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ADR NOTES CHAPTER 6

PROFESSIONAL ETHICS

 A number of ethical consideration can arise.


 Lawyers have a duty to their clients, the lay client and any neutral third party
 Professional conde of conduct tends to focus on the duties of the court rather than
duties of ADR

ADVISING ON ADR OPTIONS

 ADR leads to cost savings


 Lawyers would generally earn less if the case is settled at ADR but they should not let
this influence them
 They have a professional duty to the court further the overriding objective.
 They therefore have a duty to save expense, ensure that the case is dealt with
expeditiously and fairly in a proportionate way
 Legal representatives are under a positive duty to consider routinely with their
clients whether the dispute is suitable for ADR
 The duty on the parties is to consider ADR at all times and not just at the start of the
proceedings
 The duty to consider ADR should be exercised at all stages of the dispute
 Both barristers and solicitors are required to act in the best interests of the lay client
without regard to their own interests
 If a lawyers fails to give appropriate advice about ADR or negligently advises the
client to rejection of an offer, the law may expose their client to costs penalty or be
personally liable for a wasted cost order.
LAWYERS PROVIDING AN ADR SERVICE

 A solicitor’s law firm may offer ADR services, to third parties either as a mediator,
neutral evaluator or adjudicator
 They must ensure that there is no prior knowledge of or relationship either of the
parties- this is important to avoid bias
 If they had a connection from before, this must be disclosed
 No lawyer should act if there is a conflict or interest

COMPLICANCE WITH CORE PROFESSIONAL DUTIES

 Acting professionally and ethically is important in ensuring that the interest of justice
is served.
 A party or opponent might refuse to engage in ADR if the conduct is not
professional.
1. TO ACT AT ALL TIMES IN THE CLIENT’S BEST INTEREST
 A barrister must act in the best interests of the lay client without regard to his or her
own interests
 The lawyers should advise on the best process to be used for dispute resolution and
seek the best reasonably available outcome for the client not making unnecessary
concessions.
 A lawyer acting in the client’s best interest should advice on the best process to be
used for dispute resolution and seek the best reasonably available outcome for the
client.
 In advising whether to use litigation or continue with ADR, focus should be on what
is best for the client
 Settlements should be drawn up in way that best protects the client’s interests.
 The fee the lawyer gets depends on the final settlement offer, the lawyer should
accept a fee which is in the best interest of the client even if it is a low fee.

2. TO ACT WITHIN THE CLIENT’S INSTRUCTIONS


 The lawyer only acts as an agent in settling the case and thus must act within the
client’s intructions
 The objectives of the case should come from the client itself and the lawyer should
make an assumption of what the client wants
 The lawyer should always look for an outcome that is fair or that the lawyer may
choose personally but the lawyer should not decide what is the appropriate outcome
 The lawyer should advise the client on the strengths and weaknesses of each case
and what amount to a realistic outcome of the case but leave the decision to the
client.
 If the lawyer acts outside the client’s instructions, the agreement would still be
binding but the client can make a complaint for negligence
 It may be beneficial for a lawyer to procure and retain a signed copy of the client’s
instructions in case there is a dispute afterwards.
3. TO MAINTAIN CLIENT CONFIDENTIALITY
 The lawyer has a core duty to protect confidentiality of all information form a client.
 But, there are exceptions where disclosure is required by law or where the client has
given an informed consent.
 There is also the concept of legal professional priviledge, this means that the lawyers
should get the client’s approval before raising anything a client has revealed in
confidence in an ADR process
4. TO ACT COMPETENTLY
 A solicitor must only act if they are able to provide a proper standard of service and
this includes exercising competence, skill and diligence. A barrister also owes the
same duty to the client.
 A lawyer should not take a case forward unless he or she has the legal knowledge to
analyse the case properly.
5. TO ACT WITH INTEGRITY
 A solicitor must act with integrity towards the clients, the courts and other
lawyers and this maintains the trusts the public maintains in them
 A barrister should act with honesty and integrity and not behave in a way
which involves offensive or discreditable conduct to a third party.

