| Introduction | What is ADR? | >ADR does not have an agreed definition. >There are also debates whether the term ‘alternative dispute resolution’ should be used at all. >Options are only really ‘alternative’ if the use of the litigation is seen as the norm, but statistics show that most cases settle rather than going to court for decision, so that settlement rather than litigation is actually the norm. >Many cases use a mixture of court procedure and ADR rather than relying solely on one ‘alternative’. >For the reasons above it has been argued that it may be more accurate to talk of ‘appropriate dispute resolution’. | ||
| ADR is taken to cover alternatives to going to court where: | >there is a dispute between two or more parties >that disputes relates to civil legal rights and/or duties >the dispute could potentially go to court for resolution >the dispute is resolved through some other process >the process is essentially confidential >the process involves individuals other than the parties in dispute(eg lawyers; neutral third party) | |||
| Alternative to litigation include the following factors: | >a process that is formal(eg. arbitration), or informal(eg. negotiation); >the involvement of lawyers and clients only (eg. Negotiation) or third party (eg. Mediation); >the involvement of specialist or experts; >a process provided or facilitated by a commercial or not for profit organisation; >process that operate within this jurisdiction, or are available in this jurisdiction but can operate internationally; >a process that is based on meetings, or documents, or that is wholly or partly remote. | |||
| Terminology | >The general approach to refer to those involved in dispute as the ‘parties to the dispute’. >If a dispute is settled before the issue of proceedings there will never be a claimant/defendant. | |||
| Need for ADR | Factors that might cause a potential litigant to look for ADR: >The very strength of a court system can include potential weakness. Rules of civil procedure may need to be quite complex to be fair, but this complexity may of itself extend the time needed to resolve the dispute and the cost of the action. >Rules for disclosure and inspection may assist justice, but they may be burdensome where a wide range of documents are potentially relevant, or where a client is concern about issues such confidentiality. >Though it is central objective of the court system to provide justice for individual litigants, the court system has also other objectives, such as development of law through the precedent. It may be necessary to go to the court of appeal/supreme court to resolve a point of law, and this may be something an individual litigant would prefer to avoid. >The court system in UK is adversarial. This may not always be appropriate (where the parties are likely to have an ongoing relationship). >In court a judge can only make such decisions or orders as he has power to make, though there are some flexibility ( eg. Consent order). A party might prefer a process that could look at decisions and outcomes beyond the technical power of the judge. *None of these points means that an ADR is necessarily better than a court process. The point is rather that all of these factors may be relevant in considering options for resolving a dispute. | |||
| Growth of ADR (historical context) | >First English statute relating to arbitration was the Arbitration Act 1697. >First tribunal to adjudicate disputes was set up under the National Insurance Act 1911. >Under the Parliamentary Commissioner Act 1967 the term Ombudsman is used for dealing with disputes relating to administration. The term ‘ombudsman’ is derived from old Swedish. He is an independent official who could review the actions of the executive government to address the concerns of individual citizens. >In 1975 the Advisory, Conciliation and Arbitration Service(ACAS) was set up. Although funded by the government, this body is independent and focuses on supporting employment relationship. >In 1990 the Centre for Effective Dispute Resolution (CEDR) was set up. This body is based in London but has national and international presence in promoting ADR, and in particular mediation, especially in commercial cases. >In 1995 the National Health Service started a pilot scheme to use mediation for medical negligence claims. | |||
| Growth of ADR within litigation system | >The use of offers to settle was encouraged in Calderbank v Calderbank (1976) which made it clear that a written offer to settle could be brought to the attention of the judge when cost were considered. Recently this has been formalised as part 36 offers, with cost consequences. >In 1994 the Commercial Court issued the Practice Note: Commercial Court Alternative Dispute Resolution (1994), which requires lawyers to ‘consider with their clients and other parties concerned the possibility of attempting to resolve the particular dispute or particular issues by mediation, conciliation or otherwise’, and to ‘ensure that parties are fully informed as the most cost-effective means of resolving the particular dispute’. >In 1996 a pilot scheme in Central London County Court offered time-limited voluntary mediation in any defended case where the claim was over £3000. | |||
| Recent development *the use of ADR has grown substantially over the last 20 years | >Encouragement of the use of ADR was built into the Woolf reform, and expressly and by implication in the CPR 1998. The overriding objective expressly includes saving expense and dealing with case in a proportionate way. Judges are also expected to encourage the parties to co-operate(eg. encourage to use of ADR where appropriate; help the parties to settle the whole or part of a case). >ADR is expressly encouraged prior to litigation. The reasonableness of pre-action conduct can be relevant to a cost order, including whether proceeding were issued prematurely. >ADR is also expressly encouraged during litigation. It is provided that ‘a party may when filing the competed allocation questionnaire make a written request for the proceedings to be stayed while the parties try to settle the case by ADR or other means. If all the parties request a stay or the courts of its own initiative consider such a stay appropriate the court will direct that the proceedings be stayed for a period of one month, which can be extended. >From 2007 the use of ADR has been standardised in county courts, and from 2008 there is full time mediation officer in each area. | |||
| Development of ADR in judicial attitude | >In Dunnett v Railtrack (2002), the courts showed that they were prepared to impose a cost penalty on a party who failed to take part in an ADR process. >In Halsey v Milton Keynes NHS Trust (2004) the court concluded that the party could not be compelled to use ADR, but that a cost penalty could be imposed on a party who unreasonably refused to consider ADR. >In Burchell v Bullard (2005) the C has suggested mediation at an early stage but the D refused (claim for £18,000; counterclaim for £14,000; cost of the case were £160,000). Although the judge was not prepared to impose a penalty, as the case was some years old, he made it very clear that ADR should have been attempted. | |||
| ADR and the review of civil litigation costs | >The question of cost is one of the main reasons for choosing ADR. It may be in terms of lower potential costs, more predictable costs, and potentially more control over costs. | |||
| The international context | >There is separate system for international arbitration based on international arbitration institutional rules. >Mediation is an informal process based on agreement, and it is therefore not necessarily jurisdiction specific, though its use is regulated in different ways in some jurisdictions. >Options developed in different parts of the world in relation to different types of cases can provide useful models for effective dispute management and resolution process. | |||
| Some issues with regard to ADR | >A key issue is whether a party can ever be forced to use ADR. There might be a breach of article 6 of ECHR. However, the European Court has accepted that a party can waive article 6 rights in, for example, agreeing to a binding adjudicative process, so long as there is not undue pressure and the right to trial is retained (Deweer v Belgium). >There are issues with regard to the traditional concepts of privilege and confidentiality. In litigation, client confidentiality is protected by LPP. There are significant queries how this applied in relation to ADR, and problem can arise where information is disclosed in an ADR process, and with regard to issues such as whether mediator can be called as witness. | |||
| Advantages of ADR | >lower cost >speed of settlement >control of process >choice of forum >a wide range of issues can be considered >flexibility of process >confidentiality | |||
| Disadvantages of ADR | >increased expense >additional delay >possible reduction in outcome compared to a court judgement (A client who feels that he has a strong case may prefer to go to court to achieve the full potential of the case, including a cost order. ADR may involve some concession or compromise. A non-adjudicative ADR process can never force a client to accept anything less than the client thinks is fair, and some reduction may be justified where time and cost have been saved). >lack of clear and public finding >loss of potential advantages of evidential rules >confusion of process | |||
| Weighing up advantages and disadvantages | >There can be quite strong reasons for using, or not using ADR. >A decision about ADR is rarely a decision to be taken once only in a case; the factors in a case may change over time, so a decision about ADR may need to be reviewed >A case may move between litigation and ADR options (starting under PAP, then attempting mediation, if fails move to issue of proceedings, a part 36 offer may then lead to negotiation, then perhaps go to court for consent order. This seems a blended dispute resolution) | |||
| Overview of regulatory frameworks | >The Arbitration Act 1996 for arbitration >International Chamber of Commerce Arbitration Rules 1998, and the UNCITRAL Model Law on International Arbitration for International Arbitration. >There is as yet no statutory or regulatory framework for mediation in England and Wales, though there are references to ADR and to mediation in the CPR. >There is no regulatory framework for lawyers taking part in a negotiation or mediation, save the need to abide by the rules of professional conduct and ethics. >There may be a costs order due to an improper, unreasonable or negligent act or omission on the part of the lawyer, provided there is a casual link between the poor conduct and the cost wasted. | |||
| Examples of claims for professional negligence that have succeeded | >the failure of a lawyer to investigate the facts of a case properly so that the client recovered less than they should. >the failure by lawyers to pass on important information to their clients. >the failure by a lawyer, who had negotiated a business lease, to notify the client of an unusual clause with regard to rent that was used to raise the rent dramatically. | |||
| Examples where the claim for negligence has not succeeded | >The mere fact that the advice given by a lawyer is not ultimately successful cannot found an action, or no lawyer would risk giving advice where the law was not clear. >A lawyer only has to work within the scope of their jurisdiction. He has no obligation to investigate matters outside their instructions. >A lawyer is not necessarily in breach of duties of competence and care by pursuing a very weak case. | |||
| Review of ADR option | Key elements of ADR options | There is no overall system for managing or providing ADR. For example, mediation services may be provided by courts, commercial providers, not-for-profit providers, solicitors’ firm or barristers’ chambers. The main purposes of ADR options are as follows: The focus is settlement rather than conflict.Some level of objectivity is introduced to try to assist the achievement of a settlement through facilitating communication.Those involved have some level of control over the process and the decision taken.There is a level of flexibility in the process. The main factors that differentiate ADR options are: Whether the process involves an independent third party (as most ADR options do), or only the parties and their rep (negotiation). Whether the binding decision at the end of the process is made by a 3rd party (adjudicative), or by the parties themselves by agreement (non-adjudicative)The extent to which the 3rd party controls or facilitate the process. In adjudication the adjudicator normally has a high level of control, whereas the role of a mediator is largely facilitative. | ||
| Factors influencinselection of ADR option | When to give advice on ADR options | The main opportunities for giving general advice on ADR options are: When giving initial adviceWhen holding a conference or meetingWhen writing an opinionWhen reviewing a case prior to issuing proceedingsWhen reviewing a case prior to court hearing | ||
| Factors influencing ADR selection | CostThe nature of the disputeThe objectives of the partiesRelationship between the parties | |||
| Recap | >No type of dispute is inherently unsuitable for ADR, though an individual case may be. >ADR processes are private, but confidentiality depends on contractual provisions, LPP, and privilege for without prejudice communications. | |||
| Cost for ADR procedure | General cost considerations | The main factors to consider in assessing the likely cost in a case, and who may be liable to pay those costs at the end of the day, are as follows: What are the main elements of cost in the case?How is the litigation being funded?How much is at stake in the case? Proportionality is part of the overriding objective under CPR, which means an ADR process may be attractive as potentially cost effective.The extent to which costs have already been incurred.The chances of successThe possibility that liability for cost may shift: The main way this might happen is that the loser is normally ordered to reimburse the winner for cost reasonably incurred. The second possibility is that a part 36 offer may lead to cost being shifted from the last date on which an offer could have been accepted where the offeror does not go on to beat the terms of the offer. | ||
| Cost of ADR processes | Most ADR processes can be carried out at various levels with a range of cost. Just as litigation cost can vary substantially between a small case in the county court and a large case in the high court, so mediation may cost very little if the parties attend a free service without lawyers, but it can be very expensive if a big case is mediated over several days with lawyers retained by both sides. ADR provider’s fee: >The Law Works organisation offers up to three hours of mediation free to a party who is on benefits or has very low income. >A paper-based or IT based arbitration might be based on an hourly fee for the arbitrator and cost only a few hundred pounds. >The fee for a mediation might typically be in the region of £300 for a case worth less than £10,000 that can be settled within a day. Many mediations are concluded in less than a day. For a case that might take 2-3 days and be worth over £100,000 the fee would typically be at least £1,000. The National Mediation Helpline: >For a small track claim the service is offered at no charge once the claim form has been submitted to the court. Each court area has a full-time mediation officer based in a county court who can offer advice and information, and who can provide mediation in a meeting or by telephone. >For a fast track or multi track case the fee is subsidised. At the time of writing mediation for a fast track claim the cost would be £300 + VAT per party for three hours. For a multi track case the cost would be £425 + VAT per party for four hours. Negotiation: >The main cost of a negotiation will be the fees charged by the lawyers. >Each party to a negotiation will bear their own costs, unless there is any agreement or order as the payment of cost. Mediation: >The way in which the cost of a mediation will be met will normally be covered by the written mediation agreement. A mediation agreement is a contract, enforceable as such, and court will not have power to vary it. Normally each side will bear their own costs, and the fees for the mediation will be shared equally whatever the outcome of the mediation. Alternatively, it can be agreed that the fees will count as costs in the case if the dispute is not settled and goes to trial. If one party has much greater resources than the other party, or is keen to use mediation, that party might agree to pay the whole fee. Arbitration: >The payment of the arbitration fee will normally be covered by the arbitration agreement. The cost incurred by each party before the arbitration and at the arbitration will be borne by the party incurring the cost, although often the arbitrator is given discretion to make orders about the tribunal fees and parties’ cost. Legal service commission funding: The Court of Appeal has said that publicly funded claims should be mediated, if appropriate, in order to save cost. The funding recognises that mediation costs can be publicly funded in family work and family mediation procedures are funded directly by the Legal Services Commission. | |||
| Recap | >Cost are a major motivation for undertaking ADR, but the cost position can be quite complex. The separate elements of cost must all be considered. >Although a process like arbitration can be expensive, most ADR processes are relatively inexpensive, and information on cost is quite easily available from ADR providers. >The basis on which a party is funded is relevant, and the implications of CFA. LSC and third party funding must all be taken into account where appropriate in an ADR process. | |||
| The approach of the courts to ADR | Key issues | >Parties are required to consider ADR before proceedings are issued by the protocols and PD Pre-action Conduct. >The courts will actively encourage the parties to attempt to resolve their dispute by an ADR process after proceedings have been issued. >The parties may request or the court may order a stay for ADR to be attempted at the track allocation stage or at any other time. >If ADR is not undertaken after issue, then it should be considered at the track allocation stage (when all the statements of case have been filed), and again after exchange of documents, and also when witness statements and expert evidence have been exchanged. >The court will actively consider whether attempts have been made to settle the dispute by ADR at any case management conference, and may direct the parties to attempt ADR. >If the parties reject ADR, before issue or at any stage of the litigation, they should have reasonable and cogent reasons for doing so and may required to explain these reasons to the court. >The courts will uphold and enforce ADR clauses in contracts. | ||
