ADR Reading Guide PDF

To prepare for this unit you should: 1. Read Chapters 2, 13 (excluding. 13.17), 14 (paras 14.49, 14.61, 14.73-74), 15 (paras 15.04-05 including fig. 15.1), 16, 22 (paras 22.01-07, 22.10-13 and 22.15), 23 (paras 23.01-07), 24 and 25 of *The Jackson ADR Handbook*. 2. Civil Procedure Ru...

To prepare for this unit you should: 1. Read Chapters 2, 13 (excluding. 13.17), 14 (paras 14.49, 14.61, 14.73-74), 15 (paras 15.04-05 including fig. 15.1), 16, 22 (paras 22.01-07, 22.10-13 and 22.15), 23 (paras 23.01-07), 24 and 25 of *The Jackson ADR Handbook*. 2. Civil Procedure Rules 62.2-62.4 and 62.8 in Section 2E of Volume 2 of The White Book 3. The commentary on section 9 of the Arbitration Act 1996 at para 2E-107 (first three sub-paragraphs ending "...secondary nature of the claim against the guarantor"), 2E-111 (first two sub-paras to "... only conditionally on their stay application failing"), 2E-112 (first sub-para Ato "The standard of proof if the balance of probabilities") of Vol 2 of The White Book 4. Read the *[Gero Trains] *brief [THE RANGE OF ADR OPTIONS] **[ADJUDICATIVE OPTIONS ]** In adjudicative ADR an independent third party reaches an impartial decision on a dispute, but the process provides more flexibility and more privacy than litigation. An adjudicative process may be subject to court oversight if the contractually agreed process is not followed, or where the decision reached by the third party is tainted. ADR is most appropriate where the taking of an independent decision is important, but it is not necessarily quick or inexpensive if the process selected is similar to a trial. [ARBITRATION ] 2.04 An arbitration may be conducted by one or more arbitrators who will reach a decision and make an award on the basis of what is submitted by the parties. 2.05 While arbitration is commonly used for commercial cases, it can also be appropriate in many other areas where a decision by an independent third party without the full formality of litigation may be appropriate, and it is for example increasingly used in family cases.1 Arbitration may also be used where the parties want a binding decision to be reached using a particular approach, for example applying sharia law. 2.06 The main attractions of arbitration are that: the parties can select an arbitrator with appropriate expertise and experience; the process is private, unlike a trial in open court; many aspects of the process can be tailored to the needs of a specific dispute; each party selects what material is submitted; the process can be relatively structured, if that is attractive to the parties; the process can be relatively simple and cost effective if the dispute is decided on the basis of written submissions rather than a hearing, or if an expedited process is used. 2.07 The potential drawbacks of arbitration are that: arbitration is not necessarily a cost-saving option if a process similar to trial is used; the parties will be bound by a third party decision, so control over the final outcome is surrendered; an arbitration process cannot deal easily with a party who fails to cooperate, as an arbitrator will not have the wide powers of a judge as regards matters such as disclosure the arbitrator needs to be selected with care as regards expertise, experience etc, to ensure the parties will have confidence in the award made. [ADJUDICATION] 2.08 Adjudication involves a neutral third party acting under an agreed process and reaching a decision on a dispute, or on specified issues. Adjudication is most likely to be appropriate in a specialist commercial field where the parties prefer a system adapted to the needs of their industry or business. 2.09 An adjudication process should be agreed between the parties in a binding form. Parties often agree in a commercial contract to be bound by a relevant adjudication process should there be a dispute. The process to be used may be laid down in advance in terms agreed by the industry, and/or by the body or person who provides the adjudication. The key elements of an adjudication process tend to be broadly similar to those for an arbitration, though they are often simpler, and there is not a detailed legal framework as there is for arbitration. By agreement, the adjudication may lead to a binding decision, or to a decision that will only be binding if the parties agree to it, or if neither party appeals within a set period. 