Since the Court fee increase on 9th March 2015 for cases over £10,000, businesses need to become more aware of the alternatives to litigation in order to resolve their disputes. Higher fees do not mean you should abandon your claim.
Alternative Dispute Resolution (ADR) provides for a variety of processes that can be non-binding or binding on the parties and is actively encouraged by the Courts – indeed some consideration of ADR is mandatory. The use of ADR also has several benefits that companies should be aware of when considering whether to write the cheque to issue proceedings. To help businesses consider their options, here are the key points to note of the main ADR processes:
Key features – this is the most flexible and informal process as parties can directly attempt to reach an agreement in private. Usually, a third party is not involved unless the parties agree that someone is needed to moderate the discussions as the absence of a third party can assist with costs. This method is usually confidential and can help the parties to continue the relationship and preserve their reputations.
Points to remember – if you are trying to settle, ensure that the negotiation is held on a without prejudice basis. That way, anything disclosed cannot be used against you should you not settle. Ensure that if you reach an agreement, you record the terms in a binding agreement.
Downsides – if you don’t reach an agreement then another method is needed to resolve the dispute as there is no binding decision on the parties. Furthermore, if a settlement is reached, breached proceedings may be required.
Key features – this process involves a neutral third party assisting the parties in identifying areas of disputes, resolution and attempts to assist the parties to reach an agreement. The parties remain in control and the process is non-binding and voluntary.
Points to remember – choosing a registered mediator will greatly assist in the process as they will guide you through the process and if an agreement is reached, will assist the parties in recording the agreement. The mediator is there to facilitate, meaning that the parties have more flexibility to resolve their dispute than they would in a more formal setting. Mediation does not have to be used once proceedings have been issued; it can occur at any stage.
Downsides – mediations can take time and if court proceedings are under way, be prepared to block out a day of time. Mediations can often reach settlements late at night when the parties are tired.
Key features – this is a binding dispute process that can be used when there is a specialist or technical dispute between the parties rather than a legal technicality. For example, it could be used to resolve disputes regarding service charges or rent reviews.
Points to remember – whilst usually cheaper than litigation, the fees of the expert will need to be met and the parties will need to agree with the expert, the procedure and scope of the appointment. As the decision is binding, there is little right to appeal the outcome. But be warned, as the expert can be sued for negligence, they may try to exclude liability in the agreement with the parties.
Downsides – this is not suitable for matters that have extensive factual or evidential points as the experts are not legally trained, rather experts in their field. Even though the result is binding, there is no direct method of enforcement and a new action will need to be brought.
Key features – this is an alternative to litigation which both parties must agree to and usually has been contractually provided for. An arbitrator will take on a judicial function and form a binding decision on the parties. Arbitration is governed by statute and its own rules, and the courts will stay any proceedings brought if there was an arbitration clause in an agreement.
Points to remember - the same limitation periods as litigation applies here and applications to Court to appeal are limited.
Downsides – this may be as expensive as court proceedings and there will be a lot of work involved in the lead up to the arbitration in order to prepare and present the case.
Adjudication is usually used in construction cases – my colleague, Neil Mason, has given his thoughts on adjudication in a recent article.
BPE’s approach to Mediation
BPE Solicitors takes a holistic approach to disputes and welcomes the methods of ADR available as there can be significant benefits for our clients.
In addition to promoting the use of ADR to our clients, BPE also has fully qualified mediators who can assist third party businesses and individuals to resolve disputes. BPE’s mediators cover the range of civil, commercial, construction, intellectual property and family matters, and are able to assist you in that capacity.
These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.