| Sanction for refusing to engage in ADR | Key issues | The court can penalise a party who unreasonably refuses to: comply with an order made by the court directing the parties to attempt to resolve the dispute by ADR;accept an offer made by the other side to attempt to settle the dispute using an ADR process before the issue of proceedings; oraccept an invitation by the other side to use an ADR process during the course of litigation, or even after judgement, or even after judgement and prior to the hearing of an appeal. >So if a party unreasonably refuses to consider ADR, before issue, after issue, or after judgement and pending appeal, they can be penalised. >The most common sanction that is imposed for unreasonably failing to consider or use an ADR to resolve the dispute is to make an adverse order for cost. >In considering whether a party has unreasonably refused to consider ADR, the court will look at all the circumstances in the case, including the factors identified in Halsey: -the nature of the dispute -the merits of the case -the extent to which other settlement methods have been attempted -whether the cost of ADR would be disproportionately high -whether ADR had a reasonable prospect of success. -whether an ADR order was made by the court. >Pulling out of an ADR process at the eleventh hour is likely to be judged unreasonable conduct and may result in an adverse costs order. >The court will look at whether a party complied with the requirement of PD Pre-action Conduct and the Pre-action protocols in making decisions about costs. >If a successful party unreasonably refuses ADR, they can be deprived of some or all of their costs or ordered to pay some or all of the losing party’s costs, including cost on an indemnity basis. >The court will not consider ‘without prejudice’ material in considering costs, unless privilege is waived by all the parties to the dispute, or the correspondence is explicitly written on the basis that it is ‘without prejudice save as to costs’. | ||
| Recovery of ADR costs in ADR | Introduction | The ADR cost will include the costs of lawyers preparing documents for and attending the ADR process, as well as any fees paid to a neutral party such as the mediator’s fees or an evaluator’s or determiner’s fees and other cost such as venue fees. ADR process with no power to award costs if the process is unsuccessful: NegotiationMediation Conciliation Evaluation Expert determination with no power to award costs. ADR process with power to award cost if the process is unsuccessful: AdjudicationArbitrationExpert determination with power to award costs >If the parties have agreed that they will each bear their own costs of the ADR process, then the court will not look behind this agreement and make a different costs order in the event that the ADR process is unsuccessful. >If the parties agree to bear their own cost of a pre-action mediation, regardless of the outcome, they cannot subsequently seek to recover these costs from the other party to the proceedings. >In the absence of any specific agreement between the parties as to who should bear the costs of the process it is likely that the court has jurisdiction to determine the cost of the process, particularly bearing in mind the court’s encouragement of ADR. >If the parties reach agreement on the main issues by an ADR process and agree that ADR costs should be determined by the court, the court is likely to make no order for costs (meaning each party will bear their own cost) unless it can determine, without trying the case, who have own at trial. | ||
| Recap | >The court does have the power to make an order that the costs of interim application in connection with ADR should be borne by one party if that party has acted unreasonably, otherwise the usual order will be ‘costs in the case’. | |||
| Negotiatio | Style, strategy and tactics | >In a negotiation there is no set structure (save for whatever is agreed by the parties), and no rules (save for those that come from the context of possible litigation and as matters of professional conduct). >A confrontational opponent may appear intimidating, but you need to be able to ensure that this does not undermine what you can achieve for your client. >Negotiation process offers substantial control to a lawyer, and the opportunities are best exploited with planning. Strategy and tactics may need to be adapted as a negotiation develops, but options should be planned in advance so they can be properly set up, and quickly develop. *A style is the manner of delivery/presentation, a negotiator’s attitude and demeanour. *A strategy is the overall plan/approach taken to achieve a good settlement. This is key to success. *A tactics is a specific action/type of behaviour used to try to achieve a particular end. | ||
| Styles | Two main styles can be identified: 1.Co-operative >friendly, courteous and conciliatory, seeking to gain trust >relatively open, provide information and seek to co-operate with an opponent in trying to reach an agreement >such style is very productive if opponent also be co-operative >a co-operative style can easily be exploited by a competitive opponent 2.competitive/confrontational >making demands, argumentative. >emphatic language and a strong tone of voice may be used to make the opponent feel uncomfortable/intimidated. >in an extreme form this style could be seen as bullying. >such style quite effective if an opponent is weak, dislike confrontation, or is poorly prepared. >however, this style can be risky. It can easily alienate an opponent who may well refuse to concessions so that no progress is made. >it is not uncommon for a lawyer to start a negotiation with a competitive style, but to do so with an underlying collaborative strategy that may emerge later in the negotiation once the case has been put in strong terms. | |||
| Strategy | Strategy and style may coincide so that one reinforces the other, or style may be used to mask strategy. A strategy may be selected for whole case, or part of a case. 1.co-operative >focussing on reaching an agreement that is adequately fair and acceptable to both sides. >concessions are expected on both sides and information is shared. >this strategy support a continuing relationship between the parties. >however, this strategy can be undermined by a competitive opponent. >can lead to unnecessary concessions. 2.competitive >seeks to win, getting the best possible outcome for the client. >the negotiator takes the strong stance on each issue, focussing on demands rather than concessions. >settlement is not seen as key goal in itself and the negotiator will walk away if terms unsatisfactory. >this strategy is basically adversarial and may therefore come most easily to a litigation lawyer. 3.collaborative >parties work together to reach an agreement that meets the needs of both. >parties explore their underlying interest, share information. >this strategy may be used to reach settlement in difficult political situations and may be particularly useful where the parties will have an ongoing relationship. Within the term collaborative different strands may be identified: a. Principled >This strategy tries to achieve an outcome that is objectively fair against some external authoritative norm(eg.based on the view of an agreed expert) b. Problem solving >This strategy focuses on both parties’ real needs and interests, and tries to get a practical solution without building costs. Elements of the concept of ‘principled’ >separate the people from the problem >focus on interests rather than positions >look for options that may benefit both sides (this sometimes is called win-win, or increasing the pie, contrasted to any view that one party will ‘win’ and the other ‘lose’) >use objective standards to justify offers and concessions (this can be done by use of an independent expert, an independent standard). >develop a best alternative to a negotiated agreement (BATNA) 4.Pragmatic >meet the needs of the particular negotiation. a. Planned pragmatism >Careful forethought about potentially effective strategy for each separate issue, but leaving options open for a final decisions during the negotiation. >This is most effective where you have limited information and need to get more facts in the negotiation before finally deciding how to proceed. b. Unplanned pragmatism >make it up as you go along >it carries a high risk of failure, especially in the hands of an inexperienced negotiator, or against an opponent who has a well prepared strategy. | |||
| Tactics | >Tactics should not be used by a lawyer in an unethical or unprofessional way, nor accept such behaviour from an opponent. >It need to be planned in advance because they may need to be set up as part of agreeing an agenda for negotiation, or as part of dealing with a specific issue. >It is not necessary to plan tactics for every part of a negotiation-focus on tactics for key issues, and the issues that might be most difficult to address. 1.Tactics relating to information >questioning >statements >revealing information >concealing information (no obligation to provide info; may refuse to answer a question) >reframing (redress how a difficult opponent is presenting their case) 2.Tactics relating to offer and demands > Pre-conditions and setting parameters(precondition-I cant make any offer unless your client agrees to apologise; parameters- I have instruction to settle no more than £2000 on this point) > Objective standard > Authority to settle (Negotiator should make clear any limit on their authority. If an opponent suggest that they do not have authority, you may wish to investigate what is being said; for example, are you saying your client has specifically told you she will not accept less than £2000?. Alternatively you can sidestep the problem, as in ‘your client will not have been able to give you instructions on the full offer I have made, and I would like you to put it to your client’) > Ultimatum (An ultimatum may be used to force to settlement; eg.unless you accept £5000 to settle this issue I will have to withdraw that offer, and I will make no other offer. This is most associated in competitive strategy. An ultimatum should be distinguished from a threat- an ultimatum should be justifiable) >Proposing additional outcomes. 3.Tactics relating to structure >imposing structure >ignoring structure >parking issues >moving on >reopening issues 4.Tactics relating to presentation >Abruptness >Evasion >Silence >Time to think >Prepare a draft >bluffing(bluff should not amount to actively misleading an opponent) >Aggression (there must not be overt aggression, but sarcasm, ridicule, expression of exasperation etc. if such approaches are used against you, do not react. Ignore it or respond in a rational way, or level the behaviour to defuse it) >Threats (pure and unjustifiable threat would normally be unethical and might well amount to unprofessional conduct. There are a variety of ways of responding to a threat; ignore it/state openly that you refuse to deal on the basis of threat/push it aside with words. In appropriate circumstances, you could challenge whether the threat would really be carried out. Making a counter threat is rarely helpful as it escalates hostility). 5.Tactics relating to law >Although legal analysis is vital in preparation, use of detail law has a limited role in the negotiation itself. There is no need for law to be explained in detail. >A point about the legal strength of a case may be made in shorthand way. >Mentioning a recent/obscure case as an authority can be effective tactic in getting a concession from an opponent. If this tactic is used against you, take care not to reveal that you have not heard of the case and are a bit shaken. Say something like, ‘interesting point, but have you got a copy of the case with you so I can deal with the detail?’ | |||
| Preparatiofor negotiatio | Identifying the objectives | >Make clear exactly what the client hopes to achieve. >Ask the client to identify priorities- do not make assumptions. Money claims: >need a full list of every potential loss >consider future loss as well as past loss >consider associated matters Other Legal rights: >if there is a possible claim for non-financial remedy such as declaration or an injunction relating to legal rights, consider whether this can be addressed without going to court Future relationship: >if there will be a future relationship, eg.residence and contact in relation to child,neighbours etc, establish what your client’s objectives for the future are. Personal objectives: >the client may wish to achieve something in addition to enforcing legal rights, eg.apology. Cost of the litigation: >check the cost of the case to date and costs of the negotiation itself. | ||
| Importance of the procedural stage the case has reached | The case is at a very early stage(shortly after the client has approached a lawyer): >may be good in terms of keeping cost to a minimum >however, it carries risk, unless the case has only one or two issues, because of lack of information. The case is at a pre-action stage(before a claim form is issued): >still good time to settle in terms of saving costs >the possibility of issuing proceedings can be used as a tactic in a negotiation. After the issue of the proceedings: >At this stage you may be negotiating at the court door or prior to an interim application(eg summary judgement, interim injunction). >There are several factors to consider: -be clear whether you have authority to negotiate the outcome of the whole case as well as the interim application. -if you have authority on both, remember that you will still need to go into court to address the judge as regards the interim application -be aware of the possible effect of the application on the case -as regards negotiating the outcome of the interim application, bear in mind the test that the court will apply. The case is being prepared for trial: >This is the last stage at which the parties will have control of the outcome rather than leaving it to the judge. >The imminence of trial may also focus the minds of the parties on trying to avoid the risk, stress and cost of a full trial. | |||
| Identifying the issues | Need to identify clearly what parts of the case and what issues you are instructed to negotiate: You may be instructed to negotiate the whole case, or the outcome of a specific application.You may be instructed to deal with certain issues, eg you might be instructed to negotiate a claim but not the counterclaim. | |||
| The relevance of the legal context | >Where your case has legal strength you should use this in argument in the negotiation. >Where your case has legal strength you should not make significant concession. >You can use point of law, such as recent law. >Ensure you indentify and are familiar with relevant legal principles as your opponent may take a more legalistic view of the case than you. >Ensure that your knowledge of the law is up to date so that you cannot be taken by surprise. | |||
| Identifying the BATNA | BATNA(the best alternative to a negotiated agreement): >Sometimes seen as ‘bottom line’, that is the least that should realistically be accepted. >A competitive negotiator might suggest a high BATNA as a tactic. >Do not forget that your BATNA is your bottom line- you should aim to get much more. >This is the point where you walk away because you are likely to do just as well going to court. >If the chance of success at trial is 75% at most then the client who might get £40,000 at trial should perhaps consider £30,000 as the BATNA due to risk. Another factor to consider is that if the client might have to incur another £5,000 in cost to go to court, not all of which would be recoverable even if the case was won, then the BATNA might go down to £28,500. | |||
| Identifying the WATNA | WATNA(worse alternative to a negotiated agreement) >This is relevant to assess whether a deal offered in negotiation should be accepted. >If there is only a 60% chance of success at trial a WATNA might need to be taken more seriously. | |||
| More features on Batna/Watna | Assume that you recently purchased a home and, after moving in, discover that the home is infested by termites. You believe that the Seller had some degree of knowledge and, therefore, made a potential material misrepresentation in the contract for purchase. You are the new homeowner (Plaintiff). Before you file a lawsuit you want to attempt to reach a resolution in mediation. During the mediated conference, you develop the following “BATNA/WATNA”: BATNA 70% probability of proving that the Seller was aware of the termites and that they are liable for the cost of remediation ($30,000). To take this case to court will cost an estimated $10,000. Thus, there is a 70% probability of netting $20,000 IF no mediated agreement is reached. WATNA 30% probability of proving no liability by Seller. Thus, no recovery. To take this case to court will cost an estimated $10,000. Thus, there is a 30% chance of spending $10,000 with no recovery. Let’s consider the “BATNA/WATNA” now in terms of a proposed settlement by the Seller. If they offer $15,000 to settle the matter by mediated agreement, would you accept? Here’s how your analysis might go: 100% probability of receiving $15,000 today 70% probability of netting $20,000 30% probability of losing $10,000 | |||
| Clarifying of your authority/instruction | >Although a lawyer normally has apparent authority to settle on behalf of a client, if you do not act within actual authority you may put yourself in the very difficult position of having made an agreement with the other side that your client is not prepared to honour. | |||
| Recap | >Negotiation offers a lot of opportunities to a lawyer who is properly prepared to get the most out of the process. | |||
| Negotiatioprocess | Stages | Agenda setting/openingSeeking informationDiscussion of the merits on the issuesConcessions and offersConclusion | ||
| When, How and Where | >The first decision to make is that negotiation is an appropriate process for settlement and that good point in the case has been reached to try negotiation. >The next question is what form of negotiation is to use. It may be conducted wholly or partly face to face, by telephone or in writing. Exchange of letters or email may be appropriate if there are limited issues and proposals can be put quite briefly without the need for much explanation or discussion. Negotiating by telephone might be appropriate where the barristers/solicitors on each side are instructed to investigate settlement and it is thought that the process will not take too long. >An appropriate location for the negotiation must be agreed, depending on who will attend. Solicitor will often negotiate in the office of one of the solicitors, and barrister may negotiate in the chambers of one of the barristers. A negotiation can be facilitated or frustrated by simple things like comfortable chairs and adequate table space for papers. | |||
| Who | >Relevant people need to be included, but additional people will increase cost, may slow the process down, and may make it more difficult to control. >Negotiation may be just between solicitors, just between barristers, or between teams of lawyers on both sides. >The number of lawyers should be justified by the complexity of the case, the amount at stake. >If there is more than one lawyer on each side the role of each should be decided in advance. >If the client wishes to be present, his role should be clearly agreed beforehand. >Others might usefully attend if there are complex issues, eg accountant, expert. | |||
| Communicatineffectively | 1. Effective presentation 2. Responding effectively 3. Questioning effectively 4. Listening effectively (what is not said can be very important, could be an area of weakness of the opponent. Ask about gaps. If careful but vague wording is being used it may well be because care is being taken not to mislead). >Effective communication is central to effective negotiation >Psychological factors and non verbal communication should not be ignored >Sitting back, smiling and making open and relaxed body movement can suggest confidence >Hunching over a desk or sitting uncomfortably can indicate a lack of confidence >Nodding normally indicates support >Crossed arms and looking away can show hostility >Failing to meet someone’s eyes might indicate that what is being said is misleading. | |||