2.10 The potential benefits of adjudication are that the process can be carefully adjusted to meet specific commercial or other needs. The process tends to be more flexible and cost effective than arbitration. The possible drawbacks are that adjudication is not necessarily low cost, and there may be difficulties if the adjudicator is not chosen with care. If the adjudication agreement does not provide that the adjudicator's decision will be final and binding on both parties, litigation or arbitration may still be necessary. [EXPERT DETERMINATION] 2.11 Many cases turn wholly or largely on issues requiring expert knowledge. Reliance on expert witnesses in litigation can be expensive and time consuming, and is controlled by the court, so there can be significant advantages in time and cost in agreeing to use an appropriate expert to make a binding decision on some or all issues in dispute. One option is to appoint an expert to decide the outcome, if the only or main issues in the case require expert knowledge and a full adjudication procedure is not needed. An alternative is that an adjudication takes place, but with an expert assisting the adjudicator. A further option is that the parties each get a separate expert report and present them to an arbitrator or adjudicator for a decision. A potential drawback is the possible cost of the process (although this should be less than litigation). **[NON-ADJUDICATIVE OPTIONS ]** 2.13 In a non-adjudicative ADR process, the parties to a dispute retain control of both process and outcome. The agreed process may be relatively simple and involve only the parties/lawyers, as in a negotiation, or it may be facilitated by a third party, as in mediation. The basis upon which any third party is involved is a matter of contract between the parties and the third party. Any settlement is a matter of a separate contractual agreement between the parties. The process is normally confidential, save for any need to enforce an agreed outcome. Non-adjudicative ADR is most appropriate where the parties wish to retain control over outcome as well as process. [OFFER AND ACCEPTANCE] 2.14 Offer and acceptance is the simplest form of non-adjudicative ADR. If an offer is accepted then an agreement is reached with the greatest possible saving of time and money. An offer can be made and accepted orally, but it is normally done in writing to ensure certainty as to the terms agreed. Normal contractual principles apply as regards whether an agreement is reached, and if so on what terms. 2.15 The form in which an offer is made is important. An offer made in an attempt to settle a dispute will be protected by without prejudice privilege, and therefore must be kept confidential and cannot be referred to in court, see 5.17--5.26. If the party may wish to be able to refer to the offer in relation to the court's discretion as to costs, it should expressly be made as an open offer, or 'without prejudice save as to costs'. [NEGOTIATION] 2.16 Negotiation remains the most common form of dispute resolution. There is no set procedure, and the process may involve a very simple exchange between parties and/or lawyers, or a more complex structured settlement meeting including the parties, see 12.16--12.17. 2.17 The main potential advantages of negotiation are that: it is very flexible and can be conducted by parties and/or by lawyers; it is relatively cost effective, as only a limited amount of special preparation may be required; clients retain complete control of the outcome through giving instructions, and approval of any agreement reached. 2.18 The main potential drawbacks of negotiation are that: success depends to a significant extent on how well the case has been researched and analysed; success can depend on the skill of the negotiator, and the strategy and tactics employed; negotiation can lead to a relatively weak outcome for a client if the strengths of a case are not properly exploited; the relative informality of negotiation can lead to confusion as to process; a negotiation may fail if party expectations are unrealistic, or the parties are too entrenched. [MEDIATION ] 2.19 Mediation involves the use of a neutral third party who seeks to facilitate what is essentially a negotiation process to resolve a dispute. Various types of mediation service are available, and may be provided by the courts, by a commercial or not-for-profit organization, or by an individual. Normally parties will want to select a mediator with appropriate training and experience. 2.20 A mediation service provider may offer a standard form of agreement and a standard process, and details are usually set out in a written agreement to mediate. There are many types of mediation---where lawyers and clients are present a mediation may take up to a day, though a complex commercial mediation may last longer. In contrast, a small claim mediation is normally conducted by telephone within one hour. 2.22 The main potential benefits of mediation are: a neutral third party can help a party to see the strengths and weaknesses of a case more clearly; a mediator can help parties step outside an adversarial framework and entrenched positions, so mediation may work where negotiation has failed; a mediator can make possible offers and concessions look more acceptable; a robust and experienced mediator can help to find a way forward even in a relatively intractable dispute; the structure of a mediation allows a lawyer and client time to review offers and options in a way that may not be possible in a negotiation; the flexibility of mediation can be used to advantage, for example letting a party make a statement about something of particular personal importance; mediation generally achieves good success rates and party satisfaction. 