6. TO BE INDEPENDENT
 A solicitor must not allow her or his independence to be compromised. A
barrister owes an overriding objective to the court to maintain independence
and must not knowingly mislead the court.
 The barrister should not let anyone influence his decisions and he should
make a decision based on his professional judgement.

7. NOT TO MISLEAD ANYONE


 A barrister must not knowingly mislead anyone or the court.
 The lawyer should not also mislead the other side in negotiation
 If there is anything that is misunderstood, this must be clarified by the other
side
8. NOT TO BRING THE SYSTEM OF JUSTICE INTO DISREPUTE
 Lawyers should uphold the rule of law and behave in a way that maintains
the trust the public places in the lawyer and in the provision of legal services.
9. NOT TO MAKE THREATS
 A lawyer should argue each case on its merits as it is part of acting with
integrity.

SPECIFIC DUTIES IN NEGOTIATION AND MEDIATION

 The professional duties above have implications for all stages of negotiation
or mediation. The lawyer should not take a case where he / she does not
have the ability to analyse it fully.
 The lay client must be informed properly about the merits of the case, the
prospects of success and evidential weakness in the case. The client should
also be informed of the costs of going to trial so that the client can make an
informed decision.
 The client should be given sufficient information to be in a decision to make
an informed decision.
 When drafting a position statement, case summary or any other document
for use in an ADR a lawyer should ensure that all allegations and assertions
are properly arguable and supported by instruction
 In conduction the negotiation or mediation, there is a potential tension
therefore, it is important to take a strategic approach, tactics should be used
to get the best available outcome for the client.
 It is important to act ethically at all times. A competitive strategy may involve
the making strong statement of bluffings. But there are grey aread about how
far it is acceptable to go; a lawyer should not pretend to hve evidence that is
not in the case, misrepresent evidence, conceal information that should be
properly disclosed, provide information that is false
 If the mediator, or neutral in an ADR process, believes that an information is
being misrepresented, the party has a right to ask the other party for
clarification.
 The mediator can also warn the other party the dangers of misleading a
position
 If a party is acting in an unethical way, the behaviour can be challenged.

THE DUTY OF CONDIDENTIALITY

 Privacy can be one of the main attractions of an ADR process. Whereas litigation
normally takes place in open court.
 There is no absolute right of privacy in an ADR process but privacy depends on
several concepts such as there is a professional duty to main confidentiality, there is
an agreement between the parties,
 However, whilst they are useful, they also create drawbacks as well as advantages.
Problems may arise if; the ADR process breaks down and a party would like to reveal
something later on in litigation
 What happens in an ADR process can be disputed after in relation to the terms
 There is an attempt to call anyone involved in the ADR process as a witness in later
proceedings.
Confidentiality in mediation

 The confidentiality of mediation is based on contractual agreement and on ‘without


prejudice’ principle. Communication takes place between the parties themselves and
the parties and not between the mediator. The mediator should never be revealed
to the court.
 A separate duty of confidentiality exists where communication takes place between
the part and the mediator in a private meeting. These communications are
confidential unless the disclosing party otherwise agrees. The mediator therefore
owes a separate duty of confidentiality to each party in relation to the information
communicated.
 The confidentiality of communications in mediation is not absolute and they can be
disclosed in the following circumstances; where it is in the interest of justice to do
so, on the grounds of economic duress, where a claim is being brought for
misconduct of mediator, to prevent commiting a criminal act, where there is a
statutory duty to disclose.
Confidentiality can be waived in the following circusmtances:
 The parties agree hat it is important that a public rather than a private meeting takes
plces
 The parties want a provision od their settlement agreement made public
confidentiality in early neutral evaluation and expert determination

 Confidential information can be provided to an expert in expert determination or to


an evaluator in early neutral evaluation unless the parties agree that this should not
be done
WITHOUT PREJUDICE COMMUNICATIONS

 In litigation, all communications passing between the parties whether orally or in


writing which are made in an attempt to settle a dispute are protected from
disclosure in both the present and subsequent proceedings.
 The without prejudice rule will prevent disclosure of communication aimed at
settling a dispute even if litigation has not yet begun.
 Communications are protected from disclosure whether or not the word ‘without
prejudice’ is used. The words ‘without prejudice’ may simply reserve the right to
raise a point rather than protect contents from being raised in court.
 Parties should not be discouraged by the knowledge that anything said in
negotiations may be used to their prejudice in the course of the proceedings. They
should be able to put their cards on the table without fear that any statements made
would be used against them in the future.
 The rule therefore enables the parties to conduct negotiations freely in that they can
make negotiations and offers without the mattes being used against them in
litigation.
 It has been held that a meeting between lawyers and opposing side to discuss tactics
will not be protected.