| Structure and agenda setting | Benefits of a clear structure and agenda: >time is used efficiently >able to cover all the things need to >can implement chosen strategy and tactics >can deal with topics in a sensible order >can work coherently to achieve client’s objective | |||
| Opening | The way you open can set the tone for a whole negotiation: Open by agreeing an agendaOpen with a statement or proposalStart by asking some key questionsInvite your opponent to openStart with items that can be agreed easilyStart with items where your case is strong | |||
| Seeking information | >Basic factual information relating to the issue >Basic factual information relating to remedy claimed >Information about what evidence the other side has to support their allegations >Information about the other side’s objectives >Checking if the other side has information you have | |||
| Reaching a close:settlemen or breakdown | If a negotiation is successful an oral contract is reached. The terms should be clarified and recorded. Making an oral contract: When you think you have reached a provisional agreement on all issues you should do the following: >double check your own list of issues to ensure you have gone through every item; >ensure that you have included all the details such as interest, costs etc; >check each term is practical and realistic, if you have been drafting terms; >check the arithmetic; >remind your opponent that the agreement is provisional and subject to client approval. Recording the outcome: An oral agreement is potentially enforceable, and it will be enforceable immediately if it is not subject to some condition. Most negotiated agreements are subject to client approval, so will be binding once approved. It is therefore normal to note the terms in writing and to agree how they will be made enforceable. The options for recording a settlement are: -endorsement on briefs -exchange of letters -a contract or deed -an interim order -a consent order No agreement is reached: Even if the negotiation is not successful, there may still be some progress: -if there is provisional agreement on some issues, note which issues have been agreed and on what basis. -if there has been movement on some issues without agreement make a note of the movement. Even if the negotiation is not successful and there is no clear progress, most negotiations provide some useful information or insights: -review your plan for the case and any insights you may have gained with regard to objectives and concessions. -decide whether to formalise your updated views of the case into a part 36 offer. -consider whether some other form of dispute resolution might be tried at some point, eg if negotiation does not succeed, a mediation with the client’s present might make more progress. | |||
| Mediation | Definition | CEDR- Mediation is a flexible process conducted confidentially in which a neutral person actively assists parties in working towards a negotiated agreement of a dispute or difference. The National Mediation Helpline- Mediation is an effective way of resolving disputes without the need to go to court. It involves an independent third party, a mediator, who helps both sides come to an agreement. >Instead of conducting negotiation face to face with the other side, the parties do so through a neutral third party whom they select by mutual agreement. Mediation is therefore a form of neutrally assisted negotiation. >Mediation is a voluntary process. The court can offer strong encouragement to the parties to mediate their dispute, but it cannot compel to do so. >Mediation is the term that is more commonly used now in UK to describe ADR by 3rd party facilitation in civil and commercial disputes. | ||
| Key characteristics of mediation | >voluntary >private >structured process >confidential >without prejudice >informal >parties remain in control | |||
| Difference between negotiation and mediation | Characteristics | Mediation | Negotiation | |
| Voluntary | Yes- although the court may order the parties to attempt mediation it cannot compel them | Yes | ||
| Structured process | Yes | Not usually | ||
| Take place through neutral 3rd party | Yes | No | ||
| Active participation | Yes | Not usually | ||
| Expert evidence | Allowed- may be asked to attend | Not usually | ||
| Date, venue, issue, person involved | Yes- although will be subject to mediator availability | Yes – although will be conducted between lawyers | ||
| Advantages of mediation over negotiation | >The presence of the mediator can help the parties to present their own case more effectively. >Mediation can create balance between the different negotiating styles used by the parties. >It encourage a more accurate and honest assessment by each party of the strength and weaknesses of their own case. >It avoids the direct confrontation between the parties that occurs in face to face negotiation. >Mediation has a high success rate. | |||
| Judicial endorsement of mediation | In many cases, the courts have stressed the importance of mediation: See introduction chapter (Development of ADR in judicial attitude) | |||
| Disputes suitable/not suitable for mediation | Suitable: Almost all disputes are suitable such as: contract, consumer, neighbourhood, housing, tortuous, regulatory and public sector, family disputes. Not suitable: >cases where the parties wish the court to determine issues of law or construction of a contract of document >cases that require a judicial precedent; publicity; court order; urgent/final injunctive relief; court approval > cases involve matter of public policy; allegation of fraud or other disreputable conduct; intentional wrongdoing. >if a party has a strong case, it may be more appropriate to issue proceedings and apply for summary judgement. >if one party takes unreasonable bullish stance which suggest that it is unlikely to have any reasonable prospects of success. >cases in which mediation is proposed at a very late stage and close to trial which would have the effect of delaying the trial. >if more time is genuinely and reasonably needed to obtain further information. | |||
| Does mediation work? | >CEDR reports on its website that over 70% of cases referred for mediation do settle at mediation. >The Civil Mediation Council’s submission of 21 July 2009 recorded that its members reported around 6,473 mediations so far in 2009, which was an increase of 171% over the 2007 baseline. | |||
| Facilitative and evaluative mediation | Facilitative mediation- The mediator helps the parties to solve their problem by negotiation that he facilitates. In addition, he will focus primarily on the real interest of the parties that underpin the dispute rather than the legal merits of the disputes. >Although the mediator is there as a facilitator, his role is not a passive one. He will ask questions that test the strength and weaknesses of each side’s case. He will help the parties to negotiate more effectively and formulate offers in a way that will be attractive to other side. He will also give the parties guidance about the timing and staging of offers and concessions. However, he will not give his opinion on the strengths and merits of each party’s case or evaluate the likely outcome of a dispute. >A facilitative mediator is also likely to exert less control over the process than an evaluative mediator and will generally be less interventionist. >Facilitative mediation is the primary or true form of mediation. Whether any particular mediator favours a facilitative or an evaluative style is something that the parties should ask into account when selecting mediator. Evaluative mediation – It concentrates on the strengths and weaknesses of the case. The evaluative mediator will evaluate the dispute, exert more control over the process, challenge the party to re-evaluate their assessment of the case and give an opinion on the likely outcome. However, there is a perception that evaluative mediator can coerce the parties into settlement, and by expressing an opinion on the likely outcome they can compromise their neutrality. In addition, providing an evaluation may also expose the mediator to a potential claim in negligence. >The evaluation will be carried out in a legalistic way, with emphasis on the legal and factual issues and an evaluation of the evidence in relation to the issues. Consequently, lawyers or professionals have a natural tendency to be evaluative mediator. >Evaluative mediator will usually communicate his opinion to each party in a private meeting, although the evaluation can also take place in a joint meeting. He will set out his opinion in writing. However, his evaluation is not binding on the parties. >The mediator will not usually evaluate a claim or issue unless he is specifically invited to do so because doing so may lead to the appearance that he is not maintaining neutrality.. He must not allow his personal view. If evaluative mediation is sought from a mediator, this should be specified in advance. > Transformative mediation- Some commentators make this as a third style of mediation. It focuses on improving the relationship and communication between the parties. | |||
| Role of the mediator | The role of the mediator can be classified into three categories: Organising the mediation processActing as facilitator during the mediation processActing as intermediary in the process Pre-mediation role: >Contact the parties and explain the nature of the mediation process, how they should prepare for it, his function and the role that the parties will play in the mediation. >Discuss with each party who should attend the mediation. >Set the timetable for the events that need to happen during the mediation. At the mediation: >Help the parties to present their case effectively. >Create a balance between different negotiating style. >Encourage each party to make an honest assessment of their case. >Encourage the parties to think about the BATNA and WATNA. >Perform the role of reality checker. Post mediation role: Even if the mediation does not result in settlement, the parties may engage the mediator to broker settlement negotiation at a future date if both parties trust and respect him. | |||
| The disadvantages of mediation | It displays a lack of confidence in the case and gives an impression of eagerness to settle.It will delay trial or the litigation process.A party may fear revealing their case.A party may fear that information disclosed in the mediation will be used against them in subsequent litigation. | |||
| What can be done to make a reluctant party to engage in mediation? | >A letter can be written to the party pointing out the PAP, CPR require the parties to consider ADR to resolve the dispute and also pointing that if they unreasonably refuse, an order for cost will be sought against them at trial. >A party may seek help from an ADR provider. >A party may invite the court to stay proceedings to enable the parties to attempt to resolve the dispute by ADR. | |||
| Timing of mediation | If negotiations are unsuccessful and the dispute is suitable for mediation, the lawyer will have to consider the timing of the mediation. It can theoretically take place at any stage of a dispute, eg before issue, after issue, or at any time up to trial and even pending an appeal. In deciding on the most appropriate time to mediate, a lawyer acting for a Party should consider the following matter: >are the issues fully defined? >is the client’s own case in relation to the issues clear? >has all the key information been obtained? >have the main witness being interviewed and statements taken from them? >is the other parties case clearly developed? | |||
| Duration of mediation | A typical mediation will last a day. However, in a case involving few issues or straightforward issues, it may only take half a day. In time-limited court schemes, the mediation will usually last three hours. In more complex, multi-party, or high value cases, it is not uncommon for mediations to last anything between two and half days. | |||
| Selecting a venue | >A neutral venue is likely to be best. >Normally at least three rooms will be required, one for the joint meeting, and two separate rooms, one for each of the parties. Ideally a fourth room is desirable for the private use of the mediator. | |||
| The cost of mediation | 1.The parties own cost of preparing for the mediation. 2.The mediator’s fee >Hourly rates vary greatly between individual mediators, and will depend on the nature and value of the case being mediated, and experience of the mediator. >The hourly rate can range between £200 and £500 plus VAT, and perhaps even more in high value case. >Daily rates can vary from around £800 per party (for a multi track case upto £50,000 mediated by a mediator with little experience) to £3000 per party or more in high value cases with a highly experienced mediator. >Fees payable to mediator or an ADR provider are usually payable in advance of the mediation(usually around seven days in advance) and if they are not paid the mediation may be cancelled and the parties are likely to pay some or all of the cancellation charges. 3. Expenses of the mediation. | |||
| Funding of the mediation costs, fees and expenses | Public funding >The LSC are prepared to fund a party’s mediation costs, fees and expenses in appropriate cases. Counsel and solicitors acting in publicly funded cases should ensure that the LSC will fund the costs of mediation before embarking on this process. >Family mediation procedures are funded directly by the LSC. Funding under CFA Mediator’s can also be instructed on the grounds that their fee is dependent on the outcome of the mediation. If the case settles they will be paid a success fee, but if the mediation is not successful, then the mediator obtains no fees. Many mediators will refuse to accept instructions on this basis as there is a perception that such a fee arrangement compromise the neutrality of a mediator. | |||
| Selecting a mediator | The parties can approach a mediator directly. Alternatively, they can engage the services of one of the ADR providers, who will then recommend one or more accredited mediators on their panel, often leaving their final choice to the parties themselves. | |||
| Factors influencing the selection of a mediator | Personal recommendationPersonalityExpertise in the subject-matter of the disputePractical experience as a mediatorAccreditation Expertise gained as a lawyer | |||
| >Mediation can be attempted without the litigation being stayed. Even if a stay is granted, it tends to be for a short period, usually 28 days. The matter would be different if a trial date had been arranged, and mediation would result in the trial date being vacated. In that case, it will delay trial or the litigation process. >Mediation should only be conducted when the issues are clearly defined and the merits and quantum can be evaluated. >The earlier mediation can be undertaken the greater the saving in costs. | ||||
| Preparatiofor mediation | The mediation agreement | The key clauses, most of the mediation agreement, include: >Scope of the mediation >Practicality >The process is confidential and the parties will keep confidential all information arising out of mediation >Communication passing between the parties and / or the mediator during the mediation process will be protected from disclosure by the without prejudice rule >Mediator has not conflict of interest and will not reveal confidential information without the consent of the person who provided it unless he is required by law/court >The parties will not call the mediator as a witness in any legal proceedings >Any settlement reached at the mediation will not be binding on the parties until it is recorded in writing and signed by the parties >The agreement will set out the cost of the mediation. *The parties may wish to vary the standard form agreements so that they are more specifically tailored to the circumstances of the particular case. *The final mediation agreement should be signed by the parties and the mediator, and returned to the mediator. *The courts have recognised that mediation agreements are valid and that they contain enforceable terms. The courts have also granted an injunction to restrain breach of a confidentiality clause in such an agreement. Significance of these clauses: >Set out the fundamentals of the mediation >Set out details of mediation >Clauses are specially tailored to the circumstances of the particular case >Encourage the party to mediation | ||
| Attendees: | Factors influencing the selection of the participants: >who has direct knowledge of the key issues in the case? >who is most closely and personally affected by the dispute or the resolution of it? >if relevant, who has the relevant technical expertise? >does resolution of any particular issue require expert evidence and the attendance of an expert at the mediation? >who has authority to settle the dispute? Key attendee will include the following: >Representative of the parties >Person with authority to settle >Lawyers >Insurers >Interest groups Will always be: >party to dispute. >person with authority to settle the dispute. May be: >lawyers >witnesses >experts >friend *Expert and lay witnesses of fact may be called upon to certain types of mediation. *Expert may be able to meet in a without prejudice meeting during the mediation to see if they can narrow the issues and identify areas of agreement or dispute between the parties. | |||
| The position statements | The mediator will usually stipulate the time limit within which the position statements and supporting documents should be sent to him. This is usually be around 7 to 14 days in advance of the mediation. The aims in drafting position statement- It should be clearly laid out.It should be logically ordered.It must be precise.It must be concise.It needs to be persuasive. The content of the position statement- HeadingFormalitiesFactsIssuesOutline of the party’s case on the issuesThe parties interest and objectivesFurther information requiredNegotiations The position statement should always be accompanied by two separate documents: ChronologyPersonal details Joint position statement: The parties can also agree to prepare a joint statement that they can both use at the mediation, although such a statement is likely to be limited to the facts, the issues and an explanation of each party’s case in relation to the issues. | |||
| The key supporting documents | Each of the parties will have to select and prepare a bundle of key documents for the mediator. These documents will usually support or even prove the assertions and arguments made in the position statement. Agreed bundle: The parties should co-operate with one another in relation to the documents that are provided to the mediator and produce agreed bundle where possible. This will be particularly important if the mediator has imposed a maximum page number in relation to the supporting documents that should be provided to him. The agreed bundle should consist of: statement of case if proceedings have been issued;witness statements that have been disclosed;any expert report disclosed;part 36 offers or other offers;any relevant documents;any relevant correspondence. | |||
