stated by the judge that the strength of a partys case was not necessarily a good enough reason not to mediate The fact that a party believes that he has a watertight case is no justification for refusing mediation he said

Mediation automatic referral pilot scheme

As from 1st April 2004 Central London Civil Justice Centre has housed a scheme which involves automatically referring selected civil cases to mediation This has been successfully copied in many other courtsParties are liable for costs if they still decline to mediate when their reasons to opt out of the scheme do not satisfy a judge

If one or both of the parties object to mediation they would need to give their reasons The case will be referred to a District Judge who will decide whether mediation should take place or whether the case should proceed If one of the parties still declines to mediate even though their reasons do not satisfy the judge they risk being liable to costs under existing case law and Civil Procedure Rule 445

If mediation is successful the court will draw up a copy of the agreement reached send copies to the parties and retain a copy on file The agreement will be binding on both parties If mediation is unsuccessful or only partially successful the parties will be free to continue with court proceedings The court will allocate the case to the fast or multi-track or order parties to complete an allocation questionnaire

Wyatt v Maxwell Batley (2002) Ch Div

A party that refused to mediate because its opponent had tried to bully it into mediation won A party that succeeds at trial but refused mediation because of the strength of its case may well face costs sanctions against it

Cable amp Wireless plc v IBM United Kingdom Ltd [2002] QBD

The court considered mediation could be ordered when a contract between the two parties contained clauses for such a method of resolution Interestingly the court took the view that CPR 14(2)(e) added weight to the compulsory nature of ADR to do otherwise would fly in the face of public policy as expressed in the Civil Procedure Rules As it happens the mediation failed in this case

Claimants do not normally issue proceedings wanting to recover a proportion of their claim they want it all because that is what they consider they are entitled to

It is possible for a claimant to obtain the whole of their claim and costs but more frequently the result achieved is a halfway-house plus a bit The successful party may well feel that they have been short-changed by the system This will be more firmly felt if they feel they were unduly pressurised into mediation and little attention has been paid to the evidence

Cases that settle as a result of mediation is an impressive 80 per cent

We are heading to a position where mediation is obligatory

Parties sometimes go to mediation not to settle but to protect themselves from adverse costs penalties The court cannot look into what actually happens at the mediation due to its without-prejudice nature

It is thought that the success of mediation will decline as parties treat it simply as another step in the action failing to prepare or attending with no intention to compromise

Mediation has succeeded as a form of alternative not compulsory dispute resolution

Halsey guidelines In the case of Halsey v Milton Keynes General NHS Trust and Steel v Joy and Halliday [2004] CA the Court of Appeal gave guidelines on when mediation should take place but stopped short of making it compulsory They said that compulsory ADR orders will not be

made as to do so would make a voluntary process involuntary The Court took the view that making mediation compulsory could breach a persons Human Rights Convention Article 6 right to a fair trial The Court however made it clear that there was a duty on every lawyer to advise clients on mediation Another important feature of the judgment is that if the winning side had refused to mediate the onus is on the losing side to prove that the refusniks had acted unreasonably if they are to avoid paying the winners costs

Family and the role of mediation

Mediation in divorce Mediation plays an important part in family matters and aids the splitting couple to lsquocome uprsquo with a settlement rather than having one imposed by the courts

Family Mediation is probably the most widely practised form of mediation in the UK

Early attempts at Family Mediation actively encouraged ADR in separation and divorce cases but attempts at reconciliation were not a success Nevertheless it emphasised the importance of mediation Mediation in divorce and separation cases is now provided by mediators who might also be lawyers It covers almost all areas of dispute including children and finance

Family Law Act 1996 (s 13) strengthened the emphasis on mediation

Although most of the provisions of the Family Law Act 1996 have never been implemented one effect has been to place mediation on the same level as courts as a forum for resolving divorce and separation disputes A benefit of mediation is its potential to decrease the

adversarial nature of these disputes and to produce longer lasting agreement Since 1998 couples who want to apply for Legal Aid must first attend a meeting with a mediator to discuss whether mediation is suitable for the parties the dispute and all the circumstances However the government - lobbied by mediation providers themselves - stopped short of making attendance at mediation compulsory One of the criteria on which mediators can base an assessment of suitability is whether both parties are willing to mediate If one is not mediation is not suitable The stronger party can however manipulate the mediation process Sometimes establishing entitlements based on clear legal advice is the best way Mediation has its place in family proceedings involving children and was used in C v C (2003) CA Where children are involved mediation must also take account of the requirements of the Children Act 1989 which makes the welfare of the child paramount