2.23 The main potential drawbacks of mediation are: success depends partly on the abilities of the mediator; mediation can increase costs if a case might have been resolved by negotiation, or if the mediation fails; mediation may need to be approached with skill by a mediator and by lawyers if a party tries to misuse the process, eg to get an unjustified offer in a weak case; mediation may not work if the parties are deeply antagonistic, or if adversarial positions are maintained in the face of reasonable settlement options; mediation can be more difficult where one or both parties are not represented, and/or not fully advised in advance. [EARLY NEUTRAL/EXPERT EVALUATION ] 2.24 An early evaluation is a written assessment of some or all of the issues in a dispute by an independent third party. This may be appropriate where the case wholly or largely turns on limited issues, particularly if those issues require expertise, and the parties will respect the views of an agreed appropriate independent individual. The evaluation may relate to the whole dispute, to a specific point like the construction of a contractual term, or to conflicting expert evidence. The written evaluation should help each party to evaluate their own case and reach a resolution. The courts have power to order that an early neutral evaluation be carried out in appropriate circumstances,3 even if one party is not willing.4 In limited circumstances a judge can conduct an early neutral evaluation, for example the Commercial Court and the Technology and Construction Court both provide forms of ENE by a senior judge or lawyer. 2.25 The potential advantages are that an independent report may facilitate the early and cost-effective settlement of a case, or at least some of the issues, especially where the third party has the confidence of the parties, and the parties are forced to see their chances of success in a more realistic light. An agreed evaluation can be less time-consuming and expensive than mediation. The costs of using contested expert evidence at trial may be avoided. Greatest benefit will be achieved if the evaluation is carried out as early as is reasonably possible, once the parties have sufficient information to identify the issues to be addressed, and to brief the evaluator. Possible drawbacks are that work will be required to agree what materials and issues are put to the evaluator, and success may depend on the quality of the report produced. [MINI TRIAL ] The format is a matter of agreement between the parties as best suits the needs of a case. It might for example involve senior representatives from the parties meeting together with an independent adviser. Each side makes summary submissions, and the senior officers seek to reach an agreement. [CONCILIATION] The conciliator might facilitate a negotiation between parties. Alternatively, a conciliator might propose a decision if the parties cannot reach one, though this may be non-binding. In some instances if conciliation does not produce a final result another process may follow. A number of bodies offer conciliation services, probably the best known being the Advisory, Conciliation and Arbitration Service (ACAS). [COMPLAINT OR GREIVANCE PROCEDURES ] 2.28 There are numerous processes for dealing with complaints or grievances, with most large organizations having internal processes which often provide for a person or body to look at a dispute or concern. The process may provide for some form of investigation, facilitation or decision-making. Some industries have developed special procedures to meet specific needs. Alternatively, there are public grievance procedures such as an ombudsman-type process. **[MOTIVATIONS FOR THE USE OF ADR ]** 2.30 The potential benefits of ADR are important to a party, to a lawyer advising a client, and to a judge reviewing case and cost management options. They may also be relevant in persuading another party to agree to use ADR. **Lower costs** 2.31 The use of ADR will usually keep down the costs of resolving a dispute, particularly if the case is settled at a relatively early stage and if non-adjudicative ADR is used. The potential advantage will decrease if ADR is not attempted until significant costs have accumulated, if the ADR process fails, and/or if a potentially expensive form of ADR is selected. **Speed of settlement** 2.32 Non-adjudicative ADR or expert determination can potentially take place very quickly, and soon after a dispute arises. There is less potential time advantage in using arbitration, depending on the process agreed. Quick settlement can of itself limit the indirect costs of dealing with a dispute, and the distraction and stress of dealing with a dispute, which may offer significant commercial or personal benefits. **Choice of forum** 2.33 In most forms of ADR the parties have a wide choice in selecting an arbitrator, mediator, or independent evaluator. This may be of particular benefit where the parties feel