| Steps to be taken prior to mediation | >Disclosure of position statements and documents >The mediator may contact one or more of the parties, by telephone or in writing, to seek further information on the following- -about an issue in the case -about offers and negotiations -about method of funding for the case -the nature of any cost >The lawyers acting for each party should ensure that a full risk assessment is carried out in relation to the client’s case before the mediation. The preparation falls into two main areas: 1. Analysis- legal, factual, evidential and cost analysis 2. Preparation for negotiation strategies and tactics to be employed | |||
| Role of a lawyer in mediation | >Legal analysis >Factual and evidential analysis >Cost analysis >Analysis of other matters that may influence settlement >Draw conclusions from the analysis Role of a lawyer involve the exercise of the four main skills: preparation and case analysis;mediation advocacy skills;advisory skills;drafting skills. | |||
| Tactics and styles to be employed in the mediation | The final stage involved in preparation will be planning a negotiation strategy. Bearing in mind the WATNA/BATNA, the lawyer attending the mediation should give some thought to, such as, the concessions that could be made by the lay client, the value of those concessions would have for the other side, etc. | |||
| Recap | *A logically structured and persuasive position statement should be prepared to set out the client’s position on the issues. *Effective drafting of position statements, supported by key documents, may strongly influence how the other side and the mediator view the client’s case. *Any documents or position statements that are provided by one party to the mediator will not be disclosed to the other side by the mediator unless the party consents. *The parties should co-operate to produce an agreed bundle of key documents for use in the mediation. | |||
| Mediation process | Four main stages | The opening phaseThe exploration or information phaseThe negotiation or bargaining phaseThe settlement or closing phase | ||
| The opening phase | Introduction: Usually the mediator will arrive at the venue early so that he can greet the parties as they arrive and show them to their private rooms. If the parties have not signed the mediation agreement, then the mediator will ask them to do so before the commencement of the mediation. He will then call the parties together for the opening joint meeting. Purpose of the mediator’s opening statement: The purpose of opening statement is to set the tone for the day and can influence the party’s expectations and attitude towards the day and encourage them to commit to the process. Structure of the opening statement: >Introduce himself and give an outline of his qualification and experience and professional history. >Explain what mediation is about. >Confirm that he is neutral. >Explain that he is not there to decide the case, but merely to help the parties to reach settlement. >Explain the confidential nature of the mediation process. >Explain the voluntary, non binding nature of the process. >Check the parties have authority to authorise the settlement. >Explain the settlement procedure. | |||
| Sitting plan for joint meeting in a mediation | Mediator Party Party Person with authority to settle Person with authority to settle Lawyers Lawyers Witness Witnes Experts Experts | |||
| Nature of Open Joint Meeting | IntroductionOpening statement by mediatorOpening statement by each partyMediator’s closing remarks | |||
| Purpose and structure of the parties opening statement | >Let the parties to express their views about the matters in dispute >Enable the parties to persuade the other side of the strength of their case >Inform the mediator about the nature of each parties case >Point out weaknesses in the other side’s case >Enable the parties to set out the remedies or outcome >Give each party their day in court >Give the other side the opportunity to assess the personality involved in the opposing team >The quality of their argument | |||
| Witnesses and experts | Lay witnesses: If a party wishes to call any witnesses at the mediation, then this will usually happen after that party has made their opening statement. If a witness is called at the mediation, their evidence will not usually take the form of examination in chief and cross-examination; rather the mediator will ask the witness to give a brief summary of their evidence. The mediator rather than the party calling the witness will usually ask the witness additional questions arising out of his evidence. However, the mediator may allow each side to ask additional questions of the witness. Expert evidence: The lay witnesses may be followed by expert evidence. There are two options which may be employed: The lawyers for the parties can question the experts within a pre-determined time limit.The mediator can question the expert, but in doing so he should not cross-examine or challenge the expert because this may cast doubt on his neutrality. | |||
| Closing the opening joint meeting | When the opening statements have been made, and any relevant witnesses have been heard, the mediator will draw the opening session to a close. He will usually summarise the concerns of the parties and any areas of agreement between them, and the areas they need to resolve in the mediation. | |||
| Separate private meetings | Separate private meetings are also known as ‘caucuses’ or ‘closed meetings’. In this meeting the parties will meet privately, without the other side being present, to explore the issues and discuss settlement. This is key stage in mediation process. The mediator will attend the private meetings of each party. Any discussion that takes place within them in the presence of the mediator is confidential. Purpose of separate private meetings: >Give the parties privacy to discuss the issues in the case and their own negotiating strategy and proposals for settlement. >Enable the mediator to meet with the parties privately to discuss the dispute and strategies for settlement and test the reality of their assessment of the case. >Enable the parties to consider proposals from the other side and make a considered response to the proposals. >Enable the mediator to frame and communicate offers and counter- offers in a constructive way. In the closed private meetings two phases of the mediation usually take place: The exploration/information phaseThe negotiating/bargaining phase | |||
| (1)Exploration/information stage | The exploration/information phase is referred to as the problem-solving stage. In the closed private meetings, in the presence of the mediator, the parties can embark on a rigorous assessment of their case without the other side being present and without losing face if they revise their position several times on any issue or in relation to the overall settlement that they hope to achieve. Mediator performs the following important roles during closed meetings: He will carry out a reality check: >review and evaluate the strength and weaknesses of their case >gaps in the evidence, facts >help the parties to work out BATNA/WATNA >encourage the parties to express their private feeling and concern >make the parties consider the consequences of a settlement not being reached. 2. He will devise strategies to help parties work through deadlock: >embark on a rigorous reality check to get the parties to reassess their case >require the parties to consider their interest >persuade one party to disclose additional documents to the other side >adjourn the mediation to another day, if one party needs time to consider offers made. >encourage the parties to explore the likely outcome if the litigation proceeds to trial. | |||
| (2)Negotiating / bargaining stage | Role and purpose of this stage: >Parties will start to think about putting forward proposals for settlement. >Parties may ask the mediator for guidance how a proposal or offer should be presented to the other side, and about the value and content of the opening offer, and the strategy they should employ in order to move towards settlement. >Before he leaves a private meeting with a party, the mediator will sum up the discussion that has taken place and any offers or concessions or information that he is authorised to communicate to the other side. >The mediator then shuttle between the parties, putting forward offers, concessions, information and responses to offers for their consideration and generally acting as the intermediary between the parties. | |||
| Settlement or closing phase | >If settlement is reached, the mediator will confirm the terms agreed and ask the lawyers of the parties to draw the settlement agreement. The mediation agreement will provide that no settlement is binding on the parties unless it is recorded by the parties and signed by them. If the parties are represented by lawyers, they will have the task of drawing up the settlement agreement. If the parties are acting in person, the mediator may draw up a heads of agreement or a memo or agreed terms and ask parties to sign. >If no settlement is reached, the mediator will record this, and may also set out the reasons why the mediation did not result in settlement. However, if an offer made in the mediation is accepted outside the mediation meeting it is likely to be regarded as a settlement reached in the mediation. So, it then must be recorded in writing to be binding on the parties. Setting aside settlement agreement: A party may be able to issue proceedings to set aside a settlement agreement reached in mediation on the grounds of fraud, misrepresentation and on the basis that on side has renounced or breached the agreement or that the agreement failed to comply with the formalities essential for a contract ie it was not signed by the correct party to the dispute. | |||
| The closing joint meeting | The mediator will convene closing meeting if: a settlement has been reached;settlement is not likely to be achieved;one of the parties wishes to terminate the mediation;the mediation needs to be adjourned. | |||
| Termination and adjournment of the mediation | The parties may request an adjournment at any time, to consider proposals, to obtain advice or for any other reason they see fit. The mediation can also be terminated at any time by any of the parties or by the mediator. | |||
| Mediator’s role after mediation | If mediation does not result in settlement, the mediator will have no further involvement with the case unless, at some future date, the parties refer back to him for further mediation or negotiations. | |||
| The main variations in the process | >The procedure can be varied to suit the subject-matter of the dispute and the needs of the parties. In family proceedings, it is rare for the mediator to convene separate meetings with the parties to avoid any impression that he is not completely neutral. >In cases that raise public policy or environmental issues the mediation may take place in public before interested parties rather than in private. If the relationship between the parties has broken down completely the mediation can take place in private closed meetings only. Telephone mediations: In some situations, mediation may need to be conducted by telephone rather than face-to-face meetings. This may happen in: the Small Claims Court Mediation Scheme;if the parties have been restrained by a court order from meeting each other;if the parties have a long geographical distance. Internet mediations: Mediation can also take place on the internet. This can be useful if the parties reside in different countries. | |||
| Without Prejudice Rule | >The without prejudice rule and exceptions to it apply to communications passing between the parties made in the context of mediation, so these cannot be relied on or referred to in subsequent court proceedings if the mediation is unsuccessful. >This rule is often specifically stated in the mediation agreement between the parties, and is further strengthened by a confidentiality clause. Communications that are protected by without prejudice rule in mediation: >Any oral or written communications made specifically for the purpose of settlement (eg position statement, correspondence about offer, concession). >Any communications passing between the parties and the mediator before/during/after the mediation with a view to exploring settlement. More clearly, communications that take place between the parties before the mediation agreement is signed, or before the mediation commences, as well as communications that take place during the course of the mediation. >Communications created for the purpose of trying to persuade the parties to mediate. >Without prejudice rule will also operate to protect investigations carried out as part of the mediation process ie interview. Communications not protected by the WP rule in mediation: >Open offers >Offers that can be communicated to the court on the question of costs, after issues of liability and remedies have been determined. >Communications that are not aimed at settlement of a dispute (eg. statement of case; contractual documents; documents relating to loss; accident report forms; maintenance records). *If the without prejudice rule is abused (a party making threat about the action they will take if an offer is not accepted during a mediation),then the court will not allow a party to shield behind the rule and will order disclosure. *The mediation agreement itself is not protected by the without prejudice rule and it can be produced to prove its terms. *If all the parties waive privilege, the communications can be placed before the court. | |||
| Can a mediator rely on Without Prejudice rule? | The without prejudice rule exist for the benefit of the parties and it can be waived by them. It is not a privilege of the mediator. So, if the parties waive it the mediator cannot rely on it to prevent non-disclosure of communications arising out of the mediation process or to justify a refusal to give evidence about such communications, even if the mediation agreement contains an express provision as to the without prejudice nature of the mediation process. | |||
| Can a mediator be sued? | Legal proceedings: >A claim could be brought against a mediator for breach of contract, or in negligence if he acted in a way that was not consistent with his duty of care and skill (eg. giving incorrect legal advice; negligently evaluate the parties’ case; brought undue pressure or misrepresentation in order to persuade the party to settle the case). >If a settlement was reached as a result of undue pressure exerted on that party by a mediator, then this may provide grounds to overturn the settlement agreement. >Some mediation agreement will contain an exclusion clause that purports to exclude the mediator from liability for negligence or breach of contract. This may be unenforceable in law or unfair under the UCTA 1977. Disciplinary proceedings: It is possible that disciplinary proceedings could be brought against a mediator who acts improperly or not in accordance with the code of conduct adopted by the ADR service provider. | |||
| Legal advice privilege in mediation | >Communication passing between a client and their lawyer made for the purposes of giving or receiving legal advice are protected by legal professional privilege. >Legal advice privilege will also be upheld in mediation. | |||
| Confidentiality | The obligation of confidentiality: >A confidentiality clause in the mediation agreement amounts to contractual promise on the part of all parties to the contract, including the mediator, not to reveal communications made during the mediation. An injunction can be obtained to restrain breach of this obligation. Damages could also be claimed for any breach. >Even in the absence of an express confidentiality clause, one is likely to be implied, because it would destroy the basis of mediation. >The mere fact that the parties have agreed to try and resolve the dispute by mediation or have had a mediation hearing is not confidential. The confidentiality, therefore, attaches to the events during the mediation process, rather than the bare fact that the parties are about to have or have embarked on mediation. >The duty of confidentiality will apply even after the mediation process has been completed or terminated. Can the mediator enforce the confidentiality clause? The without prejudice rule exists for the benefit of the parties and it can be waived by them. It is not a privilege of the mediator, and cannot be relied on by him. However, the express or implied term of confidentiality is different. The court accepted that the express or implied obligation of confidentiality exist not just between the parties themselves, but also between the parties and the mediator, so it could only be waived by them all. The mediator has an express enforceable right to keep matters confidential under the terms of the mediation agreement. However, the court hold that the obligation of confidentiality is not absolute, and the court has power to permit evidence of confidential communications to be given or produced if it is in the interest of justice to do so. Will the court override the confidentiality provisions in the interest of justice? The court will override the confidentiality provisions in the absence of agreement by all parties only in exceptional cases: It was necessary for the court to ascertain what was said and done at the mediation in order to determine whether the agreement reached at the mediation should be set aside for economic duress.The interest of justice requires confidentiality to be overridden if one party is seeking to vitiate an agreement reached at the mediation on the ground of duress or undue influence or misrepresentation.The court may not allow a mediator to rely on a confidentiality clause so as to prevent the parties from revealing advice given by him during the mediation in respect of any action against him for breach of contract or negligence. Other exceptions to confidentiality: where disclosure is required by law;if the mediator believes there is a risk of significant harm to the health, life or well-being of a person if confidential information is not disclosed;if disclosure is necessary to prevent criminal activity, or prevent the mediator being charged with colluding in the commission of an offence. | |||
| Mediator as a witness | >Mediator should not be compelled to give evidence regarding information arising out of mediation unless all the parties agree or there are public policy considerations that require the mediator to give evidence. >The mediation agreement will usually contain a clause by which the parties agree not to call the mediator as witness. The court can override the mediation agreement and require a mediator to give evidence, if it is in the interest of justice. | |||
| Recap | >Mediation is ‘without prejudice’, although there are exceptions to the rule. >Mediation is confidential process but confidentiality can be overridden by the courts in the interest of justice. >The mediator may be called to give evidence about the mediation if this is in the interest of justice. | |||
| International mediation | Key issues | Mediation is particularly effective as an ADR process for resolving international disputes, because: It enables linguistic and cultural differences to be managed and respected to a greater extent than is possible in court proceedings.It avoids complex arguments about which court has jurisdiction to determine the dispute and which system of law applies to the dispute.It can be speedy and cost effective compared to the costs involved in arbitrating or litigating such disputes.The flexibility of the process enables the parties to tailor it to their particular needs. >A team of mediators will usually need to be appointed to mediate international disputes. | ||
