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Think dispute, think ADR

24 March 2010

ADR is alternative dispute resolution – a range of options for resolving disputes without going to court. Methods of ADR include mediation, adjudication, arbitration, conciliation and ombudsman schemes.

In recent years, there has been a growing trend towards resolving disputes by methods other than via the courts. Even so, disputing parties often fail to consider ADR—or consider it far too late, by which time costs have spiralled, leaving no realistic way of out-of-court resolution.

The courts are keen to encourage the use of ADR and any business already involved in a dispute or likely to be, needs to be aware of the consequences of ignoring this.

There are many different directions and protocols governing pre-action conduct, the most recent of which came into force last April (2009). These make it clear that the parties must consider ADR and failure to do so may result in an adverse costs order.

Parties are reminded that they need to consider the possibility of reaching a settlement ‘at all times’, both after proceedings have commenced and up to any trial or final hearing. Following the case of Birchall v Bullard courts can penalise a party who ignores an offer to mediate at the pre-action stage.

The preamble to allocation questionnaire forms (normally provided to parties after statements of case have been filed and served) states: “the parties should make every effort to settle their case before the hearing. This could be by discussion or negotiation (such as a round the table meeting or settlement conference) or by a more formal process such as mediation. The court will want to know what steps have been taken. Settling the case early can save costs, including court hearing fees.”

That said, there are some circumstances in which it is reasonable to refuse to mediate or refuse a certain type of ADR. For example, there may be no real prospect of success; your opponent may have seriously misjudged the facts; or may be behaving extremely irrationally; or the costs of pursuing mediation would be disproportionate.

Something else to be aware of is that a disputing party can discharge his obligations under the rules provided he considers at least some form of ADR. For example, if he refuses one particular type of mediation and the court believes a different option would be a viable way of resolving matters, he should not be penalised in refusing to mediate.

The shift towards the increasing use of mediation and ADR generally is likely to continue. In his final report on civil litigation costs, Lord Justice Jackson has called for a serious campaign to raise awareness of the benefits of ADR.

Our dispute resolution team is experienced in all forms of ADR and lead partner Nick Cox is an ADR Group-accredited mediator. The ADR Groupis acknowledged nationally and internationally as a leading authority in mediation and other dispute resolution techniques. paul.gordon@willans.co.uk

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Nick Cox LLB (Hons)
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