TB - Different options for DR Flashcards
What are the different options for DR?
1) Mediation
2) Arbitration
3) Litigation
Litigation should be the …
Last resort - the CPR make it clear that parties should only resort to litigation once alternative methods of DR have been explored
Would the court impose a costs penalty on a party for ignoring an offer to mediate from their opponent?
Yes, it’s very likely that the court would impose a costs sanction in this case.
Case law has made clear that if a party refuses to engage in mediation following an offer from their opponent, they should communicate this clearly and give reasons for their refusal.
After arbitration has concluded, a party who’s dissatisfied with the outcome:
a) Is bound by the determination
b) May refer the matter to court to decide instead
c) May use another form of ADR
A - because parties who agree to arbitration aren’t able to refer their matter to court if they’re dissatisfied with the outcome
Litigation is the quickest and most cost-effective way of resolving a dispute. True or False?
False - litigation is the slowest and most expensive method of DR
Which of the following isn’t a method of ADR?
1) Litigation
2) Mediation
3) Early Neutral Evaluation
Litigation isn’t a form of ADR
What is ADR?
An umbrella term that covers methods of resolving a dispute between parties outside of the civil court process
Do parties enter the ADR process voluntarily?
yes
what is the procedural code which governs civil litigation in england and wales?
The Civil Procedure Rules 1998
what does the CPR 1998 say about litigation being a last resort?
it should be a last resort and an offer to engage in a form of ADR by one party shouldn’t be unreasonably refused by the other party
what is the court entitled to do in situations where the court considers that a party has unreasonably refused ADR, or the party has been silent in the face of an initiation to particiapte?
the court is entitled to impose sanctions or penalties on that party
(such sanctions are generally in the form of an unfavourable costs order against the refusing/silent party)
What is meant by ‘all forms of ADR are confidential or ‘without prejudice’?
it means parties cant disclose any info used as part of the ADR process if a resolution isn’t reaches, and the matter is subsequently referred back to court for determination
which forms of adr are you required to know for the sqe?
1) mediation
2) arbitration
what is litigation?
formal process by which disputes are resolved through the courts.
At the conclusion of the process, a trial will be held, and a judge will make a determination on the claim which is binding on the parties
what is mediation?
a form of ADR that involves the agreed instruction of an independent third party (mediator) to facilitate discussions between disputing parties with the aim of reaching an agreed settlement
what is arbitration?
a form of ADR that 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, and they aren’t entitled to subsequently seek a judgement on the matter from the court.
does the court place a duty on parties to consider ADR?
yes
what must a party’s reason to refuse ADR be justifiable?
must be justifiable under scrutiny from the court
Has the court of appeal set out a list of criteria to determine whether refusal to consider ADR is justified?
yes - Halsey v Milton Keynes General NHS Trust 2004
it’s important to have this criteria in mind when answering qs on this topic
what is the criteria to determine whether refusal to consider ADR is justified?
a) the nature of the dispute
b) the merits of the case
c) the extent to which other settlement methods have been attempted
d) whether the costs of the ADR would be disproportionately high
e) whether any delay in setting up and attending the ADR would have been prejudicial
f) whether the ADR had a reasonable prospect of success
What has the court of appeal held since Halsey, in relation to failing to responding to an invitation?
failing to respond to an invitation to ADR is unreasonable in and of itself - even if a party refuses, they must at least engage with the proposal
if theres a q on a party not who hasn’t responded to an invitation, what is the court likely to do?
the court will find this conduct unreasonable and impose a sanction or penalty against the refusing party
REVISION TIP: when faced with a scenario where ADR has been refused by a party, consider what you could use from the facts of the case to justify refusal of ADR in front of a judge.
1) would you be able to argue convincingly that one or more of the Halsey considerations applied?
2) if yes, then there may not be sanctions applied
3) if not, then it’s likely that the court would impose sanctions
if it’s determined that ADR has been refused unreasonably, what sanctions are available for the court to impose?
the court can issue penalties to parties who unreasonably refuse to comply with a court order requiring the parties to attempt ADR or accept an offer made by the other side to attempt to reach settlement using ADR
What are adverse costs orders?
a court order that requires a party to proceedings to pay some or all of the other partys costs associated with the legal action
the penalties, or sanctions, available to the court to impose
(exam is likely to ask to identify the most likely penalty in a given set of circumstances)
what do adverse costs orders include?
- depriving a party of being awarded their costs even if they’re successful in the litigation
- ordering the party to pay for some or all of the losing side’s costs as well as their own, even if the party is successful in the litigation
- ordering a higher rate of interest to be paid on damages awarded by the court
- depriving a party of interest on damages awarded by the court
PRACTICE EXAMPLE: Annie has issued proceedings against Josh for breach of contract. During the course of litigation proceedings, the court orders on two occasions that the matter be stayed (paused) for a 28-day period for the parties to explore ADR. During the 28-day stay period, Annie writes to Josh on seven occasions to ask that he engage in mediation. Josh writes back refusing, on the basis that there’s no realistic possibility of it succeeding; however, he offers no reasons as to why. The matter proceeds to court and Josh is successful in defending all of the claim. He requests the court to order that Annie pays 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’.