| Professional ethics in Negotiatio and Mediation | Key points | >Lawyers must advise their clients about ADR options, at all stages of the dispute. >Lawyers can provide ADR services to the client provided there is no conflict of interest. >If the lawyer acting under a CFA, care must be taken to ensure that the settlement is in the client’s best interest, irrespective of whether the success fee becomes payable on settlement or the amount of the success fee. >When acting in mediation or negotiation, a lawyer must take care not to: -mislead the other party; -disclose confidential information to the other side (or the mediator) unless the client consents; -reveal the details of the negotiation or what took place in mediation to third parties or to the court; -exceed the limits of his authority. >Mediators are required to act in accordance with ethical standards. >Although there is no standard code of practice for mediators, most mediator/ADR providers will devise their own code of conduct or code of good practice, and this will be incorporated into the terms of the mediation agreement made between the mediator and the parties. >The European Code of Conduct for Mediators and CMC Code of Good Practice provide useful benchmark for determining the minimum rules of professional conduct that should be expected from a mediator. | ||
| Arbitration | Definition | >Arbitration is an adjudicative dispute resolution process. It is based on an agreement between the parties to refer a dispute or difference between them to impartial arbitrators for a decision. >Arbitration in England and Wales are governed by the Arbitration Act 1996. This Act made distinction between mandatory and non-mandatory provisions. The intention is that mandatory provisions cover only the matters that are essential to the effective resolution of matters referred to arbitration, with everything else covered by non-mandatory fall-back provisions, which the parties can change if they wish | ||
| Compare and contrast the process of arbitration and litigation | Arbitration can be seen as private version of litigation. It involves an independent arbitrator or tribunal considering both sides of the dispute and making a decision on the issues raised by the parties. Arbitration differs from litigation in two main respects: >A dispute will only be referred to arbitration if that is the course agreed between the parties; and >Arbitrators are appointed by the parties or through a mechanism agreed by the parties, whereas in litigation the judge will be appointed by the state. | |||
| Fundamental concepts in arbitration | Where the parties have referred their disputes to arbitration this implies that they want their disputes decided: by a tribunal they have chosen;in a neutral location;in privacy;by the arbitrators speedily and efficientlywith light but efficient supervision by the court. | |||
| Interpretation of the Arbitration Act 1996 | >A court should comply with the guidance given in Patel v Patel >‘Shall’ is regarded as ‘Must’ >Court do the literal interpretation of the 1996 Act | |||
| Sort of cases or disputes referred to arbitration: Contractual foundation to arbitration | Almost any type of dispute can be referred to arbitration, regardless of the legal classification of the underlying cause of action. The following four contract disputes are referred to arbitration: a) the substantive contract b) the agreement to arbitrate c) the agreement between the parties and an arbitral institution referring the dispute to arbitration under the guidance of that institution d) the agreement between the parties and/ or arbitral institution and the individuals who will act as arbitrators appointing those individuals to preside over the arbitration and make a decision on the dispute. Separability of arbitration clause: An arbitration agreement which forms or was intended to form part of another agreement (whether or not in writing) shall not be regarded as invalid, non-existence or ineffective because that other agreement is invalid, or did not come into existence or has become ineffective and shall it, for that purpose, be treated as a distinct agreement. Mandate of arbitral tribunal: >The jurisdiction given to an arbitral tribunal depends on the mandate given to it by the parties. An arbitral tribunal will not have jurisdiction unless the dispute comes within the terms of the particular reference to arbitration. >The arbitrators cannot make a decision against a person who is not a party to the arbitration agreement, or on matters not covered by the arbitration agreement, or on matters not covered by the parties’ agreement with the arbitrators. >Arbitrators are entitled to make decisions on matters arising from events before they are appointed. >Where a tribunal fails to reach a decision on a central issue in the dispute there is a serious irregularity for the purposed of the Arbitration Act 1996 s. 68, which means the award may be challenged in court. | |||
| Requirements | In order to be an effective reference to arbitration the following requirement must be met: >there must be a dispute or difference; >the dispute must be ‘arbitrable’; >there must be an agreement to arbitrate; >the agreement to arbitrate must be in writing; >the nature of the dispute must come within the terms of the arbitration agreement [Food Corp of India case- the arbitration clause said that disputes relating to demurrage and freight could be referred to arbitration. A dispute arose over a claim to elevator overtime. The court said that as it could not be inferred from the clause that it included elevator overtime, that was simply not a matter that had been entrusted to the arbitrators] >the parties must have had the capacity to enter into the arbitration agreement >any condition precedent to arbitration must be complied with; >the parties must find an arbitral tribunal willing to act and decide the dispute; and >the dispute must come within the terms of the particular reference to arbitration. Dispute or difference: >If there is no dispute, there is nothing for the arbitrators to decide. >There will be no dispute if: D does not dispute liability; orthe contention now being relied upon by the defendant was never put to the claimant;the right to dispute liability has been lost under the contract or by law. >The court cannot intervene to stop an arbitration even if the court thinks the defendant does not have an arguable defence. Arbitrable dispute: Dispute that are not arbitrable: marital status;care of children;validity of parents;status of a public right of way;bankruptcy;criminal liability; andjudicial review of administrative decision. [This does not mean that disputes that have a public element are entirely off-limits for arbitration. Arbitrators are also obliged to to respect EU competition law] Agreement to arbitrate: Arbitration stems from an agreement to refer a dispute to arbitration. Such an agreement can be made before or after the dispute has arisen. Breach of an agreement to arbitrate – A party will be bound by its pre-dispute agreement to arbitrate if it subsequently changes its mind. If a party insist on ignoring an arbitration clause any litigation may be stayed. Starting court proceedings to determine the dispute in breach of an arbitration clause may also be a repudiatory breach of the arbitration agreement. Correspondence denying the existence of the arbitration agreement may also be a repudiation. A party in breach of an arbitration agreement may be liable in damages. Contracts (Rights of Third Parties) Act 1999 – Third parties may be subject to arbitration agreements in contracts between other parties in relation to contractual disputes over terms made for their benefit by virtue of this act. Not only is the 3rd party able to rely on the arbitration clause, but the 3rd party is bound by it and can be required to refer any dispute covered by the clause to arbitration. Disputes covering several contracts – Where a single disputes raises issues based on a number of contracts each with different arbitration clauses, it is necessary to determine which clause takes precedence. It is best if this can be done by agreement between the parties. If this is not possible, the rule is that the arbitration clause in the contract at the commercial centre of the transaction is the one that applies. Nature of the agreement to arbitrate: Written agreement – The Arbitration Act 1996 only apply to arbitration agreements that are in writing. This is satisfied if the agreement is made in writing, whether or not it is signed by the parties; ormade by the exchange of communications in writing; orevidenced in writing. Oral agreement – An oral agreement to refer a matter to arbitration is effective, but the reference will be governed by the common law, not the 1996 Act. Condition precedent to arbitration: A Scott v Avery clause provides that court proceedings shall not be brought until after an arbitration award has been made. Such a clause is condition precedent to litigation. If the other side commence court proceedings without arbitrating, the Scott v Avery clause can be pleaded as a defence to the claim. However, Scott v Avery clause does not prevent a party applying for a court injunction for the purpose of enforcing the arbitration agreement. | |||
| Principles that governed the object of arbitration | Arbitration governed by the Arbitration Act 1996 are subject to three general principles that are set out in s 1, as follows: a) the object of arbitration is to obtain fair resolution of disputes by an impartial tribunal without unnecessary delay or expense; b) the parties should be free to agree how their disputes are resolve, subject only to such safeguards as are necessary in the public interest (party autonomy); and c) the court should not intervene except as provided by the 1996 Act (Court application). Fair resolution of dispute: It means dealing with cases justly and in pursuant to Art 6. In most arbitration the tribunal will seek to resolve the dispute by applying the appropriate law, but this is not always the case, as the parties are able to agree that some other principles the tribunal should apply. The 1996 Act says that the dispute must be resolved by an ‘impartial tribunal’ as opposed to an independent tribunal. Tribunal is required to follow the rules of natural justice. They will be breached if the arbitrator fails to give the parties an opportunity to deal with the factors that the arbitrators intend to take into account in making a decision. Court applications: Where the parties have agreed that their dispute should be resolved by arbitration the court should not intervene except and to the extent that this is necessary. The main reasons for court intervention are: in order to give support to the arbitral proceedings; orin order to put right any serious injustice. | |||
| Mandatory and non-mandatory | Distinction between these are: >The mandatory provisions of the Arbitration Act 1996 apply to all arbitration under written arbitration agreements. The mandatory provisions are aimed at supporting arbitration and ensuring it is effective, and provide machinery for limited court intervention to prevent substantial errors or arbitrators acting without jurisdiction. >Anything not covered by the mandatory provisions can be agreed between the parties. | |||
| Different types of arbitration | Institutional arbitration: >An institutional arbitration is where the arbitration itself is administered by an arbitral institution. Very frequently an institutional arbitration will be conducted in accordance with the institution’s won arbitration rules, although some institutions, such as CEDR, will apply the rules of another organisation (CEDR uses UNCITRAL Model Law). >In an institutional arbitration the institution may well provide a range of support services which may include machinery for appointing the arbitrators, arranging facilities for hearings, etc. Some institutions even include an internal appeal process against the arbitrator’s award. 2. Ad hoc arbitration: > (Particularly in Maritime disputes) Ad hoc arbitration means that the parties have agreed to arbitrate and not to use one of the arbitral institutions for the administration of the arbitration. > In an ad hoc arbitration the parties save the fees that would be charged by an arbitral institution, and free themselves to choose arbitrators in any manner that may be agreed between them, and to agree to any procedures for the arbitration that may choose. | |||
| Statutory arbitration | >As an exception to the almost universal rule that arbitrations are based on agreement, the Arbitration Act 1996 ss 94 – 98 deal with statutory arbitration. >These occur where legislation requires certain types of dispute to be referred to arbitration. >These are quite rare, but arise in some context in landlord and tenant and company law. | |||
| Consumer arbitration | >There are restrictions on the use of arbitration in consumer disputes. >Arbitration clauses are not used against consumers as a means of preventing them from seeking redress from the courts. | |||
| Med-arb | >Hybrid between mediation and arbitration. >This can take various different forms. >One version is for a single person to be nominated as a mediator, who will then become the arbitrator if the matter cannot be resolved in the mediation. >Another version is for one individual to act as the mediator, and for a different person to be appointed as the arbitrator if the matter is not resolved in the mediation. Problem with this hybrid concepts: >If the parties proceed first by referring the matter to mediation, and this is successful, the settlement will not be enforceable under the New York Convention or the Arbitration Act 1996, because there is no ‘dispute’ as required by s 6. It is possible to ensure enforceability by starting with a formal reference to arbitration, then immediately referring the matter to mediation, and if the matter is settled, recording the agreement in a consent order. >There are obvious ethical problems in a person who has acted as a mediator changing roles and becoming an arbitrator. >It is possible that important information may be disclosed in confidence in a mediation, which may influence the decision on the arbitration and that private discussions with the mediator in the absence of other party may turn out to be entirely improper when the process converts over to arbitration. | |||
| Multi-tiered dispute resolution | Some dispute resolution clauses provide for more than two levels or tiers of ADR. For example, a clause may provide that where there is a dispute the parties must: submit the dispute to designated officers of the respective parties to attempt to negotiate a settlement;followed by mediation if the matter remains unresolved;followed by arbitration. It is a matter of construction as to whether each of the tiers is a condition precedent to proceeding to the next tier. If they are not, a party can proceed directly to arbitration. | |||
| One-stop adjudication | Where the parties have made a clear agreement for Med-arb or multi-tiered dispute resolution, that will be upheld by the courts. However, there is a strong presumption that the parties will have intended that their dispute would be resolved through a single dispute resolution process. | |||
| ECHR and Arbitration | While arbitrators cannot ignore the requirements of the ECHR, the courts have upheld the main features of arbitration in the face of a number of attacks based on ECHR arguments. >In Stretford v Football Association(2007), it was held that arbitrations comply with article 6 as the Arbitration Act 1996 provides for a fair hearing by an impartial tribunal, and gives the High Court jurisdiction to review issues such as apparent bias and procedural unfairness. >In Sumukan Ltd v Commonwealth Secretariat(2007), it was argued that article 6 was infringed by the exclusion of the right to appeal to the courts against the decision of the arbitrators on a point of law under the Arbitration Act 1996. It was held that exclusion did not infringe art 6, being a common provision in arbitration rules, and it did not matter that the exclusion was in a document referred to in the substantive agreement, rather than being express clause of that agreement. | |||
| Main features of arbitration | >Arbitrations are based on an agreement between the parties to have their dispute decided by impartial arbitrators. >Arbitrators are appointed by the parties, or through a mechanism agreed by the parties, rather than by the state. >Parties retain a measure of control over the procedures adopted by the tribunal, whereas court procedures are controlled by the judge. Arbitrators have relatively weak powers in relation to imposing sanctions on parties who do not comply with timetables and procedural orders. There is therefore more scope for parties to cause delays in arbitrations than in litigation. >Formality is often given to arbitrations by adopting institutional rules, but the parties can choose extremely informal procedures if they prefer. >Most arbitrators are conducted in private, whereas court hearings have to be in public unless there are pressing countervailing consideration. >Arbitrators have no power against the third parties. >Decision of the arbitrator is final. >Arbitrator cannot grant order such as interim injunction, search order, etc. | |||
| Recap | >The foundation of arbitration is the agreement to arbitrate which is found in the substantive contract between the parties. >The arbitration agreement is separable from the substantive contract, which means that arbitrators can rule on the validity of the substantive contract without destroying their own jurisdiction. >The three principles of arbitration law are: fair resolution of disputes;party autonomy;limited court interference. >The Arbitration Act seeks to achieve a balance between these principles by setting out a relatively small number of mandatory provisions, which are those regarded as essential to support effective arbitrations, and a wide range of non-mandatory provisions that the parties can choose whether to adopt. >By agreeing to arbitrate, the parties effectively waive their right to trial in the courts for the purpose of the ECHR. | |||
| Arbitral tribunals | Commencemenof arbitration | Importance of the date of commencement of an arbitration There are potentially two sets of time-limits that may result in an arbitration being unsuccessful: 1) any contractual restrictions on bringing claims; and 2) any limitation period. Significance of the date of commencement for arbitration In arbitration proceedings the parties are entitled to agree when the arbitration is to be regarded as having commenced for limitation purposes. If there is no such agreement there are three rules when the arbitration is to be regarded as having commenced: 1) where the arbitrator is named or designed in the arbitration agreement, arbitral proceedings are commenced when one party serves on the other party notice in writing requiring him to submit the dispute to the person so named or designed; 2) where the arbitrator is to be appointed by the parties, arbitral proceedings are commenced when one party serves on the other party notice in writing requiring him to appoint an arbitrator or to agree to the appointment of an arbitrator in respect of the dispute; 3) where the arbitrator is to be appointed by a person other than a party to the proceedings, arbitral proceedings are commenced when one party gives notice in writing to that person requesting him to make the appointment in respect of the dispute. Avoiding the consequences of failing to comply with a time-limit: The claimant may apply to the High Court under the Arbitration Act 1996 for an extension of time. In the further alternative, the respondent may simply decide not to raise the time bar by way of defence. As limitation is a procedural defence and is only effective if raised by the respondent, a time-barred arbitration will continue if limitation is not pleaded. | ||
