Disputes - Types of Dispute Resolution (1) Flashcards
What are the different types of dispute resolution?
Types of Dispute Resolution: Dispute resolution comprises formal litigation (court proceedings), and other forms of alternative dispute resolution (such as arbitration, mediation and negotiation).
How do courts encourage ADR?
Judicial Encouragement: Courts strongly encourage parties to consider and attempt alternative dispute resolution prior to and alongside formal litigation, and can impose sanctions on those who do not.
(1) Participation: Parties should participate in ADR where practicable, unless ADR is obviously inappropriate (such as requiring an injunction or where the other party is uncooperative).
(2) Encouragement: ADR is pervasively encouraged, such as in: a) court directions; b) the Civil Procedure Rules; c) the Directions Questionnaire; and d) solicitors’ advice.
>Courts can now order engagement with ADR (updated since SQE1).
(3) Penalties: Courts will penalise parties for unreasonable failure to consider ADR, even if successful in formal litigation (Laporte v Commissioner). This must be proved by the party alleging failure to engage.
Unreasonable: ‘Unreasonable’ refusal is determined with respect to: a) nature of dispute; b) merits of case; c) extent of engagement; d) proportionality of ADR costs; e) prejudicial effect of ADR in relation to limitation periods; and f) prospects of ADR succeeding (Halsey v MK NHS Trust).
In Practice: Penalty is discretional, meaning courts are unlikely to impose penalties if there were reasonable grounds not to engage in ADR (Gore v Naheed & Ahmed).
What are the different types of ADR?
Negotiation
Negotiation: The parties can attempt to negotiate settlement freely outside of court.
Mediation
Mediation: An independent mediator attempts to establish a solution acting as a ‘go-between’ between parties.
(1) Procedure: Mediation should be proposed to the other party. Mediators will be sent written statements from both sides, and then discuss it with both without prejudice to establish issues and work towards solution.
(2) Solution: The solution is non-binding, unless entered into contractually between parties.
(3) Advantages: Cheaper; Expert Opinion; Without Prejudice; Faster; Private; Flexible; Preserves Business Relations; Practical Settlements; Parties May Withdraw.
(4) Disadvantages: Lack of Court-Specific Remedies; No Disclosure Obligations; No Public Vindication; Free Withdrawal; Non-Binding Remedies.
Arbitration
Arbitration: An independent arbitrator determines a legally binding solution between the parties (Arbitration Act 1996).
(1) Procedure: Arbitration will arise in one of two ways:
Contractual: The contract in dispute may provide an arbitration clause, typically including the name of an arbitrator. This will oblige parties to arbitrate (subject to UCTA/CRA).
Discretional: Otherwise, parties may freely agree to arbitrate, and choose an arbitrator themselves.
(2) Process: The arbitration process is as such:
Referral: Dispute is referred to an independent arbitrator, usually a professional or trade body with relevant experience.
Arbitration: The arbitrator will discuss the issues with both parties and come to an appropriate solution; both are without prejudice.
(3) Solution: The solution is binding and can be enforced by the court (s66 AA 1996).
(4) Advantages: Relatively Cheaper; Expert Opinion; Without Prejudice; Faster; Private; Flexible; Preserves Business Relations; Practical Settlements.
(5) Disadvantages: Lack of Court-Specific Remedies; Potentially Lower Depth of Investigation; Higher Costs; Limited Rights of Appeal; No Public Vindication.
What is formal litigation?
Formal Litigation: If parties cannot or will not attempt ADR, or have done so unsuccessfully, they must formally litigate.
(1) Effect: Unless parties reach settlement, liability and quantum is determined by the court (county or High).
(2) Pros/Cons: Litigation breaks deadlock and is thorough, but is expensive, public and time consuming.
Parties to Litigation
Parties to Litigation: Parties to litigation include:
(1) Parties to Claim: The ‘Claimant’ and the ‘Defendant’, alongside their legal representation.
(2) Judges: Judges will deal with and determine the outcome of a matter.
District Judge: District Judges hear most interim applications, and matters for sums up to £25,000.
Circuit/HC Judge: Circuit Judges and High Court Judges hear matters for sums exceeding £25,000.
(3) Court Personnel: Court personnel include:
Court Manager: Senior civil servant in charge of the court office, alongside their staff. They receive formal documents sent to court such as claim forms.
Ushers: Ushers attend hearings, and assist in the running and listing of cases.
Enforcement Officers/Bailiffs: HC Enforcement Officers and CC Bailiffs serve court documents, and help to enforce court writs and warrants (see enforcement).
The Civil Procedure Rules
The Civil Procedure Rules: Civil litigation is governed by the Civil Procedure Rules 1998 (CPR).
(1) Function: The CPR consists of 89 ‘Parts’ and 89 accompanying ‘Practice Directions’ providing user-friendly information and rules, designed for an increasing numbers of litigants in person (self-represented parties).