Q: what order is the court likely to make?
the court is likely to order that Josh pays Annie’s legal costs of the actions as well as being responsible for his own, despite him being successful in defending the claim. Where the court has specifically directed that the matter be stayed to allow the parties to attempt mediation and there’s clear evidence that a party has refused with no grounds, the court has discretion to impose a costs sanction on that party
EXAM WARNING
rapidly developing case law has shown that objections raised to ADR at the time the discussions are taking place are much more likely to be accepted as arguments for justifiably refusing it. Parties who raise objections having simply refused or ignored an invitation at the time are much more likely to be found to have acted unreasonably, and therefore have sanctions imposed upon them.
what does mediation involve?
settlement by agreement between the parties, with discussions and negotiations facilitated by a mediator
Once parties to a dispute have consented to mediate in principle, they will nominate and agree on the appointment of an independent mediator. What happens after this?
both parties will send written position statements to the mediator which set out a background to the case, the points in dispute and any proposals they may have for settlement.
what does the mediator do with this document?
uses it to prepare for the face to face meeting
Once a date and place for the mediation to take place is agreed between parties and the mediator, what happens next?
on the day, each party will generally occupy a separate room and the mediator will shuttle between both
What is the mediators job during this?
to isolate the areas of genuine legal and practical disagreement between the parties and to direct the parties towards a personalised settlement that is to both of their satisfactions
any docs or representations made or relied on by any parties to mediation are ‘without prejudice’. what does this mean?
it means they’re confidential and aren’t to be used in the context of any subsequent court proceedings, should the mediation be unsuccessful
what are the advantages of mediation
- flexible
- cost effective
- speedy
- confidential
- preserves relationships
- settlement terms can be more creative
- increases likelihood of a later negotiated settlement, even if unsuccessful
- parties can return to court if a settlement isn’t reached
mediation is flexible because..
there’s no set process, it can be set to suit the individual circumstances if the case
(including keeping parties entirely separate if the relationship has disintegrated to that extent)
mediation also allows issues to be unbundled - broken down into smaller issues that can be resolved more easily
mediation is cost effective…
as it is often much cheaper than litigation
mediation is speedy..
because then can be arranged reasonably quickly and can result in swifter resolution of the dispute compared with litigation
mediation is confidential…
because it’s a private process, and therefore useful to commercial entities who may find their reputation damaged at trial or wish to protect trade secrets or confidential info from competitors
mediation preserves relationships…
as a mediated settlement requires agreement from both parties, it’s more likely to preserve commercial or personal relationships than an adversarial trial followed by a win/lose court determination
mediation settlement terms can be more creative…
the court is only able to award a remedy that has been claimed and is legally within their discretion
- mediation allows parties to be creative in the terms of settlement (eg apologising or agreeing to continue trading with each other on renewed terms)
mediation increases the likelihood of a later negotiated settlement, even if unsuccessful…
even if an agreement isn’t reached, it helps parties ti understand each others positions to the point that settlement could take place via negotiations between party solicitors after the mediation
in mediation, parties can return to court if settlement isn’t reached…
if it’s clear that an agreed settlement won’t be reached, parties can be safe in the knowledge that they can still commence or continue with proceedings through the court
what are the disadvantages of mediation?
- enforceability of verbal agreements
- all parties must agree to a proposed resolution
- can increase costs if parties are unwilling to cooperate
- parties aren’t required to disclose documentation
- ability to withdraw
- no ‘day in court’
enforceability of verbal agreements…
unless there’s a written agreement (essentially a contract) between the parties, then it’s not enforceable through the courts
all parties must agree to a proposed resolution…
if one party has already shown rigid unwillingness to negotiate, mediation could prove to be a futile exercise
can increase costs if parties are unwilling to cooperate…
if one or both parties are unwilling to even consider settlement, then mediation will likely fail and just increase costs to parties overall
parties aren’t required to disclose documentation…
there are no formal rules in mediation - therefore parties can deliberately withhold info if they think it will be damaging to their case
therefore the risk is that parties settle without having the full facts - this can hinder settlement in disputes where trust between the parties has completely disintegrated or there’s a history of dishonesty between them
ability to withdraw from mediation…
parties can withdraw at any time, risking the exercise being expensive and causing unnecessary delay to court proceedings without a resolution being reached
no ‘day in court’
a party who’s seeking vindication or validation of their conduct or looking for the conduct of the opposing party to be penalised will likely not achieve this through mediation
ARBITRATIONNN
