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Litigants have always been encouraged by the Courts to consider and engage in alternative dispute resolution before court proceedings are issued and during the court process. Whilst there may have been costs sanctions for those who failed to engage in alternative dispute resolution methods without good reason, the emphasis was on those methods as an “alternative” to the court process rather than a compulsory requirement. It was felt that to impose alternative dispute resolution on truly unwilling parties would be akin to obstructing their right of access to the Court (Halsey v Milton Keynes General NMS Trust).
However, recent developments indicate that the tide is now turning. The Courts’ resources were under significant pressure pre-pandemic, and this has only intensified with the backlog created in the legal system during the pandemic. The pressure is now on the judiciary to find ways of alleviating the caseload whilst ensuring that there is access to justice for all. One of those methods is to consider imposing “alternative” dispute resolution procedures on parties to minimise court time and costs.
In June 2021, Sir Geoffrey Vos, Master of the Rolls, said that Alternative Dispute Resolution should be renamed “Dispute Resolution” as it was not an alternative at all. This position has been supported by the latest report from the Civil Justice Council, which concludes that it is lawful to make alternative dispute resolution mandatory and that imposing mediation does not breach Article 6 of the European Human Rights Convention.
If that is to be the case, parties may be inclined to agree to contractual provisions in agreements to give them more control over the dispute resolution process in the event that a dispute arises. Key questions to consider are how ADR provisions will become more prevalent in agreements, and even if those agreements encourage early resolution, will pre-action ADR be sufficient to satisfy the Court’s mandatory requirement?
One of the main hurdles ADR faces is that one (or both) parties are often not inclined to consider a compromise. One of the most effective ways of encouraging/mandating parties to enter into ADR is for them to agree to it in contractual documentation before any dispute arises.
Contractual provisions are already included in leases to deal with (for example) the resolution of rent reviews and suspension of rent due to damage by insured risks. It has also long since been the case that construction contracts include provisions for arbitration and ADR. In order to deal head-on with the Court’s potential power to impose compulsory dispute resolution, ADR provisions may become more prevalent in other areas of property agreements, such as:
Indeed, Government Guidance on contractual behaviour in the performance and enforcement of contracts impacted by the Covid-19 emergency requires that the parties “use negotiation, mediation and other alternative or fast-track dispute resolution mechanisms”. In Dwyer (UK) Franchising Ltd v Fredbar Ltd & Bartlett, the Court criticised the Claimant’s approach to recovering sums from the Defendant, stating that they had failed to treat the Defendant “compassionately in the context of exceptional circumstances which required all companies to adopt a reasonable approach rather than apply strict legal rights”.
However, any contractual agreements to mediate need to be considered with care. For example:
Regardless of whether the parties agree to a form of ADR at the outset, will such pre-action dispute resolution satisfy the Court, or will the Court require the parties to revisit mediation throughout the court process?
A hard and fast procedural rule requiring dispute resolution at a certain point pre or during litigation may only work in some cases. In some cases (such as boundary disputes), the Court will likely impose dispute resolution early in the process and require the parties to continually revisit it. ADR may be a pre-condition to issuing a claim or a compulsory part of the early stages of the procedure.
However, in other cases, particularly in legally and factually complex claims, it may be that ADR can only sensibly take place later in the process, for example, after the case has been pleaded, after at least some disclosure has taken place, or even after exchange or witness statements. It may be left to the Court to decide if and when an order compelling the parties to enter ADR should be made. In those cases, the Courts may be empowered to strike out a claim or defence if a party fails to comply with a compulsory ADR order at a later stage in proceedings, with a facility for such a strikeout to be set aside if there was a valid reason for non-compliance.
The practice of ordering parties to proceed to mediation regardless of their wishes is prevalent elsewhere in the Commonwealth, the US and other parts of the world. Where mandatory ADR is prevalent, the requirement is imposed at different stages in the process. For example;
Sir Geoffrey Vos considers that England and Wales have some catching up to do on the world stage in terms of imposing ADR on litigants before costs and time expenditure become excessive. How this will be implemented in practice is yet to be seen, but it is clear that those litigants who wish to have “their day in Court” may have to reassess their approach to dispute resolution.
If you would like more information regarding alternative dispute resolution and how we can help, you can get in touch with our Property Litigation Team on 0161 941 4000 or email the Property Litigation Team.