Financial Dispute Resolution (FDR)

The Family Proceedings (Amendment No 2) Rules 1999 amend the Family Proceedings Rules 1991 (there have been several other amendments up to 2003) Couples wanting a divorce need to resolve financial matters which include distribution of assets (including pensions) and maintenance Financial Dispute Resolution (FDR) is compulsory part of obtaining a divorce settlement FDR agreements are binding on the parties as discovered by the husband in a pound35 settlement in Rose v Rose [2003] CA

Two features of FDR The Family Proceedings (Amendment No 2) Rules 1999 introduced from June 2000 an additional stage into court proceedings At its heart are two fundamental features

Form E a standardised financial statement to be completed by both parties in every case This increases the likelihood of giving full disclosure early on and therefore increases the likelihood of settlement

A financial dispute resolution (FDR) hearing with the judge in the case Both parties must attend in person (ie they cannot send their representatives in their place)

The judge is made aware of offers of settlement made by each side and of any previous attempts to produce an agreed settlement At least 50 of all cases settle at or shortly after this hearing However as the parties have already gone quite a long way through the court process by the time of the FDR hearing if this fails to resolve matters the only option is usually a final hearing

Alone in London an organisation for young people Website here

The service deals with disputes between young people and their families Among the issues it can help with are

disputes about a young person leaving or being kicked out of the family home

leaving home in a planned way restoring communication behaviour within the home intra-family conflict

Mediation in Europe

EU Directive The EU Commission has suggested harmonising mediation across Europe but this has had a hesitant start The proposals take key parts of a voluntary process and make them compulsory

After lengthy consultation a draft directive finally emerged in 2004 the proposals were modest There was nothing about the mediation process itself or about the appointment or accreditation of mediators As a step forward in harmonisation across frontiers it remains very much work in progress Current EU procedures are explained in detail here

Conciliation

A form of mediation where rights are enforced

Basically takes mediation a step further and gives the mediator power to suggest grounds for compromise and a possible basis for a conclusive agreement (unfortunately the term conciliation is often used interchangeably with mediation) Conciliation is an assertive rights-focussed process that fundamentally aims to enable the complainant to exercise his or her rights in law A conciliator will take a more active role in making suggestions or advising on the best way to resolve the dispute It is used in disputes about access for disabled people to goods and services It aims to secure a resolution in response to a particular incident of alleged discrimination which is satisfactory to the complainant If an acceptable resolution is not found or if a provider refuses to become involved in the conciliation process then the complainant still has access to the courts to enforce their rights In some conciliation procedures (such as ACAS conciliation in employment disputes) the parties do not meet but the conciliator works with them separately usually over the telephone

In others (such as the Disability Conciliation Service)

the parties usually meet face-to-face for the conciliation process

Conciliation also has overlaps with negotiation but unlike negotiation where the third party acts as an advocate for one side in conciliation the third party is impartial and does not take sides

Conciliation in employment cases Conciliation is an established feature of industrial relations The conciliator brings the parties together and acts as a facilitator in their discussions The conciliator is not a decision-maker Where an industrial issue is involved the Advisory Conciliation and Arbitration Service (ACAS) tries to resolve disputes through discussion and negotiation It is of more than passing interest to note the order of the words in the title ACAS

1 Advisory 2 Conciliation and 3 Arbitration 4 Service

for it is in that order that their officers attempt to resolve disputes

Employment cases All employment claims go first to ACAS who attempt a resolution before a tribunal date is set this is a very effective procedure and matters are often resolved at this early stage

Seven reasons why employment disputes are suitable for mediation

1 First many parties have a continuing relationship If the employee is still in employment the litigation process can be immensely stressful and destructive to the relationship Matters slide inexorably towards claims of victimisation and unfair dismissal

2 Second the best solution may be to address the management or organisational issues rather than dealing with the particular historic complaint

3 Third mediation offers some prospect of better understanding each otherrsquos respective

positions 4 Fourth mediation might provide an outlet for

all the strong feelings about the case which can be a crucial step towards settlement Often all that is needed is for the employer to accept there is a problem and to apologise

5 Fifth there is no such thing as a lsquorisk free claimrsquo or lsquocast iron defencersquo employment tribunals are unpredictable at best

