Alternative Dispute Resolution Flashcards
Negotiation
What is it?
Advantages? (5)
Disadvantages? (2)
Negotiation is a communication process between parties that is intended to reach a compromise or agreement to the satisfaction of both parties.
No third party intervention
Advantages:
- Confidential (not revealed to the court or public)
- Preserves relationship between parties
- parties can reach any agreement they wish to reflect their interests and perceived risks of litigation
- less costly and time consuming than litigation or arbitration
- less disruption to the parties’ business
disadvantages:
- if issues of fact or law are in dispute, a party may prefer the court to decide on them especially if material to the dispute
- court can grant interim remedies
Mediation
What is it?
Advantages? (7)
Disadvantages? (3)
Process facilitating resolution of dispute using a mediator - an impartial third party
Advantages:
- Confidential (content not revealed to the court or public)
- decision of mediator is NOT BINDING on parties
- Preserves relationship between parties
- parties can reach any agreement they wish to reflect their interests and perceived risks of litigation
- parties have control over the process - can choose the mediator, timetable, final agreement
- less costly and time consuming than litigation or arbitration
- less disruption to the parties’ business
disadvantages:
- if issues of fact or law are in dispute, a party may prefer the court to decide on them especially if material to the dispute
- court can grant interim remedies
- have to pay mediator’s fee (usually borne jointly and severally between parties)
Arbitration
What is it?
Advantages? (4)
Disadvantages? (3)
formal resolution process involving an impartial third party - adjudicator
decision is final and BINDING
parties can consider whether to arbitrate when a dispute arises, or when negotiating a contract and deciding to include an arbitration clause
Appeal can only be for an error of law (not for point of law or procedural matters)
Advantages:
- privacy
- easier enforcement
- ability to choose a specialist to determine the dispute
- flexibility of adapting the arbitration to the needs of the parties and the dispute
Disadvantages:
- time consuming and expensive (including arbitrator’s fee)
- formal process governed by rules - more is expected from the parties
- arbitrator’s decision is binding
advantages of using ADR (9)
1) court expects parties to reasonably consider ADR
2) preserves relationship between parties
3) less expensive than court
4) less time-consuming than court
5) more privacy and confidentiality
6) less disruption to clients
7) bigger range of outcomes
8) more control over the process
9) more involvement of the parties themselves
what is the role of lawyers with regards to ADR? (3)
to act in client’s best interest:
1) ensure client is fully aware of the options for ADR and their consequences
2) help client to pursue ADR if they want to
3) act within authority given by client to settle granted by the client in any settlement discussions
When in the disputes process does the CPR require parties to consider ADR? (4)
1) Pre-action protocols and practice direction on pre-action conduct require parties to consider ADR
2) Precedent H (costs budget) guidance requires explanation of negotiation and advising on settlement
3) Directions questionnaires (fast/multi track) require representatives to confirm that they talked to their clients about settlement and why a settlement might not be achieved
4) Case management conference: court may want to know what steps the parties took to explore ADR AND court could give directions to encourage ADR
what can the court do to encourage ADR? (5)
1) give information about ADR
2) encourage parties to consider ADR and engage in it (costs encouragement, etc.)
3) order a stay so that parties can explore ADR
4) direct parties to consider ADR and require an explanation of the outcome and parties’ reasoning
5) order parties to produce a witness statement of reasons for not engaging in ADR - which court can consider when later deciding costs
–> these are usually done at a CMC
can the court compel parties to engage in ADR?
no
how does the court use costs to encourage ADR?
Courts have discretion when appointing liability to costs (general rule is loser pays winner’s costs) but the court can depart from this general rule.
One of the factors the court considers when making cost order is parties’ conduct.
So, the court can encourage parties to engage in ADR by rewarding positive ADR behaviour and punishing poor ADR behaviour in costs
What if a party suggests ADR but the other party refuses to engage?
who has the burden of proof and what does the court have to consider?
The burden of proof is on the unsuccessful party to show the court why it should depart from the general rule on costs to deprive the successful party of its costs on the grounds that it refused to agree to ADR
The court will consider whether the refusal to engage in ADR is REASONABLE and if not, the court might impose a penalty on the successful party who refuses to engage in ADR
what are the Halsey Factors that the court considers when determining if a party’s refusal to engage in ADR suggested by the other party was reasonable? (7)
- nature of the dispute - is it suitable for ADR? not suitable if public interest case, fraud case, or there are complex issues of law that the court must determine.
- merits of the case - refusal to engage in ADR may more justifiable if the party justifiably believes its case to be very strong
- The extent to which other settlement methods other than the one refused have been attempted
- if costs of ADR would be disproportionately high - refusal to engage in costly ADR is likely to be reasonable
- if any delay in setting up and attending the ADR would have been prejudicial - if a party suggested ADR close to trial then refusal by the other party to engage is likely reasonable
- if ADR had a reasonable prospect of success - Refusal to engage in ADR is more reasonable where the ADR had little prospect of success, but this does not require the party alleging unreasonable behaviour to show that it would have succeeded
- Other factors - e.g., if there are contractual clause to consider ADR before court proceedings, courts have a tendency to give effect to such commercial agreements even if unenforceable so refusal to engage would be unreasonable
Is there a difference in how the court treats these 2 scenarios:
(1) one party suggests ADR but the other party refuses to engage
(2) the parties fail to suggest ADR all-together
Yes - the court will not refuse to award costs to a successful party because it did not suggest ADR
What should a party do when it receives an offer to engage in ADR? (5)
1) Consider with its legal advisors the merits of that offer
2) Respond promptly, in writing, setting out reasons for its decision
3) If it does not wish to engage in ADR, explain in what different circumstances it would agree to ADR
4) Make that letter with ‘open’ or ‘without prejudice save as to costs’
5) Consider making a separate note of any reasons for refusal that it is unwilling to express to the opponent at that time, in a form which can be later shown to the court if necessary.
does an arbitration clause prevent civil proceedings from being issued?
no - but the court may stay proceedings on the basis of the clause
In pre-action correspondence relating to a modest neighbour dispute, and to which a protocol does not apply, a claimant proposes the use of ADR to resolve the dispute. The defendant’s solicitor discusses the proposal with his client. After brief consideration, the client is reluctant to enter into ADR and wishes to reject the proposal.
How should the defendant’s solicitor respond to the claimant’s solicitor with regard to the proposal to use ADR?
The defendant’s solicitors should respond providing sufficient reasons to show that the refusal is REASONABLE.
Response must be prompt (but no prescribed time limit)
Explain in letter what other circumstances the client would agree to ADR in
make the letter without prejudice save as to costs
make a separate note of any reasons for refusal that it is unwilling to express to the opponent at that time, in a form which can be later shown to the court if necessary
