Timing and judicial encouragement (ADR) Flashcards
When will ADR normally take place?
A contract between the parties may have already specified how and when ADR should be used.
As ADR is an alternative to court proceedings, it will almost always be pursued before any court proceedings have been commenced.
What are the factors suggesting it is better to engage in ADR earlier?
Cost savings: the earlier the ADR, the greater the cost saving in the event of success.
Better relationships and information: even if ADR does not lead to settlement, it can improve the relationship between the parties and produce useful information (for example, an opinion gained during early neutral evaluation might inform the way a party approaches litigation).
What are the factors suggesting it is better to engage in ADR later?
The parties will have a better understanding of each other’s case. However, this should be relatively clear by the time statements of case are finalised.
The parties will have a better understanding of the evidence each party has available. It will rarely be justifiable to wait until all information/evidence is available. In addition, an exchange of information/evidence can often be agreed in advance of an ADR procedure or part of it.
If a party engages in ADR too early, it may have occurred costs doing so when the dispute is not genuine.
What provisions does the CPR contain which have implications for when ADR should at least be considered?
a. Various pre-action protocols and PD on pre-action conduct require parties to consider ADR;
b. Guidance accompanying Precedent H (costs budget) requires the inclusion of elements relating to negotiations and advising on settlement.
c. Directions Questionnaires require legal representatives to confirm they have explained to clients the need to try and settle, the settlement options and possible cost sanctions. Also includes option to request a stay for settlement. Parties must state expressly why settlement might not be achieved at this early stage in proceedings.
d. At a CMC, the court is likely to want to know what steps the parties have taken to explore ADR. The court can give directions that are aimed at encouraging ADR. The court is required to manage cases including by encouraging and facilitating ADR if appropriate.
How does the court encourage parties to engage in ADR?
A. Provide information about ADR;
B. Stay proceedings for, or order, the parties to engage in ADR. If the court are to make an order for the parties to engage in ADR, they must ensure that it does not impair the claimant’s right to proceed to a judicial hearing and is proportionate to settling the dispute fairly, quickly and at a reasonable cost.
C. Encourage parties to engage in ADR without going so far as to order it.
What happens where a successful party would normally be entitled to costs but they refused to engage in ADR?
If a party refuses to engage in ADR, when it comes to assessing costs, the court will consider whether that refusal was reasonable.
What circumstances will the court look at where a party has failed to engage in ADR?
a. The nature of the dispute – how suitable it is for ADR.
b. The merits of the case – refusal may be more justifiable if the party justifiably believes it to be very strong.
c. The extend to which other settlement methods have been attempted
d. Whether the costs of ADR would be disproportionately high (note, free or fixed-fee mediations are potentially available for low value claims).
e. Whether any delay in setting up and attending the ADR would have been prejudicial – particularly if close to trial
f. Whether ADR had a reasonable prospect of success
Who has the burden of proof in relation to showing the successful party should have engaged in ADR?
The unsuccessful party.
What approach will the court take where the successful party has failed to suggest ADR?
The court will not refuse to award a cost order to a successful party simply because it did not suggest ADR.
What approach will the court take where a successful party is silent in the face of an offer to engage in ADR?
Silence in the face of an offer to engage in ADR is likely to be considered unreasonable and be sanctioned in costs.
Upon receipt of an offer to engage in ADR, what should a party do?
(a) Consider with its legal advisors the merits to that offer;
(b) Respond promptly, in writing, setting out reasons for its decision, and noting the principles above;
(c) If it does not wish to engage in ADR, explain in what different circumstances it would agree to ADR;
(d) Make the letter with open’ or without prejudice save as to costs’; and
(e) Consider making a separate note of any reasons for refusal that it is unwilling to express to opponent at that time, in a form which can be later shown to the court if necessary.
At the CMC what powers does the court have which can be used to encourage ADR?
*The court can order a stay in order that the parties can explore ADR;
*The court can direct the parties to consider ADR and require an explanation of the parties thinking in that regard
*The court can reinforce the direction mentioned immediately above with a direction that any party not engaging in any proposal by the other party, must serve a witness statement giving reasons within 21 days of that proposal (which shall not be shown to the judge until costs).