| Notice of arbitration | >A notice of arbitration has to be in writing and must comply with the requirements on appointing the arbitral tribunal. These requirements can be met by a reasonably simple letter. >The notice of arbitration is sent to the respondent. Where the arbitrators are appointed by an appointing institution, or where institutional rules so require, the notice needs to be sent to the institution as well. | |||
| Appointment and number of arbitrators | Appointment of the arbitrators: The parties are free to agree on the procedure for appointing the arbitrator, including the procedure for appointing any chairman or umpire. Arbitrator may be chosen because they are known professionally by the appointing parties. More frequently the parties will use an arbitral institution as a nominating authority. Number of arbitrators: The parties are free to agree on the number of arbitrators to form the tribunal and whether there is to be a chairman or umpire.Where there is an agreement that the number of arbitrators shall be two or even number shall be understood as requiring the appointment of an additional arbitrator as chairman of the tribunal, as the even number of arbitrators risk deadlock. If there is no agreement as to the number of arbitrators, the tribunal shall consist of a sole arbitrator. Procedures for the appointment of arbitrators: Sole arbitrator – parties jointly appoint the arbitrator not later than 28 days after service of a request in writing by either party to do so. Two arbitrators – each party is required to appoint one arbitrator not later than 14 days after service of a request in writing by either party to do so. Three arbitrators – each party is required to appoint one arbitrator not later than 14 days after service of a request in writing by either party to do so, and these arbitrators then appoint a 3rd arbitrator as the chairman of the tribunal. Failure of appointment procedure: Where the above procedure breaks down, possibly because the other side does not make an appointment, there are default powers in the Arbitration Act. These may result in the claimant’s nominee becoming the sole arbitrator, or may require an application to the High Court to resolve the problem. | |||
| Judges as arbitrators | A judge of the Commercial Court or of the Technology and Construction Court may accept appointment as a sole arbitrator or as umpire. Such an appointment requires the permission of the Lord Chief Justice having regard to the state of business in the relevant court. A judge arbitrator can exercise the jurisdiction of the High Court. | |||
| Contractual basis of the arbitrator’s mandate | Where a person accepts an appointment as an arbitrator they enter into a contract with the parties in the terms that are agreed. Once appointed, the arbitrators are contractually bound to complete their mandate. | |||
| Qualification of arbitrator | >The arbitrator will usually possess minimum professional qualifications, or membership of an organisation, or status (such as being in business in the city of London). >Arbitrators appointed under the rules of arbitral institutions are invariably only on the relevant panel if they are suitably qualified. >Arbitrators must be impartial, even those appointed by a particular party. | |||
| Removal, Resignation and Vacancies | Removal: >The parties are free to agree in what circumstances the authority of an arbitrator may be revoked. In the absence of such prior agreement, the authority of an arbitrator may not be revoked except by the parties acting jointly, or by an arbitral institution vested by the parties with such power. Revocation of the authority of an arbitrator by the parties acting jointly must be agreed in writing unless the parties also agree to terminate the arbitration. >An early termination of an arbitrator’s appointment is potentially a breach of contract that may lead to a claim of damages. It will not be a breach if the appointment contract has been discharged or if the termination of the appointment is for a reason permitted in the appointment contract (eg fundamental breach by arbitrator, impossible for the arbitrator to continue). Party may apply to court for an order removing the arbitrator if: -doubt arise as to the arbitrator’s impartiality; -arbitrator does not possess required qualification; -arbitrator is physically or mentally incapable; -arbitrator has refused or failed properly to conduct the proceedings. [Where the court removes an arbitrator, it may make such order as it thinks fit with respect to his entitlement to fees and expenses] Resignation: Resignation by an arbitrator is also a potential breach of contract. The parties are free to agree with an arbitrator on: >the consequences of his resignation; >the arbitrator’s entitlement to fees or expenses; and >any liability incurred by the arbitrator as a result of having resigned. Vacancies: Where an arbitrator ceases to hold office, the parties are free to agree: >whether and if so how the vacancy is to be filled; >whether and if so to what extent the previous proceedings should stand; >what effect his ceasing to hold office has on any appointment made by him. [In the absence of agreement the same procedures apply as where there is a failure to make an initial appointment] | |||
| Immunity of arbitrators | An arbitrator is not liable for anything done or omitted in the discharge or purported discharge of his functions as arbitrator unless the act or omission is shown to have been in bad faith. This immunity does not apply to any liability the arbitrator may have on account of resigning. | |||
| Immunity of arbitral institutions | An arbitral institution which appoints or nominates an arbitrator is not liable for anything done or omitted in the discharge of its function unless the act or omission is shown to have been in bad faith. Nor is liable for anything done or omitted by the arbitrator. These immunities do not cover every situation, and will not cover, for example, negligence in the way the institution administers an arbitration. | |||
| Liability for arbitrators’ fees | The parties are jointly and severally liable to pay to the arbitrators such reasonable fees and expenses as are appropriate in the circumstances. This does not affect any liability of a party to any other party to pay all or any of the costs of the arbitration or any contractual right of an arbitration to payment of his fees and expenses. The tribunal may refuse to deliver an award to the parties except upon full payment of the fees and expenses of the arbitrators. | |||
| Commercial arbitration | Definition of ‘Commercial’ | UNCITRAL Model Law- the term ‘commercial’ gives a wide interpretation so as to cover matters arising from all relationship of a commercial nature, whether contractual or not. | ||
| Privacy and confidentiality | Privacy: Privacy relates to holding hearings in places where the public have no access. Privacy in arbitration is based on the fact that the parties have agreed to submit their dispute to arbitration between themselves and only between themselves. Confidentiality: Confidentiality relates to an obligation on those participating in arbitration not to disclose details, documents or information about the arbitration to anyone outside the arbitration. The duty of confidentiality arises as a corollary to the privacy of arbitration. Case where disclosure may be permitted: >where there is consent; and >where a court grants permission, which it has a discretion to grant, where: -disclosure is reasonably necessary for the protection of the legitimate interests of an arbitrating party; -the interests of justice require disclosure; or -possibly, the public interest requires disclosure. >it may be in the interest of justice to permit the use of documents disclosed in arbitration where the party giving disclosure has advanced inconsistent cases in the arbitration and in related litigation. | |||
| Range of procedural approach in arbitration | very simple procedure, which do not even include a hearingshort-form arbitrationsarbitrations that adopt the default proceduresarbitrations that adopt the rules of an arbitral institutionarbitrations, where the parties agree on a bespoke procedurearbitrations where the procedure draws heavily on the procedures in the CPR | |||
| Procedural rules governing arbitration | Bespoke arbitration clause: As parties are allowed to agree anything not covered by the mandatory provisions, the parties and their lawyers may decide to make detailed provision for the procedure to be followed in the event of any dispute being referred to arbitration. Arbitral institution rules: There are many organisations that publish their own rules for arbitrations in their areas of interest. Most rules cover: Appointment of arbitrators;Pleadings;Procedure and exchange of information and evidence;Decision-making by the arbitrators;Awards; andPayment of fees and costs. Silence in institutional rules: Where the rules of an arbitral institution apply to an arbitration, but are silent on a non-mandatory matter covered by the Arbitration Act 1996, the relevant provision of the Arbitration Act 1996 applies. | |||
| Role of legal representative | Being an adjudicative process, solicitors and barristers representing clients in arbitrations need to be adept at all the traditional lawyering skills, from legal analysis to drafting, advising and advocacy. Advise on the arbitration clauseReference of a dispute to arbitrationDefining issuesPutting together the caseHearings | |||
| Commencement | Arbitrations are commenced by sending a notice of arbitration and then appointing the members of the arbitral tribunal. | |||
| Look-sniff arbitrations | Look-sniff arbitrations are most commonly met in disputes over the quality of goods in import-export transactions. If the disputes boils down to whether the goods match the contract specification or description, it may be that all that is needed is for an expert in the field to go to the warehouse, have a look at the goods, do the test and express a view on the quality of the goods. | |||
| Short-form arbitration | A number of arbitral institutions have promulgated short-form procedures. An example is the ICS Short Procedure. Under the ICE Short Procedure, within 2 working days after the appointment of the arbitrator the claimant is required to deliver a file setting out its case to the arbitrator and the respondent, which must contain: a statement of the orders or awards sought;a statement of the reasons for being entitled to those orders or awards; andcopies of all documents. Respondent must deliver its defence in the same format within 14 days of receiving the claimant’s file. No counterclaim is permitted. | |||
| Typical steps in arbitration proceedings | Appointment of arbitral tribunalPreliminary hearing to discuss procedural steps and set timetablePossible mediation windowPoints of claimPoints of defenceDisclosure and production of documentsExchange of witness statementDisclosure of experts’ reportsMeeting of expertsPre-trial hearingHearingClosing of proceedingsAward | |||
| Dismissal for inordinate delay | Where the claimant in an arbitration is guilty of inordinate and inexcusable delay the tribunal may make an award dismissing the claim. | |||
| Evidence | An arbitral tribunal has a wide discretion on whether to apply the strict rules of evidence or any other rules as to the admissibility. | |||
| Disclosure of documents | The tribunal must consider whether any documents should be disclosed between the parties and what stage. There is no requirement to import the concept of ‘standard disclosure’ from CPR. | |||
| Implied obligation of confidentiality | Parties to an arbitration are under an implied obligation not to use or disclose any documents provided to them by the other parties for any purpose outside the scope of the reference. This is very similar to the implied undertaking relating to disclosed documents in litigation. A significant difference is that in litigation the undertaking is lifted once documents are used in open court, whereas the obligation in arbitration continues after a hearing because of the privacy of arbitration proceedings. | |||
| Experts | Party appointed experts: There is a limit on the expert evidence that each party may rely upon one expert in each relevant field. Tribunal appointed expert: The tribunal may appoint expert to assist it on technical matters. The parties must be given a reasonable opportunity to comment on any information, opinion or advice offered by an expert appointed by the tribunal. The fees of a tribunal-appointed expert need to be provided for. Usually they are paid by the parties. | |||
| Pre-trial hearing/conferenc | If the arbitration is of some complexity it may be sensible to hold a PTH or conference. | |||
| No right to an oral hearing | There is no right to demand an oral hearing. The tribunal can decide whether and to what extent there should be oral or written evidence or submissions. | |||
| Hearing | The ways in which a hearing progress in commercial arbitration: Adversarial or inquisitorial- arbitrators can choose to adopt either an adversarial or inquisitorial approach to the hearings.Written submissions and skeleton argumentsWitness- witnesses in arbitration usually attend voluntarily, because the tribunal has no power to issue witness summons. If a witness summon is needed for an unwilling witness, it is possible to obtain one by making an application to the High Court.Witness conferencing- alternative to having witnesses called in.Expert evidence at the hearing- presented in the form of expert report. Reports taken as their evidence in chief, and they will be cross examined and re-examined in the usual way.Views and site visitsClosing submissions- usually the respondent makes the first closing submission, followed by the claimant.Closing proceedings –after the closure of proceedings the usual rule is that no further evidence or submission can be given to the tribunal.The decision- arbitrators must act judicially, even if they are appointed on the basis of qualifications or experience that they possess. It is permissible for the arbitrator to use his technical knowledge and experience in evaluating evidence but it is not permissible for the arbitrator to supply evidence from his own knowledge without disclosing that knowledge to the parties so that they put an answer through submission or with additional evidence. | |||
| Equity clauses | By choosing arbitration the parties may also intend that their dispute should be decided on principles other than the strict application of law. | |||
| LME | This is an example of institutional rules that follow a system similar to the CPR. They adopt court procedures in a more over way than the Arbitration Act 1996, but their general scheme is in fact very similar to that laid down by the Act. | |||
| Internationa arbitration | Key issues | >In English law, there are no differences in the Arbitration Act 1996 between domestic and international commercial arbitrations. >The UNICITRAL Model Law and ICC arbitration rules are widely used across the global in international arbitration. Enforcement: In international there is a simple enforcement procedure through the New York Convention 1958, which provides a huge advantage to arbitration compared with the more difficult oversees procedures that apply court judgement. In cases where both parties are within jurisdiction, enforcement will be more direct in litigation, because there is no need to go through the stage of registering the award as a judgement. | ||
| Arbitration awards and orders | Key issues | Making awards, which are binding decisions, distinguishes arbitration from the non-adjudicative methods of ADR. There are four different types of awards and orders that are available to arbitrators: Procedural orders – arbitrators lays down timetables for the steps to be taken by the parties to prepare for the arbitration hearing and to preserve property pending the final award.Interim awards – interim awards are final decisions on aspects of the whole dispute, but are not all that common. They can be useful method of saving expense.Main/ final awards – finally determine the dispute between the parties. Final awards must be in writing and comply with certain formalities. The normal position is that the final award should also state reasons, but the parties may agree to dispense with reasons, in which case it will not be possible to mount an appeal on a point of law.Cost awards – for the payment of the costs incurred in the arbitration between the parties. | ||
| Early neutral evaluation | Definition | >It is an assessment and evaluation of the facts, evidence and / or the legal merits of an issue in the case or of the case as a whole by a neutral third party. >It is undertaken by the parties jointly, although in some cases it can be undertaken at the request of one party only in relation to their own case. >It can take place within the court system as well as outside the litigation process. >It is private and confidential process, and the evaluator must be impartial. >This differs from mediation which is essentially a facilitative process. ENE is an advisory and evaluative process. >This also differs from mediation where the 3rd party engaged himself in the negotiation process between the parties, but in ENE the neutral 3rd party does not involve himself in any way in the negotiation process. | ||
| When ENE is used? | >ENE is usually employed in the early stage of a dispute, but in fact it could be utilised at any stage (eg before/during mediation; before or at any time during the process of litigation). > ENE can be useful where the parties have taken an unrealistic and entrenched view of the claim and need a reality check and assessment of the case by an independent person. >The rational for ENE is that an unbiased evaluation of the case and the likely outcome by a neutral party, such as judge or expert, will help the parties subsequently to settle the dispute by negotiation or even mediation. > ENE enables each party to appreciate the strengths and weaknesses of their case. | |||
| ‘Who’ to carry out the evaluation? | >The choice of evaluator depends on the issues presented by the case. It may be that an expert is required. Whether an expert is appointed to carry out the evaluation will depend on the underlying subject matter of the dispute and whether issues of a technical nature are raised that require expert to evaluate. >The parties may privately appoint a neutral person who could be a solicitor or a barrister or an independent third party such as an expert. >The parties may seek the assistance of an ADR provider in order to help them select and appoint a suitable evaluator. | |||