6 Sixth confidentiality is an obvious benefit to the employer although employee will often take a contrary view

7 Finally speed in which a solution can be found can be a virtue of mediation Even complicated problems can be resolved within short deadlines

Conciliation in The Family Division

Conciliation in respect of childrenrsquosrsquo residence contact specific issue or prohibited steps orders change of surname (and a few others) is subject to a conciliation procedure

A meeting comprises the district judge an officer of the Children and Family Court Advisory and Support Service (CAFCASS) both parties and legal advisers and affected children The purpose of the meeting is for the parties to reach an agreement

The difference between Arbitration and Mediation and Conciliation

Arbitration Arbitration is where the parties agree to the third party deciding the issue for one party or the other and agree to the decision being binding

Mediation and Conciliation Mediation and conciliation are methods of resolving disputes without a binding decision being made by the arbitrator The cost savings that can be achieved through effective and early use of ADR are such that very few types of dispute cannot be assisted by ADR There is widespread acceptance both within the legal community and beyond that lawyers and their

clients must become aware of the possibilities of mediation and should understand how the process works Equally important is the ability of parties to be assisted by appropriately trained and experienced third party neutrals At the moment there is no regulation of ADR service providers Anyone can in theory hold himself or herself out as a mediator or an arbitrator

Some boring stuff

The Arbitration Act 1996 (the Act)Whole Act here

The Arbitration Act came into force on 31 January 1997 and is applicable to all arbitrations commenced after this date The Act was introduced to bring the UKs legislation in this area up-to-date and to try to maintain and promote England as a venue for international arbitration The Act aims to do this by consolidating previous legislation and updating and clarifying a number of the provisions applicable to English Arbitrations The Act is unusual in that it sets out objectives in Section 1 as follows- the object of arbitration is to obtain the fairest solution of disputes by an impartial tribunal without unnecessary delay or expense the parties should be free to agree how their disputes are resolved subject only to such safeguards as are necessary in the public interest in matters governed by this Part the court should not intervene except as provided by this Part There are a number of provisions introduced by the Act which are divided into mandatory and non-mandatory provisions (see Section 4 and Schedule 1 of the Act) The most significant provisions of the Act are set out below-

Agreement Sections 5 to 7 of the Act require an agreement to arbitrate to be in writing Beyond this requirement Section 5 provides a wide interpretation as to how parties may agree to arbitrate They are not restricted to having to incorporate an agreement to arbitrate in a contract but may agree to arbitrate by way of exchange of written communication which need not even be signed by them

clients must become aware of the possibilities of mediation and should understand how the process works Equally important is the ability of parties to be assisted by appropriately trained and experienced third party neutrals At the moment there is no regulation of ADR service providers Anyone can in theory hold himself or herself out as a mediator or an arbitrator

Some boring stuff

The Arbitration Act 1996 (the Act)Whole Act here

The Arbitration Act came into force on 31 January 1997 and is applicable to all arbitrations commenced after this date The Act was introduced to bring the UKs legislation in this area up-to-date and to try to maintain and promote England as a venue for international arbitration The Act aims to do this by consolidating previous legislation and updating and clarifying a number of the provisions applicable to English Arbitrations The Act is unusual in that it sets out objectives in Section 1 as follows- the object of arbitration is to obtain the fairest solution of disputes by an impartial tribunal without unnecessary delay or expense the parties should be free to agree how their disputes are resolved subject only to such safeguards as are necessary in the public interest in matters governed by this Part the court should not intervene except as provided by this Part There are a number of provisions introduced by the Act which are divided into mandatory and non-mandatory provisions (see Section 4 and Schedule 1 of the Act) The most significant provisions of the Act are set out below-

Agreement Sections 5 to 7 of the Act require an agreement to arbitrate to be in writing Beyond this requirement Section 5 provides a wide interpretation as to how parties may agree to arbitrate They are not restricted to having to incorporate an agreement to arbitrate in a contract but may agree to arbitrate by way of exchange of written communication which need not even be signed by them

Stay of Legal Proceedings Section 9 of the Act has extended the power of the courts previously set out in Section 4 of the 1950 Arbitration Act to stay legal proceedings brought in contravention of a pre-existing agreement to arbitrate The Act has extended the courts powers to ensure that they can be applied where both a counterclaim as well as a main claim is being brought The Act expressly provides for a stay to be granted even though the parties are required by agreement to use methods of alternative dispute resolution before being able to commence arbitration This provision is in line with the current policy of the courts which is to encourage litigants to explore alternative avenues of resolving disputes outside the legal system

