SGS 11 - ADR and Arbitration

Question 1

Which ADR process WILL result in a binding third party determination?

Answer 1

Expert determination

Question 2

Which ADR processes will involve third party intervention but will not result in a binding decision?

Answer 2

Mediatiom;
Expert appraisal;
early neutral evaluation

Question 3

Which ADR process does not involve third party intervention?

Answer 3

Negotiation

Question 4

Give three advantages of mediation

Answer 4

1) Parties have autonomy over the process - can determine how it is carried out
2) Can include commercial benefits as the terms of settlement which provides opportunity for better remedies
3) Without prejudice - so even if the mediation fails and you do end up going to court, the court won’t hear the discussions unless privilege is waived

Question 5

Give three disadvantages of mediation

Answer 5

1) more a perceived disadvantage, but some parties see it as an early sign of weakness
2) if parties don’t properly engage e.g one party and their solicitor take an aggressive stance - not likely to be effective
3) Parties typically agree to share costs equally so even i you get a favourable result from the dispute unlikely to recover costs in full

Question 6

Give one reason why parties might consider using ADR?

Answer 6

CPR 1.4(e) court is now under a duty to encourage parties to use ADR. Court might do so by looking at the conduct of the parties when assessing costs (CPR 44.2(5)) specifically, looking at whether the party was unnecessarily opposed to settlement attempts by the other side. The disclosure questionnaire specifically asks parties whether they would like to stay proceedings whilst they seek settlement.

Question 7

What is a BATNA and what is the relevance of it?

Answer 7

‘Best alternative to a negotiated agreement’ - the client will consider what is the best alternative to a negotiated agreement e.g they win at court, get full damages and costs on the indemnity basis. There is no guarantee of this happening, so a negotiated settlement will not be in pursuit of this.

Question 8

What is a WATNA?

Answer 8

The ‘worst alternative to a negotiated agreement’

Question 9

What is reality testing?

Answer 9

The mediator will play the role of testing the merits of each parties case, and the assumptions they have made about their case.

E.g party 1 is adamant that they have a successful case which is guaranteed to win. The mediator might ask why haven’t they pursued summary judgment? There must be some reason why the solicitor hasn’t advised it. This forces the client to acknowledge the weaknesses in their case.

Question 10

What will the court do whilst the parties attempt ADR?

Answer 10

stay proceedings (CPR 26.4(2A)).

Question 11

How might parties fund mediation?

Answer 11

1) privately funded by the parties - typically agree to share the costs equally
2) legal aid might be available (small claims track)
3) parties might have insurance to cover the costs of their dispute

Question 12

What is the definition of arbitration?

Answer 12

‘Dispute is resolved by an impartial adjudicator whose decision will be final and binding’

Question 13

In arbitration - what is the ‘arbitration seat’?

Answer 13

The place to which the arbitration is attached, so the country that intervenes if court assistance is needed.

Aka if the seat is England, the English courts will step into assist if required. Does not necessarily mean the arbitration will have to be heard in England.

Question 14

In an arbitration - what are the parties referred to as?

Answer 14

The Claimant and the respondent

Question 15

Give three advantages of arbitration

Answer 15

1) privacy - does not take place in the public domain like litigation
2) Finality (could also be considered as a disadvantage) - in that there are limited opportunities to appeal
3) Neutrality - parties can appoint a neutral arbitration seat with no connection with either party for fairness

Question 16

Give three disadvantages of arbitration

Answer 16

1) difficult to join a third party to a dispute unlike litigation; a third party will have to consent to joining and very few parties likely to consent
2) Often perceived as being cheaper and quicker but this rarely proves true
3) If parties don’t want court intervention, s44 of the Act still permits the court to make orders relating to the arbitration in some circumstances

Question 17

At what stage of the arbitration will the tribunal decide matters such as the extent of disclosure, the timetable, whether expert evidence may be adduced etc?

Answer 17

At the preliminary hearing. This is when the court is likely to consider the matters in s34 AA.