EXCEPTIONS TO THE WITHOUT PREJUDICE COMMUNICATION RULE

 There are a limited number of exceptions where the without prejudice


communication can be disclosed to the court. The main exceptions are as follow:
1. To determine whether a settlement was reached or to prove the terms of the
settlement
2. To assist in the proper interpretation or construction of the terms of the
agreement or to ascertain the intentions of the parties
3. To determine whether settlement agreement has been properly reached during
the negotiation
4. Where the rule is being abused e.g by threats, dishonesty, oppressive or
disreputable conduct
5. Where there is a serious harm to the child
6. Where it may be necessary to explain why there has been a delay in starting
litigation or to obtain relief from sanction
7. If the parties have made it clear, that the communication can be looked at on the
question of cost
PRACTICAL CONSIDERATIONS

 The professional duties of a lawyer means that he is bound by the confidentiality


rule and the without prejudice rule means that the lawyer should take utmost care
no to
1. Deliberately reveal private or confidential information relating to their client.
This may be particularly risky when negotiating face to face with the other side in
the absence of the lay client, when discussions are informal and fast paced.
Lawyers must try not to reveal something which would be potentially damaging
to the clients case
2. They must not also disclose any information gained during the ADR process or
reveal the details of what took placed to any third party
3. Reveal any information that the clients wishes to keep confidential to the
lawyers acting for the opposing side.
4. Disclose Any information that the client wishes to withhold from the other side.
5. However, it must be made clear that an admission is not protected by the
without prejudice rule and this can be disclosed to by the other side….

DISCLOSURE OF INFORMATION IN ADR PROCESSES


Non- adjudicatory and expert determination

 In non- adjudicatory ADR proceeds and also expert determination, the parties usually
retain control of how information to put before the mediator, facilitator, neutral
evaluator or expert. Generally, the parties will disclose information and evidence
that is relevant to the dispute and helpful to the case of the disclosing party.
 The difficulty lies in deciding whether information should be disclosed that is adverse
to the client’s case.
 The lawyer acting for the client may be asked o give advice on whether disclosure of
certain documents should be made, however, information disclosed should not be
misleading or false. Information that are potentially helpful to the other side should
not be disclosed

AUTHORITY TO SETTLE

 Normal contractual principles will apply in relation to whether a settlement has been
reached and the terms of settlement. Therefore, an oral agreement would not be
binding unless it has been agreed in advance that any oral agreements would be
binding.
 Lawyers acting in non-adjudicatory processes much ensure that they
1. Have clarified any limitations on their authority to effect a binding settlement
2. Do not exceed the authority given by the client
3. Do not mislead the opposing party as a mediator as to the authority given
4. Make and keep an accurate note of offers, counter offers and concessions that
may be made during the negotiations
THE RELATIONSHIP BETWEEN BARRISTERS AND THEIR PROFESSIONAL CLIENTS IN ADR

 A barrister may be instructed to attend an ADR process such as mediation instead of


the instructing solicitor.
 The barrister must ensure that he keeps an accurate account of what happens during
the process
 A barrister must bare in mind that the primary duty if owed to the lay client rather
than the professional client
CHAPTER 7- THE APPROACH OF THE
COURT TO ADR
PRE-ACTION PROTOCOLS

 Under the CPR, protocols were introduced to set out the steps that the parties should follow
before issuing proceedings, as part of a reasonable pre-action conduct.
 There are 14 specific protocols relating to personal injury claims, low-value personal injury
road traffic accident claims, low value personal injury employers… etc..