Time Limits

A new provision of the Act brought in by Section 13 permits the courts in certain specified circumstances to grant extensions of time for commencing arbitration

Removing an Arbitrator

The criteria for removing an arbitrator as set out in Section 24 of the Act have been clarified and apply if substantial injustice has been or will be caused to the parties and are as follows If there are justifiable doubts about the arbitrators impartiality If the arbitrator does not possess the qualifications required by the arbitration agreement If the arbitrator is physically or mentally unable to conduct the arbitration or there are justifiable doubts that he is able to do so If the arbitrator has refused or failed either- to conduct the proceedings properly or to use all reasonable despatch in conducting the proceedings or making an award This last provision emphasises the need for arbitration to be conducted speedily This encourages arbitrators to speed up arbitration proceedings which have in the past been prone to parties dragging them out in an attempt to persuade their opponents to lose interest in the arbitration

General Duties in an Arbitration

Section 33 of the Act requires arbitrators to act fairly and impartially between the parties and to adopt procedures suitable to the circumstances of the particular case and to avoid unnecessary delay or expense so as to provide a fair means for the reduction of the matters falling to be determined Again the Act places an emphasis on speed and cost

Arbitrators Powers

To assist the arbitrators in their quest for speedier and more cost effective arbitrations a number of powers are available to them under the Act Section 34 permits the arbitrator to decide on all procedural and evidential matters thus enabling the arbitrator to set the timetable and decide on the scope of discovery of documents and what rules of evidence are to be applied Section 38 permits an arbitrator to award security for costs and order the preservation of physical evidence pertinent to the dispute Section 39 permits the arbitrator to make provisional awards Section 40 again emphasises the need for parties not to obstruct the arbitration by placing on them a duty to do all things necessary for the proper and expeditious conduct of the arbitral proceedings Section 41 empowers arbitrators to make peremptory orders where a party fails to comply with the timetable set by them This includes applying the ultimate sanction of dismissing the claim where serious prejudice is likely to be caused to a party The provisions of Section 41 are reinforced by Section 42 which provide for the courts to exercise powers to enforce peremptory orders which have not been complied with

Costs

Section 61 empowers the arbitrator to award costs Section 63 empowers the arbitrator for the first time under English law to determine what costs

may be recoverable by the winning party This avoids the necessity of the successful party having his costs taxed in the High Court and results in a higher proportion of costs being recovered by a winning party Section 65 the arbitration may limit the recoverable costs in advance of the arbitration The provision may prove useful where the arbitrator is attempting to encourage the parties to concentrate on the main issues

Advantages Disadvantages

Cheap some schemes are completely free

ADR is not always cheap and can be as expensive as court action

Quick many cases can be resolved in a matter of weeks or even days

Not all forms of ADR are quick in fact some forms of ADR require a client to pass through many stages before adjudication

Informality is preferred by many clients

There can be too much informality not popular with sophisticated clients

Efficient system for recovery of debts by individuals

An unintended and some believe an undesirable result is the constant use by business of small claims procedure as an efficient debt-collecting agency

ADR is Alternative dispute resolution not intended to be compulsory but should be appropriate

ADR is seen as compulsory because of Dunnett

Creates an imbalance by allowing an unprepared side to be assisted a mediator

Disadvantages the less powerful side in a dispute by assisting negotiation thereby produces a result that reflects the imbalance of bargaining power

Popular with claimants who do not need to use a lawyer and in some cases are discouraged by the process from using a lawyer

Not popular with lawyers because it is not in their financial interests This has the effect of closing access to the legal system which should be open to all

Simple process for example with small claims

Confusing array of ADR which does not necessarily in the end work out quicker or cheaper than court proceedings

Some trade arbitration schemes such as Ombudsmen often award less than would a

General Duties in an Arbitration

Section 33 of the Act requires arbitrators to act fairly and impartially between the parties and to adopt procedures suitable to the circumstances of the particular case and to avoid unnecessary delay or expense so as to provide a fair means for the reduction of the matters falling to be determined Again the Act places an emphasis on speed and cost