| The procedure | >The evaluation procedure is usually fixed by the evaluator after consultation with the parties. >Each party will usually make written submissions to the evaluator, together with such evidence and supporting documents. >Sometimes it is agreed that each party should present some or all of their case at an oral hearing. >The evaluator may also interview the parties at a private meeting or may conduct an informal meeting where both parties are present. >He then evaluate the evidence, law and the submissions of each party and then produce a recommendation setting out his views on the merits of of the dispute and the likely outcome. Recommendations may or may not contain detailed reasons. >The recommendation is usually non-binding, and the parties do not have to accept it, although they can agree to make this binding on them. | |||
| Neutral fact finding | A variation in the process is to require the evaluator simply to evaluate the facts in the dispute between the parties (but not the underlying issues or quantum) and reach a decision on those facts. | |||
| Judicial evaluation | >The court may provide evaluation of a dispute, in which case the ENE is carried out by a judge. >The judge conducting the ENE will then take no further part in the case, either for hearing applications or as trial judge, unless the parties agree otherwise. >Judicial evaluation is not intended to be binding on the parties, but rather to help them to facilitate by negotiation or mediation. Courts where judicial evaluation is possible: Commercial courtTechnology and construction courtThe mercantile court | |||
| Evaluation in personal injury cases | >Evaluation in personal injury cases is described by CEDR as ‘a paper evaluation service which gives the parties early judicial insight into a court outcome. Experienced evaluators with District Judge expertise provide a written evaluation steering the parties to a solution’. >Evaluation in PI cases is conducted for lower value cases up to £50,000 in value and the fees start from £195. Key features of this evaluation/ procedure: >The evaluation will usually be carried out by retired district judges who will have great deal of experience. >The parties will agree on the issues to be evaluated. >The evaluation is not binding on the parties, unless they elect to be bound by it. >Each of the parties will send their written submissions to the evaluator together with any relevant documents >The evaluator will consider the written submissions within 10 days and assess the most likely outcomes at trial and report back to the parties. >The evaluation fee will usually be jointly split between the parties, although the cost of the process can be treated as cost in the case. >The whole process is confidential and without prejudice. | |||
| Social security and child support tribunal ENE pilot scheme | The aim of this pilot was to assess: >The use of ENE as a cost-effective method of resolving administrative appeals without the need for a hearing; >Whether the ENE provided a less formal and more convenient method of resolving the dispute; >Whether ENE produces a faster resolution of the dispute; >To determine what factors contribute to the success of ENE [Where the parties elect/apply to have the dispute determined by ENE, ENE will be conducted by a district tribunal judge within four weeks of receiving the appeal] | |||
| Judicial ENE | In 2008, the Association of Her Majesty’s District put forward proposals to the Civil Justice Council for a judicial ENE scheme. | |||
| Recap | >It can be carried /undertaken at any stage of the case, even during mediation. >ENE is not binding on the parties. >If ENE is carried out by a judge, they will have further no involvement in the case. >ENE assists the parties to negotiate a settlement by direct negotiations or in mediation. | |||
| Conciliation | Definition | >Voluntary process whereby a neutral 3rd party facilitate negotiations between the parties to a dispute and assist them to reach a settlement. >Conciliator may express an opinion on the merits of the dispute and may suggest a solution if the parties cannot put forward proposals themselves to resolve the matter. >It can be described as evaluative mediation. >Conciliation is most commonly used in family and employment disputes. | ||
| Outline of the process | >Confidential and without prejudice voluntary process. >Either party can withdraw from it at any time before settlement is reached. >Conciliator has no power to impose a solution on the parties. >The process is very similar to mediation. The only difference is that the parties usually do not select/appoint the conciliator. Like mediation, the parties do not have to agree to any solution that is recommended by the conciliator, although they can agree (usually in writing in advance of the conciliation) that any solution put forward is binding on them. >An agreement reached in conciliation can be recorded and enforced in the same way as agreement reached in other ADR process. | |||
| ACAS (Advisory, Conciliation and Arbitration Service Conciliation) | It was founded in 1974 and is one of the most established ADR bodies in UK. The process / how it works? : >When a complaint is lodged by a party in the employment tribunal, a copy will be forwarded by the tribunal to ACAS, who will then contact the parties to the dispute and offer conciliation to them. >If the parties agree to use the conciliation service then ACAS will set up a conciliation meeting with the parties and the conciliator will explore settlement of the dispute. The parties will have no choice over the selection of a conciliator. >The conciliator will explain the process, his role, and explore each party’s case and discuss proposals for settlement. >If a settlement is reached it will be recorded on an ACAS settlement form and be signed by both parties which will be legally binding. >ACAS will inform the tribunal about the settlement. >If no settlement is reached, then the case will proceed to a hearing in the tribunal. [It is not the function of an ACAS conciliator to ensure that the terms of settlement are fair to the parties, and nor should he advise the parties about the merits or likely outcome of the case] Types of cases referred to ACAS: >Deals with all type of employment issues. > ACAS offer conciliation and mediation services. The only difference between the two ACAS processes is that conciliation is the term used to describe the ADR process if an employee has made or may make a claim to an employment tribunal. Mediation is used to resolve workplace disputes with the aim of restoring and maintaining the employment relationship between the parties. | |||
| Pre-claim conciliation | ACAS has a statutory discretion or power (not a statutory duty) to provide conciliation to parties who are considering making a claim to a tribunal in any type of workplace dispute. This is free of charge to the parties. ACAS will only exercise their discretion to offer conciliation in such cases if: >The parties have already tried to resolve the dispute; >There are grounds to believe that a valid claim is likely to be made by a party eligible to make the claim; >A conciliation service will not interfere with good employment relations. | |||
| Post claim conciliation | >ACAS has a statutory duty to offer conciliation to the parties after a claim has been made to the employment tribunal in respect of employment rights. This is voluntary and free of charge to the parties. >ACAS conciliators are impartial, independent and they are not part of the Employment Tribunal Service. >ACAS report on their website that about 75% of all claims made in employment tribunal are resolved by ACAS conciliation. | |||
| Collective conciliation | This is a term used to describe talks between representative groups such as trade unions and employers, which are facilitated by ACAS. | |||
| Conciliation in family case | Conciliation is commonly employed in family disputes where the choice of process is driven by the court rather than the parties. In-court conciliation is offered in disputes by parents over children on the breakdown of a marriage. The process: In-court conciliation consist of a meeting at court, usually lasting around 30 minutes, between the parents with the assistance of a neutral independent party from the Children and Family Court Advisory and Support Service(Cafcass) to help them to negotiate disputes relating to contact and residence arrangements for children following separation or divorce.In-court conciliation is delivered by Cafcass in every county court in England and Wales and in some magistrates’ courts that handle family cases. In family law cases, conciliation occurs in the following ways/procedure: Conciliation appointment will be arranged before the district judge or registrar.The parties will outline the nature of the application and the matters in dispute to the District Judge and the Cafcass officer.The conciliation appointment will then be conducted with a view to the parties reaching an agreement about the arrangement concerning children.All discussions at the conciliation appointment are privileged.If agreement is reached, the district judge will make the relevant orders by consent.If agreement is not reached, then the district judge will give directions for the hearing of the application. The Cafcass officer and DJ will not be involved in any further applications between the parties other than further conciliation appointments. | |||
| Other conciliation schemes | 1.The Independent Doctor’s Forum(IDF) It was formed to represent doctors in general practice and consultants carrying out private work in addition to their NHS work. Here complaints are determined in three stages: >The first stage involves the doctor meeting with the patient to reach a resolution of the matter. >If that does not resolve the compliant, it will be referred to conciliation. A conciliator provided by IDF will meet the parties, and then make a written report rejecting or upholding the complaint. If it is upheld the conciliator will put forward proposals for resolving it. >If the compliant cannot be resolved after conciliation, it will be referred to mediation. 2.The Disability Conciliation Service The disability conciliation service (now known as Equality Mediation Service) offers individuals with a disability the opportunity to resolve dispute under the Disability Discrimination Act 1995 in relation to discrimination in the provision of goods, services, education and employment instead of pursuing court or tribunal proceedings. 3.The Furniture Ombudsman Conciliation Scheme The Furniture Ombudsmen is an independent organisation offering ADR services for consumers of the furniture, home improvement and floor covering industry. | |||
| Recap | >In England and Wales, conciliation tends to be court-driven and it is most often used in family and employment cases. >In employment cases, a free conciliation is offered by ACAS where a claim has been or likely to be made in the employment tribunal. | |||
| ComplaintGrievanceOmbudsmen | Complaints and grievance procedure | Complaints, grievance and ombudsman scheme are designed to provide effective and speedy relief where problems arise between a customer and an organisation. In many areas of activity, having a formal complaints or grievance policy is simply a matter of good procedure which may be: 1. A requirement of a relevant code of professional conduct; 2. A statutory requirement, as in the case of grievance and disciplinary procedures in employment law. | ||
| Difference between complaints and grievance | Complaints: 1. A complaint may be regarded as a problem raised in the context of a one-off transaction or incident. 2. Most complaints procedures and policies only apply to formal, written complaints. Informal complaints (those made orally or not on the relevant form) may well be responded to, but not under the relevant complaints procedure, and probably without the investigation involved in a formal complaint. 3. Complaints are the first stage of resolution for many disagreements that members of the public have with companies or government. Grievance: 1.A grievance arises in the context of a continuing relationship, particularly between employees and employers. 2.According to ACAS a grievance is concern, problem or complaint that an employee might arise with their employer. | |||
| Complaints, including legal professional complaints | >The legal professional regulator have their own, highly developed, procedures for dealing with complaints that are not resolved by chambers or the firms. >A detailed complaint form needs to be completed and sent to the regulator. | |||
| Employment grievance | A wide range of matters may be raised in employment grievance: An employee’s contractual terms and conditions;New working practices and organisational changes;Health and safety issues;Bullying and harassment;Equal opportunities. | |||
| Raising a complaint or grievance | >Different organisations will have their own complaints and grievance policies. Most will start with the complainant lodging a formal complaint in writing. There is often a fairly short time limit for lodging the complaint. >Most organisations refuse to investigate complaints/grievance based on anonymous information, particularly when they relate to the conduct of stuff. This is because it is grossly unfair to the person indentified in such complaint, who cannot reasonably be expected to respond to an incident involving an unidentified person. Allegations of such nature are normally dismissed for this reason. | |||
| Investigation and determination of complaints and grievance | >The organisation will acknowledge receipt of the complaint in writing, and indicate a period over which it is intended that the matter will be investigated and a decision reached. >The investigator, or sometimes a panel (typically of three people), will be designated by the organisation to investigate the matter. >Some matters will be dealt with entirely on the basis of written material. >In others the complainants, and then employees involved, will be interviewed, followed by a decision. >In others there will be a meeting where the facts relating to the complaint will be raised and considered. | |||
| Decisions in complaints and grievance procedure | The primary decision: >The primary decision that needs to be made is whether to upheld or dismiss the complaint or grievance. This may be done at a meetings or by a letter shortly afterwards. >Organisations should keep records of successful and unsuccessful complaints for the benefit of future customers and employees. Typical outcomes: Typical outcomes that may be available in an individual matter under different complaints and grievance process include: An explanationAn apologyCompensationReduction of a bill or a refundDisciplinary action | |||
| Effectiveness of complaint and grievance procedures | >Grievance and complaints can be quick; >It may cost nothing to the complainant and can produce helpful solutions. [ However, many complaints procedures are inefficient and may take a long time to complete] | |||
| Ombudsmen | >Ombudsmen act like umpires in complaints brought by individuals. >Ombudsmen include the Local Government Ombudsman and the Parliamentary Ombudsman. The Local Government Ombudsman deals with complaints about services provided by local authorities in England. The Parliamentary and Health Service Ombudsman deals with complaints about services provided by government department and NHS in England. >There are ombudsman schemes for a range of different consumer services, including many professions, public utility companies such as energy, water, telephones, and financial services such as banks and insurance companies. | |||
| Complaints handling by ombudsmen | Ombudsmen are independent from the organisation they investigate. Reference to the ombudsman is only permitted after attempting to resolve the complaint through an organisation’s internal complaints procedure. Ombudsman, therefore, frequently deals with the more difficult complaints that cannot be resolved by an organisation’s internal complaints system. How complaints are investigated under ombudsmen scheme varies considerably. However, there are two key goals: Complaints must be considered impartially and on their merits; andIndependent judgement must be brought to bear. In order to achieve these goals there are seven principles with which ombudsmen scheme should comply: Clarity of purposeAccessibilityFlexible processTransparencyProportionalityEfficiencyQuality outcomes | |||
| Procedure on reference to ombudsman | >Many schemes provide that there will be a governing body with a chair and members who oversee the scheme. >Most schemes use a documents-only process which may be started by a letter or the completion of a complaints form. >In some cases the primary function of the ombudsman has to explain the decision making process or to provide other information to the complainant >In most cases the ombudsman has to enter into detailed correspondence with the complainant and the organisation in an attempt to identify exactly what lies behind the complaint. >Ombudsmen are required to reach evidence-based decisions, having investigated the matter and after careful analysis of the evidence. | |||
| Grounds on which ombudsman make their decision | Public sector ombudsmen normally only review how a decision was made, not whether it was right and uphold a complaint if there was ‘maladministration’ that resulted in an injustice. Maladministration can include: A public body not following its own policies or procedures;Rudeness;Taking too long;Failing to act;Treating the complainant less fairly than other people;Giving wrong or misleading information. Private sector ombudsmen may come to a decision against the organisation on any of the grounds mentioned above and also if it is felt that the organisation’s conduct was unfair or unreasonable. | |||
| Effect of ombudsman’s decision | >Decisions made by ombudsmen may or may not be binding, depending on the terms of the particular scheme. Decision of the pension ombudsman is binding. While a government department is not bound by the findings of the parliamentary ombudsman, it may only reject the ombudsman’s findings if doing so is not irrational. >Compensation is available only in private sector schemes. The primary relief in public sector schemes is the review of a decision or act of a government or local authority. There are number of cases where an apology will be the primary relief. >In non-binding schemes the complainants are able to bring court proceedings if they are not satisfied with the result. | |||
| Recap | >There is a large range of complaints, grievance and ombudsman schemes. Each one has its own procedure, which should be brought to the attention of customers and made available to them when asked for. >If the procedure includes reaching a decision, in the absence of a contract to be bound it will only be binding on the professional person (through their professional code of conduct). | |||
