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ALTERNATIVE DISPUTE RESOLUTION

In their recently reported decision in Dunnett -v- Railtrack the Court of Appeal issued a stern warning to both litigants and their legal advisers that serious consideration must be given to alternative dispute resolution (ADR), and that failure to do so could have adverse costs consequences.

The case involved an appeal by the claimant, a litigant in person, from a decision of the Cardiff County Court. The County Court had dismissed her claim against the defendant for damages for negligence, arising out of the death of three of her horses which had been struck by an express train on a railway line near Bridgend. When granting the claimant permission to appeal to the Court of Appeal, the Lord Justice concerned had suggested that the parties should explore the possibility of ADR. Although the claimant was prepared to consider ADR, the defendant flatly rejected the court's suggestion. Instead, the defendant proceeded to make a settlement offer to the claimant. She did not consider it to be either reasonable or fair. In such circumstances, her appeal proceeded to a hearing.

In the event, the claimant's appeal was dismissed and her claim failed. Nevertheless, despite the fact that an offer of settlement had been made (which the defendant said would not have been increased even had ADR taken place), the Court of Appeal refused to award the succesful defendant its costs of the appeal.

In delivering the judgment of the court, Brooke LJ said that it was "hoped that any publicity given to this part of the judgment of the court will draw the attention of lawyers to their duties to further the overriding objective in the way that is set out in [the Civil Procedure Rules] and to the possibility that, if they turn down out of hand the chance of alternative dispute resolution when suggested by the court, as happened on this occasion, they may have to face uncomfortable costs consequences".

The Civil Procedure Rules, introduced in 1998, both govern the handling of civil cases in the courts and seek to reinforce 'procedural values' not always put into effect in the past. In particular, they provide that the courts should ensure that cases are handled expeditiously, fairly and without unnecessary expense. The courts are obliged to further this overriding objective by actively managing cases - which involves, amongst other things, encouraging the parties to use ADR where appropriate. As Brooke LJ pointed out: "skilled mediators are now able to achieve results satisfactory to both parties in many cases which are quite beyond the power of lawyers and courts to achieve".

In such circumstances, ADR is increasingly encouraged by the courts as an alternative to the traditional litigation process, the latter having often been charaterized as adversarial, costly, unpredictable, rigid, over-professionalised, damaging to relationships and limited to narrow rights-based remedies rather than creative problem-solving.

Mediation is the most common form of ADR. Essentially it involves the principle of an objective third party assisting parties to solve their disputes. It is private in nature and non-binding (unless agreement is reached by the parties).

However, there are various other ADR processes which can be employed.

1. Judicial Appraisal involves presenting a case in written form to a judge (often retired) who then gives an appraisal as to the likely result were the case to go to court. The judge receives submissions from both sides. The parties must agree the form and extent of submissions and whether or not the appraisal is to be binding.
2. High-low arbitration is a form of arbitration in which the parties have each agreed their own parameters for settlement prior to the arbitration. Should the arbitrator make an award within the range established by one of the parties, that award will become final. If the arbitrator awards an amount lower or higher than the range established by either of the parties, the award will not be binding (save to the extent that costs may be awarded to the party whose settlement parameters were closest to the arbitrator's figure).
3. Adjudication is similar to judicial appraisal in that written submissions are made to a neutral third party who is usually a specialist in the area of dispute.
4. Expert determination is used to decide on a specific matter of contract or law, or on disputed facts or financial valuations. Usually the expert, who is selected by the parties, investigates and reports on the issue/s and does not necessarily rely on submissions made by the parties.
5. An executive tribunal (sometimes called the "mini-trial") involves a mediator joined by a senior executive from each party. They sit as a panel to hear the submissions from each party's advisers in joint meeting. The executives normally have had no previous direct involvement in the dispute but bring a senior management perspective to the issues. After the submissions the senior executives retire, usually with the mediator, and attempt to negotiate a settlement.
6. Early Neutral Evaluation is generally used to assess the likely outcome of a legal action, a neutral advisory opinion being obtained which may assist the parties in their negotiations. The evaluation is binding if so agreed by the parties.

Many contracts now provide for compulsory ADR before any dispute can become the subject of litigation. Moreover, even when they are engaged in court proceedings, the danger to parties who dismiss the concept of ADR out of hand has been made clear by the decision of the Court of Appeal referred to above.

If you have any queries regarding ADR - and mediation in particular - please contact Christopher Dunn, who is a CEDR accredited mediator.

November 2002

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Emergency Contact Numbers

Christopher J. Dunn:
+44 (0)7595 117 380
David A. Perry:
+44 (0)7595 117 381
Mark A. Lloyd:
+44 (0)7595 117 382
Andrew D. Purssell:
+44 (0)7595 117 383