PRE-ACTION CONDUCT AND PROTOCOLS

 The aim of pre-action conduct and protocols are to enable the parties to exchange sufficient
information to understand each other’s position and make decisions about how to proceed,
settle issues without the need to start proceedings and to consider a form of ADR to assist
with settlement
 Only reasonable and proportionate steps should be taken by the parties to identify narrow
and resolve the factual issues.
 The costs incurred in relation to pre-action conduct must also be proportionate, otherwise
they will not be recoverable as part of the proceedings.
 Litigation should be the last resort. Proceedings should not be commenced if a settlement is
still being actively explored.
 Although ADR is not compulsory, the parties should consider whether some form of ADR
might enable them to settle the dispute without commencing proceedings.
 The parties should also explore settlement even after proceedings have been issued and up
to the final hearing
 A party’s silence in response to an invitation to participate or a refusal to participate in ADR
might be considered unreasonable by the court and can lead the court ordering the party to
pay additional costs.
 Unless the circumstances make it inappropriate, the parties should exchange sufficient
information about the mattes in dispute to enable them to understand each other’s position
and make informed decisions about settlement and how to proceed.
 Before, starting proceedings, the claimant should send the defendant a letter before claim
summarising the facts and basis of the claim, the remedies sought from the defendant, and
if the claim includes money, how the sum has been calculated.
 The defendant should send the claimant a response, within a reasonable time which will
usually be 14 days in a simple case and up to 3 months in a more complex case.
 If any part of the claim is disputed, this should be explained in the document.

THE PRE-ACTION PROTOCOLS

 All of the protocols have the same common purpose which is to:
 Encourage pre-action conduct between the parties
 Encourage the early exchange of information about the matters in dispute
 Encourage the parties to use ADR and to settle rather than going to court
 Support the just, proportionate and efficient management of proceedings where litigation
cannot be avoided

THE PRE-ACTION PROTOCOL OR POSSESSION CLAIMS BASED ON MORTGAGE OR HOME PURCHASE


PLAN ARREARS IN RESPECT OF RESIDENTIAL PROPERTY

 Starting a possession claim should normally be the last resort and should not normally be
started unless all reasonable attempts to resolve the matter have failed.
 The protocols could include extending the terms of the mortgage, changing the type of
mortgage, deferring payment of interest or capitalising the arrers.

THE PREACTION PROTOCOL FOR CONSTRUCTION AND ENGINEERING DISPUTES

 This applies to all construction and engineering disputes including professional negligence
claims against architects, engineers and quantity surveyors.
 This is unique because it requires the parties to have a pre-action meeting within 21 days of
receipt of the defendant;s letter of response.
 The aim of the meeting is for the parties to agree the main issues in the case, to identify the
cause of disagreement in respect of each issue and to consider how the issues might be
resolved without litigation and if not possible, how it can be conducted with the overriding
objective in mind.
 There may be more than one meetings and it can take the form of an ADR process such as
mediation.

FAMILY PROCEEDINGS

 The family procedure rules sets out rules for all family proceedings in the high court and the
family court
 It provides that a mediation information and assessment meeting should take place before
making any application to the court in any private law proceedings relating to children and in
proceedings for a final remedy.
 The MIAM is between the parties and the mediator.
 The statutory provisions provide that a MIAM meeting must be attended for the purposes of
enabling information to be provided about mediation, the way in which family disputes can
be resolved

THE COURT GUIDES

THE ADMIRALTY AND COMMERICAL COURTS GUUDE

THE CHANCERY GUIDE

THE QUEEN’S BENCH GUIDE

THE CIRCUIT COMMERCIAL

THE PATENTS COURT GUIDE


THE ADMIRALTY AND COMMERCIAL COURTS GUIDE

 All parties attending a case management conference must complete and file a detailed case
management information sheet. This requires the parties to answer the following specific
questions about ADR:
1. Might some form of ADR procedure assist to resolve or narrow the dispute or particular
issues in it.
2. Has the question of ADR been considered by the client and the legal representatives
3. Has ADR been explored by other parties
4. Do you request that the case is adjourned while the parties try to settle the case by ADR
 If the parties ask the court to hold a case management conference on paper, then the
documentation to be lodged with the court must include a statement signed by each
advocate which sets out any steps to be taken to resolve the dispute by ADR and any future
plans
 At any case management conference, the judge can invite the parties to use ADR and he
may adjourn the case for a specified period of time to encourage and enable the parties to
use ADR.
 It will also look at the costs between ADR and litigation to see whether ADR is more likely to
be successful.
 The courts can make an order directing the parties to disclose documents or to provide
further information about their case.
 At a case management conference, the court may consider than order directed at
encouraging bilateral negotiations between the parties respective legal representative is
likely to be more cost-effective rather than a formal ADR or ENE.