that the dispute calls for a particular type of expertise, or can call on a person for whom they have shared respect. **Control of process** 2.34 As an ADR process is subject to contractual agreement, while many ADR providers use standard processes, the parties can agree process options to suit their needs. If an adjudicative ADR process is used, control of process will often pass to the individual reaching a decision once the parties have agreed process. **Flexibility of process** 2.35 Litigation involves standard stages, which may be an advantage, especially if for example securing necessary evidence from another party is proving difficult. However, the set stages of litigation can be inflexible. In adjudicative ADR a more flexible process can be agreed, and in non-adjudicative ADR the process is normally very open to tailoring for the needs of a particular dispute. ADR may also be useful to address key concerns that are not directly related to strict legal rights. **Confidentiality** 2.36 Court hearings are usually in public, so justice can be seen to be done. A party may prefer a more private process. Confidentiality can to some extent be protected in litigation, but is more fully protected through ADR, which is a private process, protected by the 'without prejudice' principle, and confidentiality clauses in ADR agreements. This may be important in protecting commercial interests or avoiding personal embarrassment. **A wider range of issues/outcomes may be considered** 2.37 The litigation process focuses on issues as defined by statements of case. A judge can only order a remedy that is within the powers of the court in relation to those issues. In an ADR process the parties can deal with any issues between them, and especially in a non-adjudicative process they can agree any terms they wish, even terms going outside the areas in dispute. **Shared future interests may be protected** 2.38 Litigation is often focused on taking decisions about past events, such as who was responsible for an accident. In some cases a future relationship may be just as important as the past. An ADR process may be more effective in preserving a relationship, and reaching a settlement that best reflects future interests. **Use of a problem-solving approach** 2.39 Litigation is an adversarial process. This can have great strengths, but it can have drawbacks in deepening a rift between the parties and causing them to reach entrenched positions. An ADR process can be more constructive, and an experienced mediator will be able to use a range of techniques to help to move parties away from intransigence. **Risk management** 2.40 In principle, a case with a chance of success of 51 per cent might proceed to litigation on the basis that it could be won on the balance of probabilities, and if it were won reasonable and proportionate costs would be reimbursed. However, there is clearly significant risk that case would be lost. In litigation, risk may be managed by incurring additional expense in the hope of strengthening the case, but risk may be more directly and cost effectively controlled through constructive and proactive use of ADR. **[CRITERIA FOR THE SELECTION OF AN ADR OPTION ]** **How important is it to minimize costs?** 2.42 In a relatively low value case, the need to keep costs proportionate may be key. Court-based mediation may be free. If not a written offer may be cost effective. Negotiation will often be cheaper than mediation. In a higher value case, negotiation, mediation, early neutral evaluation, or expert determination can be very cost effective, if best adapted to the needs of the individual dispute. **How important is fast resolution?** 2.43 If quick resolution is important, a non-adjudicative option such as negotiation or mediation may be most effective. In an appropriate case, adjudication or expert determination can also be completed relatively quickly. Early neutral evaluation may at least help to narrow issues to speed overall resolution. **How much control does the party want?** 2.44 A party can potentially have substantial control over any ADR process because ADR is based on agreement. This is particularly the case in non-adjudicative ADR as settlement can only be reached by agreement. In an adjudicative option such as arbitration the party will not have control over the outcome, but will have some control over forum and process. **What are the main objectives of the party?** 2.45 Different objectives may be best achieved in different ways. If the main objective is to decide on an appropriate sum of compensation, any ADR process may be appropriate. However non-pecuniary objectives may be best achieved in non-adjudicative ADR such as mediation because of the degree of discussion between the parties. **Is a future relationship important?** 2.46 Where there is likely to be an ongoing relationship between the parties, for example in a commercial or family dispute relationship, a non-adjudicative option is most likely to produce a successful outcome, as terms can be fully discussed and any terms thought desirable agreed. Litigation may significantly undermine a relationship. **Is the view of an expert important to key issues?