Arbitrators Powers

To assist the arbitrators in their quest for speedier and more cost effective arbitrations a number of powers are available to them under the Act Section 34 permits the arbitrator to decide on all procedural and evidential matters thus enabling the arbitrator to set the timetable and decide on the scope of discovery of documents and what rules of evidence are to be applied Section 38 permits an arbitrator to award security for costs and order the preservation of physical evidence pertinent to the dispute Section 39 permits the arbitrator to make provisional awards Section 40 again emphasises the need for parties not to obstruct the arbitration by placing on them a duty to do all things necessary for the proper and expeditious conduct of the arbitral proceedings Section 41 empowers arbitrators to make peremptory orders where a party fails to comply with the timetable set by them This includes applying the ultimate sanction of dismissing the claim where serious prejudice is likely to be caused to a party The provisions of Section 41 are reinforced by Section 42 which provide for the courts to exercise powers to enforce peremptory orders which have not been complied with

Costs

Section 61 empowers the arbitrator to award costs Section 63 empowers the arbitrator for the first time under English law to determine what costs

may be recoverable by the winning party This avoids the necessity of the successful party having his costs taxed in the High Court and results in a higher proportion of costs being recovered by a winning party Section 65 the arbitration may limit the recoverable costs in advance of the arbitration The provision may prove useful where the arbitrator is attempting to encourage the parties to concentrate on the main issues

Advantages Disadvantages

Cheap some schemes are completely free

ADR is not always cheap and can be as expensive as court action

Quick many cases can be resolved in a matter of weeks or even days

Not all forms of ADR are quick in fact some forms of ADR require a client to pass through many stages before adjudication

Informality is preferred by many clients

There can be too much informality not popular with sophisticated clients

Efficient system for recovery of debts by individuals

An unintended and some believe an undesirable result is the constant use by business of small claims procedure as an efficient debt-collecting agency

ADR is Alternative dispute resolution not intended to be compulsory but should be appropriate

ADR is seen as compulsory because of Dunnett

Creates an imbalance by allowing an unprepared side to be assisted a mediator

Disadvantages the less powerful side in a dispute by assisting negotiation thereby produces a result that reflects the imbalance of bargaining power

Popular with claimants who do not need to use a lawyer and in some cases are discouraged by the process from using a lawyer

Not popular with lawyers because it is not in their financial interests This has the effect of closing access to the legal system which should be open to all

Simple process for example with small claims

Confusing array of ADR which does not necessarily in the end work out quicker or cheaper than court proceedings

Some trade arbitration schemes such as Ombudsmen often award less than would a

may be recoverable by the winning party This avoids the necessity of the successful party having his costs taxed in the High Court and results in a higher proportion of costs being recovered by a winning party Section 65 the arbitration may limit the recoverable costs in advance of the arbitration The provision may prove useful where the arbitrator is attempting to encourage the parties to concentrate on the main issues

Advantages Disadvantages

Cheap some schemes are completely free

ADR is not always cheap and can be as expensive as court action

Quick many cases can be resolved in a matter of weeks or even days

Not all forms of ADR are quick in fact some forms of ADR require a client to pass through many stages before adjudication

Informality is preferred by many clients

There can be too much informality not popular with sophisticated clients

Efficient system for recovery of debts by individuals

An unintended and some believe an undesirable result is the constant use by business of small claims procedure as an efficient debt-collecting agency

ADR is Alternative dispute resolution not intended to be compulsory but should be appropriate

ADR is seen as compulsory because of Dunnett

Creates an imbalance by allowing an unprepared side to be assisted a mediator

Disadvantages the less powerful side in a dispute by assisting negotiation thereby produces a result that reflects the imbalance of bargaining power

Popular with claimants who do not need to use a lawyer and in some cases are discouraged by the process from using a lawyer

Not popular with lawyers because it is not in their financial interests This has the effect of closing access to the legal system which should be open to all

Simple process for example with small claims

Confusing array of ADR which does not necessarily in the end work out quicker or cheaper than court proceedings

Some trade arbitration schemes such as Ombudsmen often award less than would a

court

More suitable in family matters or where the parties have an ongoing relationship

Unsuitable for some types of claim for example where there has been intentional wrongdoing or involves public law or crime

Middle class professional complainants make a high proportion of the users ADR particularly Ombudsmen and Trade Association schemes

Why should a party who is right in law or has a very strong case consider an ADR compromise

High degree of success And use is growing rapidly

Claimants do not normally issue proceedings wanting to recover a proportion of their claim they want it all because that is what they consider they are entitled to