W8 MCQ (ADR) Flashcards
Your client is a producer of high-quality furniture. One of its long-standing suppliers provided it with sub-standard leather to cover its sofas. This resulted in the recall of the sofas and significant losses for your client. Your client has recently commenced court proceedings against the supplier to recover these losses. The supplier has proposed that the parties try to resolve the dispute by mediation and your client asks for your advice. Your client is not yet concerned about the increasing costs of the litigation as it has put aside a small fund to pay for it. The client believes it has a strong case so that any legally correct solution would be decided in its favour. It would like to continue to work with the supplier in future. Which of the following is most accurately describes the greatest benefit of mediation to your client?
A. Mediation is confidential.
B. Mediation will shorten the time spent on the dispute because the mediator can make a decision which will bring the dispute to a conclusion.
C. Mediation is more likely to provide a commercial resolution.
D. Mediation will save your client costs.
E. Mediation is a less adversarial process than court proceedings so it will enable the parties to maintain their commercial relationship in future.
E. Mediation is a less adversarial process than court proceedings so it will enable the parties to maintain their commercial relationship in future.
Mediation is less adversarial than court proceedings and so is a good choice if the parties wish to maintain their commercial relationship after the dispute has been resolved. In terms of the other answers, mediation will save costs if successful (although probably not otherwise), but this does not appear to be a key concern for your client. It will shorten the dispute if successful, but not because the mediator can make a decision – they cannot, they simply facilitate settlement. One of the benefits of mediation is that it is more likely to be a commercial resolution rather than a legally correct one, but this is not a clear benefit to our client who believes it has a strong case that will be decided in its favour. Mediation is indeed confidential, but your client has not identified this as a significant concern – perhaps the product recall has already publicised this issue so that this is no longer a critical concern
Your client, a supermarket, is about to enter into a contract with a new supplier of almonds and other nuts based in the USA. The supplier has proposed including an arbitration clause in the contract to resolve any disputes that may arise in future. The arbitration will have its legal seat in England. Your client is more familiar with litigation in the English courts and has generally been happy for its previous contractual disputes to be adjudicated with legal expertise to provide correct legal solutions. It has asked for your advice on arbitration. Which one of the following potential benefits of arbitration is likely to be most attractive to your client in its dealings with this supplier?
A. Arbitration is likely to be cheaper for your client than litigation in the English courts.
B. Arbitration allows your client to have some input into the process
C. Arbitration allows for easier international enforcement than litigation in the English courts
D. Arbitration is likely to enable a legally correct solution to be achieved.
E. The arbitrator can be experienced in the area of food supply.
C. Arbitration allows for easier international enforcement than litigation in the English courts
It is often easier to enforce an arbitration agreement (the reason for this is that the vast majority of countries are signatories to the New York Convention which means arbitration awards can be enforced internationally, whereas court judgments are more difficult to enforce and usually depend on there being a specific agreement between the two countries). This is important to the client given the supplier is in another jurisdiction because any judgment/award needs to be enforceable. In relation to the other answers, arbitration is rarely cheaper than litigation if the parties follow a very long and complicated process and the client has not said it is concerned about costs. Whilst the arbitration process allows for some flexibility in the process (subject to the mandatory rules in the Arbitration Act 1996 which provides a framework where the seat of the arbitration is in England/Wales), this is not a benefit of arbitration that is likely to be ‘most attractive’ to the client on the facts. Whilst arbitrators can have more expertise if available in the particular field (and this is a major benefit of arbitration), in this case, it is not something the client has mentioned it is concerned about. In fact, the client has previously been happy with judicial adjudication in the courts. Finally, arbitration allows for a legally correct solution to be achieved if the parties agree this, but so do court proceedings. So again this is not a benefit of arbitration that is likely to be ‘most attractive’ to your client.
Which of the following necessarily results in a binding decision?
A. Expert appraisal
B. Negotiation
C. Mediation
D. Expert determination
D. Expert determination
In expert determination, an independent expert reaches a binding decision on the matter referred to them. Expert appraisal does not result in a binding decision – the expert provides a non-binding assessment which might influence future settlement discussions. Neither negotiation nor mediation will result in binding outcomes unless they are successful, and even then the outcomes should not be considered ‘decisions’, because they are outcomes mutually agreed by the parties, not decided by a third party.
Which of the following is not / very unlikely to be an advantage of ADR?
A. It sets a binding precedent.
B. It allows a greater range of outcomes than court proceedings.
C. It saves money for the parties
D. It is more private
A. It sets a binding precedent.
A resolution reached by ADR will rarely, if ever, amount to a binding precedent. The other answers are often advantages of ADR, although whether they are advantages in any particular case depends on the facts of that case.
When can parties agree to arbitrate?
A. When entering into a contract, before any dispute has arisen.
B. After a dispute has arisen.
C. After a dispute has arisen or when entering into a contract before any dispute has arisen.
C. After a dispute has arisen or when entering into a contract before any dispute has arisen.
Parties might include an arbitration clause when negotiating a contract, which provides for any dispute in relation to that contract to be referred to arbitration. However, even if the parties do not include such a clause, they can refer a dispute to arbitration once that dispute arises, if they both agree to this.
Which of the following best summarises the court’s powers in relation to ADR?
A. The court can provide information about ADR and encourage the parties to consider ADR.
B. The court can encourage the parties to consider ADR and compel a party to engage in ADR.
C. The court can provide information about ADR.
D. The court can provide information about ADR, encourage the parties to consider ADR and compel a party to engage in ADR.
A. The court can provide information about ADR and encourage the parties to consider ADR.
Which of the following IS NOT part of the guidance given by the court as to how the court will approach the question of costs where a successful party has refused to engage in ADR?
A. The burden of proof will be on the unsuccessful party to show the court why it should depart from the general rule on costs to deprive the successful party of some or all of its costs on the grounds that it refused to agree to ADR.
B. The starting point is that a party who has refused to engage in ADR should pay the costs from the refusal onwards, unless factors point to a different order.
C. A relevant consideration is the extent to which settlement methods other than the one ultimately refused have been attempted.
D. A refusal is more likely to be reasonable if ADR had little prospects of success.
B. The starting point is that a party who has refused to engage in ADR should pay the costs from the refusal onwards, unless factors point to a different order.
This statement is incorrect. The contrary is the case – it is for the unsuccessful party to show the court why it should depart from the general rule that the unsuccessful party should pay the successful party’s costs. The extent to which other settlement methods have been attempted, and the prospects of ADR succeeding, are also both relevant considerations.
Which of the following IS BEYOND the court’s powers in relation to ADR?
A. To order a party to serve a witness statement if it refuses an opponent’s ADR proposal.
B. To penalise a party in costs for refusing to engage in ADR.
C. To order a stay of proceedings in order that the parties can explore ADR.
D. To order a party to attend (but not necessarily to make an offer at) a mediation.
D. To order a party to attend (but not necessarily to make an offer at) a mediation.
True or false: a party’s failure to propose ADR at any stage of a claim is likely to be treated by the court in the same way as a refusal to engage in ADR proposed by the other party.
A. True
B. False
B. False
Failing to propose ADR is generally less likely to be considered conduct worthy of criticism than refusing to engage in ADR, although either can attract criticism and sanctions.