| Expert or neutral determination | Introduction | >Expert determination differs from early neutral or expert evaluation because the parties will appoint an expert to make a decision or formal determination on the issues referred to the expert. The expert can only make a decision within the boundaries laid down by the parties. In this sense, expert determination is a determinative process, rather than a facilitative process (mediation) or an advisory evaluative process (neutral evaluation). >It is not always the case that an expert (judge, lawyer, engineer) should be used, determination can be carried out by an independent 3rd party, or even a panel consisting of a number of neutral 3rd parties and lawyer. Depending on the nature of the agreement made between the parties as to the terms on which the determination is instructed, the determiner’s decision can be: finally binding on the parties, although they must agree in advance that this is to be so. If they do agree that it is binding, there is no right of appeal, although the decision can be challenged in court on a limited number of grounds;binding on them, but only for a temporary or interim period. | ||
| When should expert/neutral determination be used? | Expert or neutral determination should be used in the following three main situations: Where the parties contractually bind themselves, in advance of any dispute arising, to use this method of ADR; orWhere a case raises issue of a very technical nature, and the parties decide to use this method of ADR; orDuring the course of mediation, with the parties settling the remainder of the issues between them when that determination has been obtained. Cases where expert determination is suitable: Rent reviewsDisputes as to causationValuation of a company or share valuationConstruction disputesReal property disputesEnergy disputes | |||
| Agreement to use expert determination | Key precepts in drafting an agreement between parties to use expert/neutral determination: If the parties agree to use expert or neutral determination to determine any disputes arising out of or in connection with the contract then- Care needs to be taken to ensure that these clauses are unambiguously drafted;They should make it clear which issues are to be referred to the determiner for determination;The type and qualifications of the expert that should be appointed to resolve the dispute;The procedure to follow during the determination | |||
| Approach of the courts to expert determination | >Expert determination clause, if clearly and unambiguously drafted, will be upheld by the courts, and such clauses will generally prevent the parties having recourse to the courts to resolve the dispute. >If one party refuses to comply with an expert determination clause, the other party will be entitled to damages for breach of contract. >The court also has discretion to stay proceedings that have been issued by a party who failed to use the contractually agreed machinery in the contract to determine the dispute. Factors court take into consideration in exercising his discretion to stay proceedings: The extent to which the parties have complied with the requirements in any pre-action protocol;Whether the dispute is suitable for determination by the ADR process;The cost of the ADR process compared to the cost of litigation;Whether the dispute could be resolved more quickly by court proceedings;Whether a stay would accord with the overriding objective. | |||
| Advantages of expert determination | It is cost effective.It provides for a speedy resolution of the dispute compared to litigation or arbitration.It removes the decision-making from the parties themselves into the hands of an independent 3rd part.It is relatively informal, as the strict rules of evidence and procedure will not apply.The parties can agree the procedure that the determiner will have to follow.It can be kept confidential and private to the parties.It gives the parties a final determination of their dispute where the parties agree that the process is binding on them, with no right of appeal. | |||
| Difference between expert determination and negotiation, mediation and neutral evaluation | The main difference are as follows: Expert determination has less flexibility than the other processes.The outcome is not within the parties control in expert determination.In expert determination, the determination will be decided on a correct application of the law and the facts whereas negotiation and mediation enable the parties to move away from their strict legal position to obtain a more creative outcome. The decision of the determiner in expert determination will usually be binding on the parties, whereas in other processes, the decision is not binding on them. | |||
| Similarities with other forms of ADR | Selection of the process is within the parties’ control.Selection of the expert is within the parties’ control.It is a more timely and cost-effective way to resolve a dispute than litigation.Parties generally control the amount of information to put before the determiner.It remains a confidential process. | |||
| Difference from Arbitration | Unlike arbitration, the determiner has no power to make an order or an award.The parties retain a great deal of control over the timing and the procedure that applies to the determination.The parties retain a reasonable degree of control over the evidence that they place before the determiner. | |||
| Selection of the expert/neutral determiner | >The parties may agree themselves on the identity of the expert they will appoint and may approach him directly. >Alternatively they may enlist the help of bodies such as the Academy of Expert, the Royal Institute of Chartered Surveyors. | |||
| The procedure | The procedure that is typically followed in an expert or neutral determination are that each party is to send to the expert: Written submission setting out their case on each of the issues; andCopies of all relevant documents. If one party refuses to disclose relevant documents to the expert, the court may order him to do so. If the parties agree on the procedure by which the determination is to be carried out, the court can intervene and provides its own procedure if the procedure agreed has broken down. In the absence of any agreement between the parties and the expert about the procedure that should be followed an expert determination cannot be set aside on the basis that the expert failed to follow a fair procedure in accordance with the notions of natural justice. | |||
| Confidential information | The parties may agree that they can each provide information to the expert on a confidential basis. If they do so, and the expert is obliged to give reasons for his determination, he should summarise any information that has been provided to him but that is not known to the other party, so that both parties can ascertain what the expert took into account in reaching the determination. | |||
| Nature of the decision | >The parties usually agree that the decision given in expert determination will be binding on them and the court will uphold the decision unless there are grounds for setting it aside. >The agreement may also specify a time limit within which the determination may be challenged by court proceedings. Alternatively, the parties may agree to be bound by the determination with no right to challenge it in court or elsewhere. | |||
| Reasons for the decision | The parties can agree whether written reasons should be provided for the determination.If the contract by which expert is appointed does not require reasons for the determination then the expert is not obliged to provide them.If the parties agree that the expert should give reasons for the decision, and the expert fails to do so, he will be ordered to do so by the court | |||
| Challenging a final decision by court proceedings | If the parties agree that their dispute should be resolved by expert determination and that the expert’s decision is to be conclusive then the report cannot generally be challenged seeking to set aside in court proceedings. If the parties agree that the expert determination should be final, they will be bound by any decision made honestly and in good faith, even the expert has made mistake. The decision will also be binding on the parties if the expert has erred in law on a question of construction, and answered the right question but in the wrong way. However, a final decision in expert or neutral determination can be challenged in the following grounds: Material departure from the instructions ie was mistaken about the terms of his instructions, value wrong number of shares;Manifest error [However, if a determiner was clearly erred in law or in fact, in the absence of any contractual term enabling parties to challenge decision on the ground of manifest error, the decision will be binding on the parties];Fraud or collusion [A mere possibility of bias will not suffice];Failure to act lawfully or fairly;The decision not intended to be final on matters of construction; No reasons for decision. | |||
| Procedure for making a challenge | >A challenge to the decision in an expert determination will usually be made by issuing Part 8 proceedings. >Part 8 proceedings may also be issued in advance of an expert determination to decide any disputes about the interpretation of the expert determination clause, or to resolve disagreement about matters that should be referred to the expert pursuant to the clause. | |||
| Enforcing a decision | >A decision reached by expert or neutral determination cannot be enforced in the same way as if it were a court decision. >However, a failure by one side to honour the decision amount to a breach of contract, and proceedings can be issued in relation to the breach. In those proceedings, the court can make an order giving effect to the decision of the expert. The court’s decision can then be enforced in the same way as any other judgement. | |||
| Suing the expert | >An expert or neutral person carrying out a determination is not immune from suit in the same way as a member of the judiciary. >An expert can be liable in negligence or breach of contract if he is negligent in the determination that he reaches or fails to act in accordance with the contract. | |||
| Dispute review panels | >This can be a hybrid form of determination which may or may not involve an expert. They can take a number of different forms, but typically they will allow for each party to appoint an independent party to the panel, and the independent parties will then choose a chairman. >Decisions made by the panel will be binding on the parties unless they agree that they will refer the decision to arbitration within a specified time limit. | |||
| Recap | >It is useful in cases raising technical issues that require expert evidence to resolve in court proceedings. >The parties can choose the determiner. >The decision is usually final and binding on the parties. >The decision can only be challenged in court proceedings in very limited circumstances. | |||
| Construction industry adjudication | Key issues | >The basic principle of this adjudication is ‘pay now, argue later’. >An adjudicator must be appointed within 7 days of a notice referring a dispute to adjudication. >The adjudicator’s decision must be made within 28 days of referral (although this can be extended) >The adjudication is binding until the dispute is decided by litigation, arbitration or agreement. >Normally the parties are required to comply with the adjudicator’s decision immediately on delivery of the decision. Otherwise the enforcement is normally through summary judgement of the adjudicator’s decision. | ||
| Recording settlement | Reaching a clear outcome | Once a settlement has been agreed it needs to be recorded. Recording a settlement is a final part of the ADR process, and the lawyer has several responsibilities in ensuring that the process is completed properly. They should ensure: The terms are comprehensiveEach term is clear and sufficiently detailThe client understand the agreementThe client accepts the agreement The terms are appropriately recordedThe terms are appropriately enforceable It is the client’s decision whether to accept a compromise, and the lawyer’s role to advise the client rather imposing their own views on the client. | ||
| Enforceable forms for recording settlement | An oral contract: Non-adjudicative ADR processes often lead to an oral contract. Once both parties say they have reached agreement and the basic requirements of a contract exist there will be an enforceable contract. A written contract: Non-adjudicative ADR processes also commonly lead to a written contract. Normal contractual principles apply then. An award with statutory authority: Some awards carry statutory or other regulatory authority, because the ADR process is governed by statute or regulation. A court order: An ADR process can be wholly or partly incorporated into a court judgement, but only where proceedings have been issued. Other legal documents: The terms of an agreement can be wholly or partly incorporated into some other appropriate form, such as deed or conveyance. | |||
| Methods of recording settlement agreement | Exchange of lettersContract or deedEndorsement on briefsInterim orderConsent order Tomlin order >An Interim order will only be a possibility once proceedings have been issued, and if there has been an application for an interim order. Where an agreement is reached outside court on the terms of the application, these may be recorded as undertaking or in a consent order. >A consent order can only be made where proceedings have been issued so that a court has jurisdiction over the case. Exceptions where the courts consider settlements reached before proceedings are issued include cases where the approval of the court is required for a settlement involving child or a person suffering from mental incapacity, representative claim, claims under the RTA. The fact that a settlement is reached after proceedings have been issued does not mean that terms have to be recorded in a consent order. >The Tomlin order is a form of consent order that offers particular advantages. A Tomlin order can be used to keep terms confidential in a schedule. While drafting this order three things must be dealt with- – further proceedings in the claim be stayed; – each party to have liberty to apply to the court if necessary to compel compliance with the terms; – the payment of costs. | |||
| Informing the court of settlement | Once proceedings have been issued, there is a duty to inform the court if settlement is reached, even if the court is not being asked to make a consent order. | |||
| Further | If you are acting for a publicly funded client who does not accept an offer of settlement the client should be warned that there should be report to the CLS which may lead to funding being withdrawn. | |||
| Enforcement of settlement and awards | Basic method of enforcing compromise agreements | Adjudicative procedures: In adjudicative procedures, the tribunal will make an award. Enforcement will open be through registering the award with the courts of the state where enforcement is to take place, and then enforcing the award as civil judgement. An exception is construction industry adjudication where the decision is not itself registrable. Instead it may be enforced through bringing court proceedings and entering judgement. Non-adjudicative procedures: In non-adjudicative procedures, if the parties have resolved their dispute, they will have entered into a contract of compromise. Enforcement is through suing on that contract. Alternatively, the parties may convert the compromise agreement into a court judgement or order, and then enforce that judgement or order. | ||
| Merger or discharge of original obligation by compromise | By settling the original claim or having it adjudicated, the original cause of action is merged or converted into a contract of compromise or an adjudicative award. As a result, it is no longer open to either party to sue on the original cause of action. There are three exceptions to this rule: Where there is an express term reviving old obligations in the event of non-performance;Where compromise is based on performance of the agreed terms;The compromise is ineffective (eg.compromise agreement does not comply with the requirements for the formation of a valid contract). | |||
| Challenging terms of a settlement | >A settlement can only be set aside in limited circumstances, for example if it was obtained by fraud or misrepresentation, mutual mistake, unilateral mistake encouraged by the other side, mutual mistake of law. It is unlikely that it can be argued that the agreement should be rectified if it was drawn up by lawyers. >It is normally possible to appeal against a consent order, or to apply to court to vary its terms. It might be possible to get the agreement rectified, but this is unlikely where it has been drawn up by lawyers. In addition, a court may refuse to enforce a consent order for someone who is not abiding by its terms. >The court may decline to enforce a compromise if there is equitable reason for not doing so, or it can be argued that the terms of compromise have been frustrated. | |||
| Enforcement of construction industry adjudication decision | A party with the benefit of an adjudicator’s decision under the Housing Grants, Construction and Regeneration Act 1996 may bring enforcement proceedings in the courts by issuing a Part 8 claim form, and then entering default judgement if there is no AOS, or otherwise applying for summary Judgement. Situations where a valid objection to the adjudicator’s decision may bring: The adjudicator was not the person nominated by the contract, or was not appointed in accordance with the agreed procedure;There is real risk that the adjudicator was biased;There is no dispute, because the matter was not previously brought to the attention of the other party;The adjudicator acted unfairly/ with prejudice. | |||
| Arbitration settlement and awards | Enforcement of domestic arbitral awards: The court may grant permission to enforce an award of an arbitral tribunal in the same manner as a judgement or order of the court. Recognition and enforcement of New York Convention and arbitration awards: >Awards are enforceable almost all over the world. >Awards may be relied on by way of defence or set-off in any legal proceedings, or with the permission of the court, be enforced in the same manner as a judgement or order of the court. Where permission is given, judgement may be entered in terms of the award. Technically, two procedures may be used: -to apply for permission to enforce the award as if it were a High Court judgement, but without entering the award as a judgement in the court; or -to apply for permission to enter the award as a High Court judgement; it then has the status of a High Court judgement, and can be enforced as such. >A party seeking the recognition or enforcement of NYC award must produce: -the duly authenticated original award or a duly certified copy; and -the original arbitration agreement or a duly certified copy. Enforcement of Geneva Convention awards: The Arbitration Act 1996 provides for the continuing effect of the UK’s obligations under the Geneva Convention on the execution of foreign arbitral awards that are not also New York Convention. | |||
| Recap | >Most compromises operate as contracts, and can be enforced by suing on the compromise agreement. There are some exceptions, such as where a compromise agreement is conditional on the performance by one side of the compromise terms (in which case the original cause of action revives). >Construction adjudication awards can be enforced by suing on the award and entering default or summary judgement. Judgement is usually entered in accordance with the policy of ‘pay now, argue later’. >Where there are existing court proceedings, a compromise is often incorporated into a consent order or Tomlin order. >Compromise recorded in court orders and judgements can usually be enforced directly using the court’s enforcement procedures. | |||