THE CHANCERY GUIDE

 The chancery division similarly encourage the parties to use ADR to resolve their dispute and
if they consider ADR to be appropriate, they can apply for directions at any stage.
 The court will invite the parties to consider whether their dispute could be resolved through
ADR.
 The master at the case management conference will consider what steps have been taken as
regards to ADR and this would be important in the future.
 The court can extend the time of the CPR to ensure that ADR has been attempted to the
fullest.
 However, an open-ended stay will not be granted and if a lengthy stay is ordered, the parties
must regularly report to the court in respect of their negotiations.
 CHECK WHETHER WE NEED TO LNOW ABOUT THE CHANCERY MODERNISATION REPORT
REVIEW

The QUEEN’S BENCH GUIDE

 Similar to the chancery guide in terms of encouraging the parties to use ADR and granting
orders

THE TECHNOLOGY AND CONSTRUCTION COURT GUIDE


 They also encourage the parties to use ADR and will facilitate the use of ADR. Legal
representatives must ensure that clients are fully aware of the benefits of ADR and that it
has been considered during case management.
 The technology and construction court guide pre-action protocol, itself provides for a form
of ADR because it requires to be at least one face to face meeting between the parties
because proceedings are commenced. Due to this process, the court would then not usually
grant a stay of proceedings upon demand.
 At the first case management conference, the court will be addressed o the likely efficacy of
ADR, timing and efficacy of it and they court may order a short stay to facilitate ADR
between the parties.
 The ADR order will provide the parties to agree on the identity of the mediator or other
neutral person. If they do not, the court will select a person for them.

THE OVERRIDING OBJECTIVE AND ADR

 The overriding objective of the CPR is set out in CPR R 1.1 which provides that cases must be
dealt with justly and at proportionate costs. The word proportionate cots was added to the
Jackson reforms.

ACTIVE CASE MANAGEMENT AND ADR

 The court is required to further the overriding objective by actively managing cases- CPR R
1.4 (1). In furthering the overriding objective, the court can and will encourage the parties to
use ADR methods to resolve dispute.
 Active case management includes CPR R 1.4 (2)
1. Encouraging the parties to co-operate with each other in the conduct of the proceedings
2. Identifying the issues at an early stage
3. Deciding promptly what issues need full investigation and trial
4. Deciding the order issues are to be dealt in
5. Helping the parties to settle the whole or part of a case
6. Fixing timetable or otherwise controlling the progress of the case
7. Considering whether the likely benefits of taking a particular step will justify the cost of
taking it
8. Dealing with many aspects of the case as possible
9. Making appropriate use of technology
 The parties and the lawyers are under a duty to assist the court to further the overriding
objective. The court can contact the parties from time to time to monitor compliance with
the directions
 The powers of the court are set out in CPR R 3.1 which include the powers to extend or
shorten the time for compliance with any rule, PD or court order, stay the whole or part of
proceedings. These powers are made to encourage the parties to use ADR.
 Where the court gives directions, it will take into account whether or not a party has
complied with the PD and protocols and any relevant Pre- Action protocol. (CPR R 3.1 (4))
 The court can also order a party to money into a court a party to pay money into court if
that party has without good reason failed to comply with a rule, PD or relevant pre-action
protocol.
CASE MANAGEMENT ORDERS AND ADR

 The court can direct the parties to consider ADR at a case management conference or pre-
trial review. This was approved in Halsay v Milton Keynes General NHS trust.
 The court can also make directions to facilitate the use of ADR for example by ordering early
or limited disclosure of documents
 If parties fail to act reasonably and proportionately to settle their dispute, the court will
penalise their conduct by making an adverse cost order. In some cases, the court may be
prepared to strike out a case.

