Litigation: Ways to avoid issuesWhat other methods are there for avoiding disputes?

Lisa Barge, Partner4 October 2012

What options are available?Options Advantages Disadvantages

Litigation • Certainty• Judicial process• Can appeal

• Time• Cost

Mediation • Non-binding unless settlement reached• Can reach commercial solution

• May not work• Consensual process

Arbitration • Certainty• May be quicker than litigation

• Can still be costly• Hard to appeal

Expert Determination

• Process can be “designed”• Can be quick and cheap

• Virtually impossible to overturn

Arbitration and expert determination

If not written into the contract, can only be used with agreement of both parties.

Factors to consider:

• what type of dispute is it appropriate for?

• who will determine the dispute?

• how will it work?

Mediation – what is it?

“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 with the parties in ultimate control of the decision to settle and the terms of resolution.”

What do the Court rules say about mediation?

The Civil Procedure Rules 1999

Part 26 – Rule 26.4(2)

“Where• all parties request a stay... or• the Court, of its own initiative, considers that

such a stay would be appropriate...the Court will direct that the proceedings be stayed for one month [to allow ADR to take place]”

What do the Court rules say about mediation?

The sting in the tail: costs

When deciding the amount of costs:“The Court must have regard to –• the conduct of all parties, including in particular

the efforts made, if any, before and during the proceedings to try and resolve the dispute.”

Part 44 Rule 44.5 (3)(a)(ii)

What does the case law say?

Dunnett v Railtrack [2002]

• Railtrack won initial case and the appeal

• Railtrack refused to mediate before the appeal, despite being discussed by LJ Schiemann

• Court declined to make any order on Railtrack’s application for the costs of the appeal, applying:

• CPR Part 44; and overriding objective in CPR Part 1

• first time court of higher jurisdiction has imposed costs sanction against a successful party who unreasonably refused to mediate

What does the case law say?

Halsey v Milton Keynes NHS Trust [2004]

• CA on dismissing appeal

• distinguishes between voluntary offers and court recommended/ordered mediation

• ignoring court recommendation is a high risk strategy

• duty on legal profession to advise on ADR

“All members of the legal profession who conduct litigation should now routinely consider with their clients whether their disputes are suitable for ADR”

• Court reaffirms confidentiality of the process

“if the integrity and confidentiality of the process is to be respected, the Court should not know, and therefore not investigate, why the process did not result in agreement”

What does the case law say?

Halsey v Milton Keynes NHS Trust [2004]

Factors to take into account when judging whether a refusal to mediate is reasonable (not exclusive):

1. nature of dispute2. merits of cases3. other attempts to settle4. whether the cost of ADR would have been

disproportionately high5. prejudicial delay of trial if ADR attempted6. whether ADR has reasonable prospect of success

What does the case law say?

Burchell v Bullard [2005]

• this important case makes several things clear:

• inter-party offers to mediate must be taken seriously

• a party showing willingness to engage flexibly in mediation problem-solving may discharge the burden of proving that mediation had a reasonable prospect of success

• those who ignore an ADR proposal at the pre-issue meeting “can expect little sympathy if they blithely battle on regardless of the alternatives”

• the fact that a professional adviser advises their client to decline mediation will not protect that client from a sanction if mediation ought reasonably to have been attempted

And finally...

41st amendment (April 2006)

• ADR to be considered before issuing of proceedings

“litigation to be a last resort.”

• cost determination

“...if the protocol is not followed...Court must have regard when determining costs.”

“...may be required by the Court to provide evidence that alternative means of resolving their dispute were considered.”

Part 44 Rule 44.5 (3)(a)(ii)

Organising a mediation

Referral Stage Set-up Stage Mediation and follow-up

Mediator selection Mediation agreement signed

Preparation

• Professional background

• Sector expertise

• Personal style

Confirmation and timetable

Final confirmation

Date and venue agreed Document exchange Mediation day

How can it all end?

• settlement agreement usually drawn up by lawyers

• settlement agreement should be complete in itself

• may need Tomlin Order/Court Order

• binding once documented and signed

• if no settlement, free to continue to negotiate, arbitrate or litigate

Any Questions?