DR1 - ADR

Question 1

Can parties go straight to litigation?

Answer 1

No.
* CPR Rules make it clear that litigation should be the last resort and that an offer to engage in ADR by one party should not be unreasonably refused by another party.

Question 2

Do partes have to explore ADR?

Answer 2

• When a dispute arises, a solicitor should discuss with the client the availability of ADR (if the client is willing or has agreed to participate in ADR) it should be used.
• At all stages, the parties must consider settling the litigation by any means of ADR
• Court expects the parties to act reasonably in relation to consdering and engaging in ADR
• Can impose sanctions if they do not

Question 3

In what circumstances is it reasonable to refuse ADR?

What will the courts take into account.

Answer 3

1) Nature of the dispute
2) Merits of the case
3) Extent to which other settlement methods have been attempted
4) Whether the costs of ADR would be disproprtionately high
5) Whether any delay in setting up and attending ADR would have been prejudicial to the claimant
6) Whether ADR has reasonable prospect of success

Question 4

What if a party doesn’t want to engage into ADR?

Answer 4

• Any party not engaging in any such means proposed by another, must serve a witness statement giving reasons within 21 days of that proposal
• Witness statement will not be shown to the trail judge until questions of costs arise

Question 5

What powers does the court have to encourage ADR?

Answer 5

1) Courts can now lawfully stay proceedings tp explore ADR
2) Courts can order parties to engage in ADR
3) Can reinforce the direction above such as requiring a witness statement

Provided that the order does not impair
* the very essence of the claimants right to proceed to a judicial hearing
* is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost

The effect = although previously ADR was strongly encouraged now courts have the power to order the parties to engage

Question 6

When should ADR not be used?

Answer 6

1) It is obviously inappropriate, e.g. an injunction is required
2) The other party is unlikely to co-operate in the process
3) The other party cannot be trusted to comply with an award following ADR.

Question 7

What is litigation?

Answer 7

Formal process by which disputes are resolved through the courts. At the conclusion of the process, trial will be held and the judge will make a determination which is binding on the parties.

CPR
- Dictates the procedure that must be adopted when pursuing a claim through the courts
- Practice directions also provides details on e.g. formalities required.

Question 8

What is mediation?

Answer 8

Involves the agreed instruction of an independent third party (mediator) to facilitate discussions between disputing parties with the aim of reaching an agreed settlement.

• If the client is open to the suggesion, mediation should be proposed, usually by letter or email to the other side.

Question 9

What is arbitration?

It is goverened by statute - Arbitration Act 1996

Answer 9

• Involves the appointment of an arbitrator, or panel of arbitrators by the disputing parties.
• The decision made by the arbitrators at the conclusion of the procedure is binding on the parties, they are not entitlted to subsequently seek a judgement on the matter from the court.
• Agreeing to oust the jurisidiction of the court to hear the matter and to give to the adjudicator instead.

Question 10

When will the decision to use arbitration arise?

Answer 10

Typically, the question of whether to arbitrate or not arises at two key stages:

1. When negotiating a contract the parties may decide to include an arbitration clause in their agreement; or
2. When a dispute has arisen, the parties can choose to deal with it by way of arbitration.

Question 11

If a party fails to respond to a request to engage in ADR by another party - is that considered unreasonable?

Answer 11

Yes.

• Failing to respond to an invitation to ADR is unreasonable in and of itself.
• Even if a party eventually refuses, they must at least engage with the proposal and respond to the email.
• If a party doesn’t respond at all = court will think this conduct is unreasonable and impose a sanction or penalty against the refusing party.

Question 12

What are the pros and cons of arbitration?

Answer 12

Pros: quicker, cheaper, less formal, confidentiality (in private), solutions are more practical, easier to enforce in certain jurisidictions e.g. Yemen

Cons: not as in-depth as court, certain remedies are not available e.g. injunction, not cheap as arbitrators are experts, binding decisions & limited rights of appeal

Question 13

What factors affect when a party should engage in ADR?

E.g. should they engage straight away? Later? Read the contract?

Answer 13

1. The Contract may set out ADR timings and methods
   some forms can only be considered at certain times
2. The earlier, generally the more costs saved and the relationship may be better preserved
3. The later, the more info on each others cases and evidence.
4. Too early, and you may waste costs on a dispute which is not genuine

Question 14

When does the CPR require consideration of ADR?