PART 36 OFFERS TO SETTLE

 Amendments to CPR part 36 which deals with offers to settle, in an effort to encourage the
parties to settle a dispute before and during the course of proceedings.
 If a claimant makes an offer to settle but at trial obtains a judgment which is as
advantageous at the Part 36 offer, then court can order that the claimant is entitled to
- Interest on the whole or part of the claim
- Additional amount
 The additional amount was added as part of the Jackson reform. It puts an incentive on the
D to accept a reasonable offer made by the claimant otherwise they would need to pay an
enhanced sum in respect of damages as well as additional interests and indemnity costs.
Therefore D need to be careful when rejecting a claimant’s offer of a part 36 offer to settle.
 If a claimant also refuses a D Part 36 offer, the claimant would have to pay the D’s costs even
if they have won the action. CPR 36.17 (3)

COSTS MANAGEMENT AND ADR

 The purpose of costs management is that the court should manage both the steps to be
taken and the costs to be incurred by the parties to any proceedings so to further the
overriding objective.
 Lawyers and parties must deal with the cost management at a proportionate cost
 The parties must file and exchange a cost budget and this requires the parties to set up a
budget for each stage of litigation
 The court can refuse to approve the budgets if the figures claims are disproportionate and
unreasonable. Parties are expected to review budgets and either agree or apply to vary
them as appropriate.
 An application to amend the costs should be made as soon as possible or that it has
exceeded the original amount.
 The court will not approve a variation unless the applicant has shown a good reason for
departure of the original costs.
 When making case management directions, the court is require to take into account the
available budget and costs of each procedural step CPR R 3.17. A party will not be able
recover more than the costs set out in the budget for each phase of litigation unless there is
good reason to do so.
 If a party does not file a cost budget, they will be treated as only filinf a budget of the
applicable court fees. This is a draconian court fee as the party will not be able to recover
the vast majority of legal costs.
 The court also has power to make costs capping order limiting the amount of future costs
that a party may recover in relation to the whole litigation or one or more issues. CPR R3.19
 Costs can only be recovered to the extent that they are proportionate
 Moreover, simply because a cost budget was accepted does not mean that it is reasonable
and proportionate but on assessment of the cost, it will still considered again by the court.

GRANTING STAYS FOR ADR

 The court’s general powers of case management include the power to make orders staying
the whole or part of any proceedings until a specified date or event CPR R3.1 92) (F)
 Such stay will only be for a period of one month although the court has the power to extend
this period and will often do so. Even if the parties do not require a stay, the court can still
order an extension
 If the parties apply for a stay then the court will treat a letter from either party as binding
but the letter must explain that both parties are willing for an extension.
 A stay suspends any further steps that are needed to be taken in relation to litigation.
Therefore, it enables an ADR process to be explored whilst litigation is suspended. When the
stay is no longer applies, the proceedings can be resumed.
 A stay can be ordered at track allocation stage or at any stage of the proceedings by any of
the parties.
 If a stay is granted for ADR to be attempted, the parties must keep the court informed about
the outcome of the ADR process
 If a settlement is finalised, the parties will need to dispose of the court proceedings by way
of a Tomlin Order or Consent Order.
 If no settlement is reaches during the ADR process, then the claimant would need to apply
to the court for the stay to be lifted and for nay further directions so that it can proceed to
litigation.
 In multi- track cases, the court may impose a sensible timetable to allow the parties to take
part in ADR as the case progresses.