** 2.47 Where expert opinion is important to one or more of the main issues, early neutral evaluation or expert determination should be considered. If appropriate, the early neutral evaluation could be followed by negotiation or mediation. Using expert evidence in litigation is almost inevitably more expensive and time consuming, and is ultimately subject to the control of the court. **Would neutral assistance be valuable?** 2.48 Parties in an adversarial process may become entrenched, or focused on 'winning', so that they may find it difficult to compromise, even if ongoing litigation is clearly not in their interests. In such a case an adjudicative process may be the only option, but mediation with an experienced mediator may also prove effective in helping a party to see the strengths and weaknesses of a case more objectively. **[WHEN ADR MAY NOT BE APPROPRIATE ]** 2.49 Almost any dispute can potentially be resolved through the use of ADR, save for cases involving public law rights. There are no categories of case in which ADR is always inappropriate, though there are circumstances in which it may not be suitable. A party may be able to show it was not unreasonable to refuse mediation if it would have wasted time and money and was unlikely to succeed, but in many cases the court is more likely to see ADR as potentially useful and cost effective. Possible problems may be addressed by careful selection of a type of ADR, and control of that process. The following factors may mean that ADR is not appropriate for a specific dispute. **The need for a precedent** 2.50 Only a court judgment can provide a legal precedent, which may be an important concern if for example the case relates to the interpretation of a clause in a standard form contract. More generally, concern has been expressed as to whether the growth of private ADR processes might undermine the development of legal precedent, and that the development of the common law depends on courts taking decisions which are reported. Unreported and confidential dispute resolution could cause the law to ossify, or to develop in a way that lawyers could not easily track. **The importance of a court order** 2.51 There are some circumstances in which an outcome can only be achieved through a court order. For example, for a declaration of legal rights or a technical order such as an amendment of the register of members of a company, court proceedings will be required. **The relevance of interim orders** 2.52 The powers of a court to make interim orders, such as an interim injunction, may be important in a particular case, and proceedings may need to be issued to secure a relevant order. However ADR may be used once appropriate interim orders have been made, or a court may in limited circumstances be able to make a relevant order prior to the issue of proceedings, or very soon after proceedings have been issued, to support ADR. **Evidential rules are important** 2.53 Rules providing for disclosure and the exchange of witness statements will be of particular importance in some cases, especially where one party is not forthcoming in producing relevant information. The level of pre-action disclosure should provide sufficient information for parties to evaluate a case. A judge may be prepared to order pre-action disclosure or specific disclosure to support the use of ADR. Specific disclosure may take place voluntarily as a basis for agreeing to the use of an ADR process. The need for evidence may be more relevant to the timing of ADR rather than to whether it is appropriate at all. **The strength of a case** 2.54 A client with a strong case may fear that agreeing to an ADR process may show weakness or necessitate the making of some concessions. There is authority that a party with a strong case may not act unreasonably in refusing ADR, though in that case the effect of costs on the claimants was described as disastrous. However, a belief by a party that a case is strong must be objectively justifiable, and a belief by a party that his case is strong is only one factor and will not necessarily of itself justify a refusal to use ADR, as the strength of a case can be put forcefully in an ADR process. *If a party feels a case is very strong then the most appropriate course may be to apply for summary judgment.* **The complexity of the case** 2.55 It might be thought that a case involving complex law needs a judge's decision, but complexity can lead to disproportionate costs, and the interests of a client may be better served in reaching a practical outcome through ADR. Complex facts may be appropriately considered in court, especially if cross-examination may be important. However, there can be significant risks in taking a complex factual dispute to court, which may be controlled through ADR. **2.56 Complexity may arise from the number of parties in a case.