(2) Enforcement: Courts have control over litigation, issuing directions and sanctions to ensure strict adherence to its rules. It is the burden of a complainant to prove that an opponent did not reasonably comply.
What are the different stages of litigation?
Stages of Litigation: The five main stages of formal litigation are: a) pre-commencement; b) commencement; c) interim matters; d) trial; and e) post-trial.
Pre-Commencement
Pre-Commencement: Parties assess their commercial and legal objectives, and instruct solicitors.
(1) Evidence and Assessment: Claimant gathers evidence, and assesses the viability of their claim.
(2) ADR and Costs: Claimant will consider ADR and costs (their own and potentially those of the defendant).
(3) Pre-Action Protocols: Relevant pre-action protocols under the CPR must be followed. These cover pre-action steps - failure to adhere may result in sanctions. The main points include:
Issues: Parties will determine the issues in dispute (which will require evidence).
Information: Parties will share relevant information available to them.
Negotiation: Parties should endeavour to resolve their issues outside of court during pre-action.
(4) Letter Before Claim: If a claim is substantiated, the claimant will send a letter before claim to the defendant, warning them of the prospect of proceedings. After this, proceedings may be issued.
Commencement
Commencement: The claimant commences their claim, and the defendant responds in turn.
(1) Claim Form: The claimant serves a ‘claim form’, generally alongside the ‘Particulars of Claim’.
(2) Response: If contested, the defendant will serve the claimant a ‘defence’, and files this at court.
(3) Court Allocation: The court will allocate the matter to a ‘track’, with higher value matters provided greater time and resources.
Interim Matters
Interim Matters: The court will deal with interim matters in the lead up to trial (or settlement).
(1) Directions: The court will issue directions, listing the steps parties must take and strict dates by which they must do so.
(2) Disclosure: Parties will have to disclose a list of relevant evidence to each other, most of which is open to inspection by the other party.
(3) Cost Analysis: The costs of the case must be determined, agreed or confirmed, and provided to the court. This will affect the recoverable costs at the end of trial.
(4) Exchange: Other evidence will be exchanged between parties some time after disclosure, namely witness statements and expert reports.
(5) Interim Applications Parties may apply for specific orders, such as for security of costs (interim applications).
(6) Pre-Trial Preparation: Prior to trial, parties will engage in last minute steps, such as confirming readiness to proceed, producing a trial bundle, and ensuring that witnesses will be in attendance.
Trial
Trial: The court will hold a substantial hearing to assess the evidence and make a binding decision as to the outcome.
(1) Judgment: The court will make a judgment, determining issues of liability and quantum.
(2) Costs: The court will decide who is required to pay costs, and if so, the sum required.
Post-Trial
Post-Trial: The parties may deal with post-trial matters, if required.
(1) Appeal: Parties may attempt to dispute all or part of the trial judge’s decision.
(2) Enforcement: Parties may apply to the court to enforce judgment against a non-paying opponent. The usual method is seizure and public auction sale of goods by bailiffs or enforcement officers.
How do the different methods of disputes resolution compare?
Process
Mediation:
Parties communicate and negotiate through third-party
Arbitration:
Professional reviews evidence and makes binding decision
Formal litigation:
Court reviews evidence through formal procedure
Choice
Mediation:
Voluntary process
Arbitration:
Voluntary (unless by contract clause)
Formal litigation:
One party usually subject by force of law
Binding Resolution
Mediation:
Non-binding, parties can withdraw at any time
Arbitration:
Decision is binding and enforceable
Formal litigation:
Decision is binding and enforceable
Control
Mediation:
Parties retain control and can leave at any point
Arbitration:
Parties may choose arbitrator, and some of the rules and procedures
Formal litigation:
Judge and CPR determine the majority of proceedings, subject to limited agreement
Speed
Mediation:
Generally the fastest of the options, completed in days to weeks
Arbitration:
Usually faster than litigation due to scheduling flexibility and fewer formalities
Formal litigation:
Often the slowest option due to court procedures, backlog and standard timelines
Cost
Mediation:
Generally the least expensive due to length and formalities
Arbitration:
Costs can vary, but often more affordable than litigation
Formal litigation:
Generally very expensive, due to length, fixed fees, and procedures
Confidentiality
Mediation:
Highly confidential, and usually without prejudice
Arbitration:
Confidentiality differs, but resolutions are usually public unless agreed
Formal litigation:
Generally very public, unless steps are taken to protect sensitive information
Flexibility
Mediation:
Very flexible, parties can adopt their own bespoke solutions
Arbitration:
More flexible, but more restricted in types of solution available
Formal litigation:
Inflexible, courts can only award certain remedies, and entirely at their discretion
Relationships
Mediation:
Easier to preserve relations due to collaborative process
Arbitration:
Can strain relations, but less than litigation
Formal litigation:
Usually strains relations due to public adversarial nature