JUDICIAL ENCOURAGEMENT OF ADR

 The courts have encouraged the parties to use ADR in general and mediation is particular.
There is still a continuing duty on the parties to consider ADR throughout the litigation

THE APPROACH OF THE COURTS TO CONTRACTUAL ADR CLAUSES

 ADR can also be incorporated into contracts which binds the parties to resolve their issues
through ADR. The clause may identify a particular ADR method to be used such as
mediation, or it may also specify a number of methods that need to be exhausted before
litigation is commenced.
 It may also specify that if an adjudicative form of ADR procedure is used such as expert
determination, adjudication or arbitration then the parties would be bound by that decision.
 In recent years, the courts have more readily upheld or implied contractual obligations of
good faith, there could be ADR clause that require the parties to behave in a friendly way, to
be honest and fair and genuine.
 ADR clauses must be drafted carefully, it must be clear and unambiguous, if not the court
will decline to enforce the clause.
 In Holloway v Chancery Mead, it set out three requirements for an ADR clause:
1. The process has to be sufficiently certain in that there should not be the need for an
agreement at any stage before matters could proceed;
2. The administrative processes for selecting a party to resolve the dispute and to pay that
person had to be defined;
3. The process should be set out so that the detail of the process is sufficiently certain.
4. The court can also award damages for breach of an ADR clause. The damages could
include the costs incurred by that party in relation to the proceeding.

CAN THE COURT COMPEL THE PARTIES TO USE ADR

 Most ADR are entered into voluntarily in order to reach a faster, more cost effective
settlement.
 Although the court can direct that the parties to try ADR, it cannot force them to use ADR. In
Halsey, it recognised that to require an unwilling part to mediate would infringe the
European Court of HR art 6 by which that everyone is entitled to a fair hearing and trial. The
CA also found that mediation is most effective when it is done on a voluntary basis. The
court can encourage them to use it rather than to compel them to use it
 The encouragement needs to be robust and could be similar to the commercial court guifr
which is the strongest form of encouragement.
 There are many commentators who consider that Halsey is wrong in holding that the court
could not compel the parties to engage with an ADR process on the basis that it would
infringe their Art 6 HR

SUMMARY

 In summary, the present position in the courts of England and wales is that the court will if
appropriate enourage the parties to attempt to resolve their dispute by ADR and the
strongest form of encouragement lies with the commercial court guides.
 Parties could be penalised in costs orders if they are unwilling to consider ADR particularly if
the court ordered them.
CHAPTER 8

THE SANCTIONS FOR REFUSING TO ENGAGE IN ADR PROCESSES

 The court can penalise a party who unreasonably refuses to:


1. Comply with an order made by the court when it directs the parties to try and resolve
their issue through ADR
2. Accept and offer made by the other side to attempt to settle dispute using ADR process
before the issue of proceedings
3. Accept an invitation by the other side to consider ADR
4. Accept a reasonable offer to settle or a Part 36 offer

 The orders that the court can make:


1. Depriving the party costs even if they are successful in litigation
2. Ordering them to pay some or all of the other sides costs even if they are successful in
litigation
3. Ordering a highest interest rate to be paid in damages
 The most common sanction that is imposed for unreasonably failing to consider ADR to
resolve a dispute is to make adverse cost order.
 Since the Jackson reform, the courts have been more robust in penalising parties who fail to
take reasonable or proportionate steps to settle their dispute.

THE COURT’S GENERAL POWERS TO MAKE COSTS ORDERS

 The courts has a discretion whether costs are payable by one party to the other, the amount
of the cots and when they are to be paid CPR r 44.2 (1)
 The usual order is that the overall loser would pay the costs of the litigation but the court
can make a different order under CPR r 44.2 (2)
 In deciding what costs orders to pay, CPR r 44.2(4) would be applied and this includes:
1. The conduct of the parties
2. Whether a party has succeeded in part of his case
3. Any previous offers of settlement made by the parties
 In looking at the conduct of the parties, the court will look at the CPR r 44.2 (5) which
includes:
1. Conduct before as well as during the proceedings and in particular the extent to which
the parties applied the PD and pre0action conduct
2. Whether it was reasonable for a party to contest a particular allegation or iddie
3. Whether a C who has succeeded in the claim, in whole or in part exaggerated his claim.
 The costs orders that a court can make under CPR r 44.2(6)
1. A proportion of another party’s costs
2. A stated amount in respect of another party’s costs
3. Costs from or until a certain date
4. Costs incurred during proceedings have begun