Answer 14

1. In pre-action protocols
2. In guidance accompanying Precedent H (Costs budget)
3. In confirmation in Directions Questionnaires (must state expressly why not settled)
4. Reported to court at case management conference

Question 15

If it has been determined that ADR has been refused unreasonably. What sanctions are available for the court to impose?

Answer 15

• Silence in the fact of an offer to engage in ADR - likely to be considered unreasonable and sanctioned in costs.
• Refusing an offer for ADR, similarly likely to be considered unreasonable and sanctioned in costs, in form of adverse costs order
• The court will not automatically sanction in costs a party because it did not positively suggest ADR, unless there is a breach of court order or protocol.

Sacctions available:
1. Depriving a party of being awarded their costs even if they are successful in litigation
2. Ordering a party to pay some or all of the losing side’s costs as well as their own, even if the party is succesful in litigation
3. Ordering a higher rate of interest to be paid on damages awarded by the court
4. Depriving a party of interest on damages awarded by the court.

Question 16

What is an adverse cost order?

Answer 16

A court order that requires a party to proceedings to pay some or all of the other party’s costs associated with the legal action.

Question 17

A party has been successful in the action overall following litigation, but didn’t engage in ADR. Can the court still impose sanctions?

Answer 17

Yes.

If it is determined that ADR has been refused unreasonable or they didn’t engage in ADR

Doesn’t matter if they were successful in litigation proceedings.

Question 18

Annie has issued proceedings against Joshua for breach of contract. During the course of litigation proceedings, the court orders on 2 occaisons that the matter to be stayed (paused) for a 28 day period for the parties to explore ADR.

During the 28 day period, Annie writes to Joshua on seven occaisons to ask to engage in mediation. Joshua writes back refusing on the basis that there is no realistic possibility of succeeding. However, he offers no reason as to why. The matter proceeds to court and Joshua is successful in defending the claim. Joshua requests to the court to order Annie to pay all of his legal costs associated with the action. However, when questioned by the judge about his refusal to mediate, he simply says ‘I didn’t see why I should’

What order is the court likely to make?

Answer 18

• Court is likely to order that Joshua pays Annie’s legal costs of the action as well as being responsible for his own, despite Joshua being successful in defending the claim.
• Where the court has specifically directed that the matter be stayed to allow parties to attempt mediation and there is clear evidence that a party has refused with no grounds, the court has discretion go impose a costs sanction on that party,

Question 19

What is the procedure of mediation?

It is not goverened by statute so largely informal

Answer 19

1) Parties will agree independent third person or body who will act as a mediator
2) Mediator will be sent written statement from both parties and will discuss the case with them on ‘without prejudice basis’
3) No future judge will be made aware of the discussions the parties should feel free to engage with eachtoher
4) Conversations will assist the mediator in identifying the real areas of disagreement and points most important to the respective parties
5) Mediators and parties will meet in the same building and enables any issues to be dealt with quickly because, if necessary the parties can meet face to face to resolve their differences.

Question 20

What is meant by ‘without prejudice’?

Answer 20

Statements which are made in a genuine attempt to settle a dispute cannot be used in court as evidence of admissions against the party that made them.

Question 21

What are the prons and cons of mediation?

Answer 21

Pros
* Low cost and speed (client still pays fees but lawyers will spend less time)
* Flexibility (parties can choose the procedure to be followed, no statute, case law, rules of court need to be followed
* Privacy (takes place in a private place, public unaware of the disputes or the outcome of the dispute)

Cons
* Disclosure (no formal procedure for disclosure, risk the parties may resolve the dispute without knowing the facts and lead to a decision that is unjust)
* Privacy - If the client requires public vindication to ensure any damage to their reputation is repaired - privacy is disadvantage
* Ability to withdraw - no one is forced to engage in mediation. If parties have started mediation they can withdraw at any stage before a solution has been agreeed despite objections from the other party.
* Enforcement - even if an agreement is reached. It is not automatically binding as the client cannot enforce this like a court judgement. However, if the parties do agree to terms suggested as a result of mediation and have entered this into a contract - can be sued for breach.

Despite the disclosure requirements - many business clients take the view that a quick decision, even if it is not completely accurate, is better than wasting time and money on a protracted dispute in order to get a (potentially) more correct outcome.

Question 22

When is mediation not appropriate?

Answer 22

• Client needs a ruling on a point of law
• Injunction is required
• Allegations of fraud or commercial disreputable conduct

Question 23

How is a decision made by an Arbitrator following arbitration become binding?

Answer 23

• Once a decision has been reached.
• Winning party to an arbitration - can apply to High Court under s66 of the Arbitration Act for permission to enforce the award as if it were a court judgement.

