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What is Alternative Dispute Resolution (ADR)?

View profile for Andrew Morley
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Few would chose to become embroiled in a Civil Court case. These are cases to resolve disputes in such diverse areas as boundaries, landlord and tenant, professional negligence, challenging wills, contractual and consumer disputes. But surely, if you have done nothing wrong then the Judge will see the truth, justice will be done and the losing party will pay your legal bill, right?  Not necessarily.

Cases do not always go to plan.  With all the preparation in the world, a civil trial can still throw up a very nasty last minute surprise, you can be tricked into saying something while giving your evidence that brings tumbling down the whole case built up for you by your legal team and the dreaded technicality has seen many a case that could not be lost end up in ruins. 

The rule book on civil cases is the Civil Procedure Rules (CPR) which covers every aspect of a case from before the issue of Court proceedings to the very end of the case.  For the purposes of this Blog we are concerned with the beginning and the end.  In the beginning CPR charges the Judge with fulfilling the overriding objective of “enabling the Court to deal with cases justly”.  This includes “encouraging the parties to use an alternative dispute resolution procedure if the Court considers that appropriate …..”.  At the end, when the Judge has made his decision, the losing party does indeed usually have to pay the winning party’s costs but the Judge has a discretion to make a quite different decision based on the conduct of the party which includes how ADR was approached. 

Costs are the key to most cases because you might win, only to find the benefit is wiped out by a legal bill. 

Why ADR?

Compared to a High or County Court case, ADR is almost always going to be quicker, cheaper, more flexible and less stressful.  A commercial dispute does not have to spell the end of the business relationship and ways can sometimes be found to trade out of a dispute. Sometimes confidentiality is as important to a party as the actual dispute if they are particularly driven to protect their reputation. You should never lose sight of the power of saying sorry when something has gone wrong, for that is often all a party is looking for. These are remedies which are not available to the Court.

A tick-box exercise?

Many have spent time pretending to go along with ADR with no intention of actually resolving a dispute. Two cases illustrate why you really need to consider ADR and participate properly.

            Dunnett –v- Railtrack

Susan Dunnett owned a field next to a railway line and she kept her horses in the field.  Railtrack replaced an automatic gate with a gate which did not shut automatically.  The gate somehow came to be left open, three of Susan Dunnett’s horses strayed on to the line and were killed.  Susan Dunnett sued Railtrack.  Throughout the Court case the Judge repeatedly urged the parties to mediate.  Ms Dunnett was in favour but Railtrack resisted as they were confident they would win at trial.  Railtrack did win at trial but the Judge would not award them their costs and the reason was their unreasonable refusal to mediate. 

            The case of The Seventh Earl of Malmesbury –v- Strutt and Parker

The Claimant sued a firm of well-known property consultants alleging negligence in the negotiation of three Leases.  The Judge found that the surveyors had been negligent in two out of the three cases and the remaining issue for the Court was the amount of compensation.  Mediation took place but failed.  The case went back to Court when the Judge ordered that the Defendant pay the Claimant £900,000.  However, when it emerged that the Claimant at mediation had been looking for £100 million, the Judge decided not to order the Defendant surveyors to pay his costs. 

So do I have to try ADR?

There can be cases where a refusal to engage in ADR will be justified and these include:-

  • The nature of the dispute;
  • The merits of the case;
  • The extent to which other settlement methods may have been attempted;
  • Where the ADR costs would be disproportionately high;
  • Where ADR would cause a delay;
  • Where there is no reasonable prospect of success at ADR.

Types of ADR

  • Arbitration – an independent Arbitrator is often appointed through a trade association or the Chartered Institute of Arbitrators.  Businesses often include provision for this in their terms and conditions of business.  The Arbitrator does not take sides.  He hears the arguments and makes a decision which is then binding on the parties.  The process is confidential.
  • Mediation – an independent Mediator again does not take sides.  Mediators do not impose a solution on the parties but rather assist them to find a solution which both sides can live with.  The process is non-binding unless an agreement is reached when usually this is signed off, and otherwise the entire process is confidential.  This is a growth area and there are many mediators accredited to undertake this type of work.
  • Negotiation – if the parties to a dispute are at least communicating then simply meeting or talking over the telephone or even exchanging letters in the search for a solution can be the best way forward.  These communications can take place on what is called a without prejudice basis, meaning that concessions can be made in an effort to facilitate a solution but if ultimately that fails, those concessions cannot be used against them if the case later goes to Court.  As with mediation, any compromise is only binding if and when the parties agree this to be the case. 
  • Complaints procedure – most businesses and organisations have their own complaints procedure.  The details are often published on their website or can be obtained on request.  After receiving the final decision, if the Claimant is still not happy with the outcome then sometimes they have an option to take the matter to an Ombudsman (see below).
  • Ombudsman – a number of organisations subscribe to these free and independent referees who can help get a complaint resolved as quickly as possible.  They will only become involved after the organisation’s own complaints procedure has been exhausted and a deadlock letter has been issued where the matter cannot be resolved.  The Claimant is not obliged to accept the decision of an ombudsman if it goes against them but the subject of the complaint, will be bound by any adverse decisions.

At Chattertons we will always discuss ADR with you early on and all members of our team have significant experience in this field.

Andrew Morley provides dispute resolution services from our Lincoln office.