ADVERSE COSTS AGAINST A PARTY WHO FAILS TO COMPLY WITH THE PRE-ACTION PROTOCOLS
 The court can take into account the extent of the parties compliance with the pre-action
protocols or PD when making case management and costs orders.
 The court is more concerned with whether there has been an attempt rather than technical
infringements.
 Non – compliance can be unreasonable refusal to consider a form of ADR or a failure to
respond.
 The court can ask for evidence that they have used ADR and what steps they took in relation
to ADR.
 If appropriate steps have not been taken, the court can have these sanctions including:
1. Staying the proceedings until the steps which ought to have been taken are taken
2. The party at fault pays the costs or part of the costs to the other party
3. If the party at fault is the claimant, the court can order that they are deprived from all
interests on damages awarded
4. If the party at fault is the defendant, the D must pay interests on all or part of the sum
awarded to the claimant

ADVERSE COSTS ORDERS AGAINST A PARTY WHO UNREASONABLY REFUSES TO CONSIDER ADR

 The leading case is Halsey v Milton Keynes General NHS Trust


 In Halsey, the D succeeded at first and were awarded the costs of the proceedings.
 The C appealed against the D in that they should be deprived of the costs orders for
unreasonably refusing mediation.
 The CA dismissed the appeal and held that we should not depart from the general rule that
the loser has to pay for litigation costs.
 In deciding whether the refusal to consider ADR was unreasonable, the court should
consider all the circumstances of the case including:
1. The nature of the dispute
2. The merits of the case
3. The extent to which settlement methods have been attempted
4. Whether the costs of ADR process would be disproportionately high
5. Whether any delay in setting up and attending the process would have been prejudicial
6. Whether ADR process has a reasonable prospect of success

THE NATURE OF THE DISPUTE

 There are some cases which may not be suitable for ADR as its may be necessary for the
court to determine issues of law or construction, a legal precedent is necessary. In such
cases, a party would not be acting unreasonably in refusing ADR process.

THE MERITS OF THE CASE

 The fact that a party believes that he has a strong case is relevant to the question of whether
ADR refusal is reasonable, otherwise a C could simply make a threat of costs sanction to
refuse a settlement.
 If a party reasonably believes that they have a strong case, then this may be good reason
for refusing ADR.
 In Halsey, it stated that if a case is borderline then it may be suitable for ADR. A party may
still have a strong belief that they have a strong case even if they do not win at trial
 In Hickman v Blake Lapthorn it held that it was not unreasonable for refusing to mediate on
the grounds that he believed
 that he had a strong case. He also refused to participate in any settlements.
 The key consideration is whether the party’s assessment of the merits of the case was
reasonable. The court would not usually look at whether the successful party failed to
respond to any offers to undertake mediation or negotiate. A successful party would not be
penalised if they reasonably believed that they would be successful in the case.

THE EXTENT TO WHICH OTHER SETTLEMENT METHODS HAVE BEEN ATTEMPTED

 The court would expect the parties to have complied with the PD and sanctions could be
imposed for not doing so
 In Burchell v Bullard, the court of appeal stated that a party should not ignore a reasonable
request to negotiate or mediate before proceedings are started. It found that the D was
unreasonable in refusing an offer to mediate before proceedings were issued. The D reason
for rejecting mediating being that it was too complex was a nonsence excuse. However, the
court still refused to make an adverse cost order because the law was not well developed at
the time
 The court will take into account any settlement offers that have been made but they would
not be automatically penalised for refusing ADR. In will depend on the facts of the case
 It is not unreasonable for a successful party to refused to engage in mediation when they
believe that they have a strong case but, theat they were prepared to engaged in ‘without
prejudice’ discussion and there is no good reason why that should not be tried. It would be
quicker and cheaper

A DEFENDANT’S FAILURE TO MAKE A TIMELY OFFER

 A court can also penalise a D for not attempting to make any offers to settle the claim.
 However, D faced with a dishonest or exaggerated claim could make a Calderbank offer to
settle the genuine parts of the claim and the costs of that part but on the basis that the C
would pay the D’s costs on the fraudulent parts of the claim.
 It is clear that there is an obligation on both parties to proactively look for ways to settle a
case particularly, where the costs exceed the value of the claim or counterclaim.
 Even if the parties reach a settlement, they court can still penalised them for exaggerating a
claim.

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