** The civil litigation rules provide structured ways for a number of parties to be engaged in a dispute, but litigation is not inevitable. An ADR process can be structured to involve a number of parties, with, for example, a mediation being structured to deal with a claim in stages, and/or to deal with potential parties in groups. **High levels of animosity** 2.57 High levels of animosity might suggest that a process based on agreement could not work, but animosity will not necessarily mean that litigation is an inevitable or best option. The introduction of robust impartiality in the form of a skilled mediator or a robust neutral evaluation by an expert may assist in reaching resolution. **Power imbalance** 2.58 A non-adjudicative ADR process may not be appropriate where one party has substantially more resources than the other, or where one party may have improper control over the other, for example through domestic violence. This does not necessarily mean that litigation is the only option if a sufficiently strong third party can be involved in an ADR process to manage the imbalance. **Quasi-criminal allegations** 2.59 Cases involving allegations such as fraud or libel may not be suitable for non-adjudicative ADR. If cross-examination is key to the case, and/or judicial determination of a serious allegation is required then litigation may be necessary. **Enforcement may be an issue** 2.61 Non-adjudicative ADR processes often result in a settlement in contractual form, and enforcement will rarely be an issue where the terms are clear and agreed. An adjudicative process might lead to enforcement difficulties if a party is not content with the decision given, though there is provision for the enforcement of arbitral awards. If enforcement might be an issue, ADR may be best used after issue of proceedings so the outcome can be recorded in a consent order that may be enforced more easily. **[CHAPTER 13]** **[CHAPTER 14 ]** **[CHAPTER 15 ]** **[CHAPTER 16]** **[CHAPTER 22]** **[CHAPTER 23]** **[CHAPTER 24]** **[CHAPPTER 25 ]** 13 (excluding. 13.17), 14 (paras 14.49, 14.61, 14.73-74), 15 (paras 15.04-05 including fig. 15.1), 16, 22 (paras 22.01-07, 22.10-13 and 22.15), 23 (paras 23.01-07), 24 and 25 Civil Procedure Rules 62.2-62.4 and 62.8 in Section 2E of Volume 2 of The White Book **[Arbitration Act 1996]** 62.2 -- INTERPRETATION 1. Arbitration claim means a. Any application to court under 1996 Act b. A claim to determine -- i. Whether there is a valid arbitration agreement ii. Whether an arbitration tribunal is properly constituted; or what matters have been submitted to an arbitration in accordance with an arbitration agreement c. A claim to declare award by arbitration tribunal is not binding on a party... d. Etc 2. This section of this Part does not apply to an A Claim to which Sections II and III of this Part apply 62.3 -- STARTING THE CLAIM 1. Except where paragraph (2) applies an arbitration claim must be started by the issue of an arbitration claim form in accordance with the Part 8 procedure. 2. Application under s9 1996 Act to stay proceedings must be made by application notice to court dealing with those proceedings 62.4 -- ARBITRATION CLAIM FORM 1. Must include a. A concise statement of -- i. The remedy claimed, and ii. Any question on which the C seeks the decision of the court b. Any details of any arbitration award challenged by C, identifying which part(s) are challenged and specifying the grounds for the challenge c. Show that any statutory requirements have been met d. Specify under which section of the 1996 Act the claim is made e. Identify against which (if any) D's a costs order is sought, and f. Specify either iii. The persons on whom the arbitration claim form is to be served, stating their role and whether they are defendants iv. That the claim is made without notice under s44(3) od 1996 Act and the grounds relied on 2. Unless court orders otherwise, arbitration claim form must be served on D within 1 month from the date of issue 3. Where C applies for order under section 12 of 1996 Act (extension of time for beginning arbitral proceedings or other dispute resolution procedures), he may include in his arbitration claim from an alternative application for a declaration that such an order is not needed. 62.8 -- STAY OF LEGAL PROCEEDINGS 1. An application notice seeking stay of legal proceedings under s9 of 1996 Act must be served on all parties to those proceedings who have given an address for service 2. A copy of an application under (1) must be served on any other party to the legal proceedings (whether or not in the jurisdiction) who has not given an address for service, at -- a. His last known address, or b. A place where it is likely to come to his attention 3. Where a question rises as to whether -- c. An arbitration agreement has been concluded, or d. The dispute which is the subject-matter of proceedings falls within the terms of such an agreement, The court may decide that question to give directions to enable to it be decided and may order proceedings to be stayed pending its decision.