Question 24

What are practice directions?

Answer 24

• They supplement the CPR.
• Rules and guidelines issued by the courts to provide further clarification on how certain legal procedures should be followed
• Examples e.g. case management, pre-action protocol, disclosure of documents - how certain procedural steps should be carried out

Practice direction 3A- case management - sets out the rules on how cases should be amanged and what is expected of the parties
Practice direction 31A - disclosure of documents - details how parties should deal with document disclosure in civil areas

Question 25

What are the pros of litigation?

Answer 25

Pros:
1) Strict rules that govern the behaviour of the parties (CPR provides a rigid framework that the court expects parties to comply with and sanctions if they do not)
2) Disclosure parties are required to put their cards on the table and produce all available evidence (even if it adversely affects a party’s claim)
3) Outcome may be easier to predict due to similar previously decided cases - e.g. precedent a lower court is bound to follow a decision in a higher court in the event that a decision on a point of law has been taken previously
4) Binding decision - once the trial has been concluded, judge will make a decision enshrined into an order which is binding on the parties
5) Parties have the right to appeal - for leave or permission to appeal a decision that has been taken
6) Enforcement - in the event that the losing party fails to comply with a court order, the successful party can apply to the court to enforce the terms of that order?

Question 26

What happens if a party doesn’t comply with CPR rules, practice directions or directions?

Answer 26

Court can impose sanctions.

There are also guidance on pre-action conduct (i.e. how parties behave before a claim is issued) to ensure that litigation is only used when there is no other alternative.

Question 27

What happens if a party fails to disclose a key piece of evidence by the deadline for the disclosure?

Answer 27

That piece of evidence will be excluded unless the court specifically gives permission for it to be used.

Question 28

What are the cons of litigation?

Answer 28

Cons:
1. Time consuming - as you need to be thorough and ensure proper administration of justice, backlog of cases and deals with cases on first comes first serve basis.
2) Complex to conduct without legal representation - despite there being helpful practice directions, CPR were drafted by lawyers for lawyers and are very difficult to follow for the layperson without the benefit of any legal representation
3) Costly- Litigation is expensive for parties. Legal advice, court fees, barrister fees, expert fees.
4) Adversarial - winner and loser and typically very little chance of preservation of the relationship between parties after litigation has concluded.

Question 29

What timetable does the court follow?

Answer 29

The court will set out a full timetable.

Designed to allow for exploration of all of the legal and evidential issues between the parties.

Question 30

What is stage 1 of the litigation process?

Answer 30

Stage 1 Pre-commencement of proceedings (PRE-ACTION)

• Parties must establish what issues are in dispute, share information available as evidence - needs to be ‘sufficient evidence’
• Endeavour to resolve the issues
• Potential claimant should send the proposed defendant a lette detailing the claim, the defendant is expected to send a letter in response.

Question 31

What is stage 2 of the litigation process?

Answer 31

Stage 2 - Commencing of the claim
* The claimant will commence proceedings by filing a claim form with the court - will include particulars of claim, facts, legal basis on which the claim is made and remedy sought
* If the defendant wishes to defend the claim - required to file a defence with the court and serve it on the claimant
* At this point the court will allocate the matter to a track - high value cases being given a greater attention and resources

Question 32

What is stage 3 of the litigation process?

Answer 32

**Stage 3 - Case management by the court **
* Once the claim and defence has been filed with the court
* Court will allocate claim to a track
* Court will carefully manage a case to ensure the matter progresses towards the trial date
* Court will issue directions to the parties on how they are to conduct the case and set deadlines for each stage.
* Stages include - dates by which disclosure must take place, by which witness statement must be exchanged, if the parties ahve the court’s permission to rely on expert evidence, when the evidence must be filed with the court
* Parties may apply to the court for specific orders that might be required, e.g. compel an opponent who has neglected to take a required step in accordance with the timetable to do so.

Question 33

What happens in Stage 4 of the litigation process?

Answer 33

Stage 4 - Trial
* The judge will hear evidence
* The judge will make an order - who is liable to whom (liability) and for how much (quantum, damages)
* Make an order on who will pay the legal costs of the matter and in what percentage

Question 34

What happens in Stage 5 of the litigation process?

NOTE. this doesn’t always happen only in certain occasions.

Answer 34

Stage 5 - Post Trial
* Only necessary if one party disagrees with the decision and therefore appeals it
* Or if one party fails to pay some or all of the judgement debt or associated legal costs and therefore needs to enforce the judgement