Pump Court Chambers

ADR – Compromise in COVID-19 lockdown

Blog 14th April 2020
Technology – A lawyer’s Best Fremeny?

With the courts shutting their doors to the majority of litigants following the outbreak of Coronavirus, now more than ever parties and their lawyers are turning their minds to alternative dispute resolution (ADR). From virtual mediations to remote ENEs and arbitrations, there are plenty of forms of ADR which can be conducted effectively during this crisis. ADR remains a powerful tool for concluding cases swiftly and at comparatively minimal cost which in this time of economic uncertainty is crucial. In this blog we would look at the different forms of ADR and how to they might continue to operate practically during the lockdown and social distancing measures associated with the pandemic.

 

A reminder of why it is important

The Jackson ADR handbook joins the CPR and the Chancery Guide in making clear that judges and parties must consider ADR prior to and at all stages of litigation with a view to achieving the new Overriding Objective of enabling the court to deal with cases justly and at proportionate cost.

Para. 8 of the Practice Direction on Pre-Action Conduct provides: “Starting proceedings should usually be a step of last resort… Although ADR is not compulsory, the parties should consider whether some form of ADR procedure might enable them to settle the matter without starting proceedings. The court may require evidence that the parties considered some form of ADR.”

While not perhaps compulsory in a literal sense any party refusing or ignoring an offer of ADR is running a very great risk with regards to the costs of the litigation.

ADR options – Practice Direction paragraph 8.2
The Practice Direction goes on to summarise some of the options for resolving disputes without litigation:

  • Discussion and Negotiation
  • Mediation (a form of negotiation with the help of an independent person);
  • Early Neutral Evaluation (where an independent personfor example a lawyer or an expert on the subject, gives an opinion on the merits of the dispute and now sometimes confusingly used judicially to refer to a quasi-FDR hearing); or
  • Arbitration

Assessment of suitability of Mediation
In Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002 the Court of Appeal said the following factors should be considered: –

  • nature of the dispute
  • merits
  • failure of other settlement attempts
  • costs of mediation disproportionate
  • delay
  • whether any prospect of ADR succeeding

 Since Halsey was decided the scope that those guidelines provide for a refusal of mediation has narrowed considerably. Alongside many other types of litigation Inheritance and Probate claims are suitable in nature for resolution by mediation and the Courts have made this clear on any number of occasions including in Williams v Seals & Ors. [2015] WTLR 34 (a later judgment in the same matter enthusiastically endorses ENE – see below) and Wright v Waters [2015] WTLR 353 (notable for a statement that the case was well suited to mediation despite the Court dismissing it in its entirety).

 

The alternatives to a conventional court hearing

Remote Hearings: In the wake of the Coronavirus pandemic, the courts have been trying their best to adhere to the government’s social distancing guidelines whilst at the same time carrying on “business as usual”. The Lord Chief Justice has issued guidance in respect of civil and family hearings which makes clear that the courts will try and conduct hearings remotely using video or telephone facilities or by paper. Contested hearings will be conducted remotely if they can but this may not always be possible or practical. In practice the courts are adjourning trials but judges are still willing to conduct directions hearings and pre-trial settlement hearings remotely. The authors have themselves successfully acted in remote Early Neutral Evaluation and Financial Dispute Resolution hearings. In the authors’ view these hearings can be just as effective as “in person” hearings,  if not better, because they might conducted from the comfort of the litigant’s own home thus reducing the burden of stress and anxiety which can itself act as a barrier to settlement.  They can, of course, be accompanied with “face to face” conferences between advisors and their clients or between representatives using video conferencing facilities. The coronavirus pandemic is perhaps acting to drag the legal system and those who work in it into a new technological era and perhaps not before time. Indeed there will be those in other sectors who would dispute how ‘new’ much of this technology is (Zoom was founded in 2011, Skype was initially released in August 2003 and Lifesize was founded in the January of the same year – although increased bandwidth and processor speeds have rendered each vastly more user-friendly in the intervening periods).

Early Neutral Evaluation (“ENE”): is a term which has come to mean two distinct things. Before it was a court process it was always understood to be an option whereby a neutral lawyer, sometimes a retired judge, (or perhaps surveyor in some property disputes) would provide the parties with an independent assessment on a non-binding and without prejudice basis. It is particularly well suited to multi-party family provision claims and cases where there is little or relatively little dispute as to the facts. The evaluator will be chosen by the parties and will be a specialist in the area concerned thereby giving confidence to the parties. He or she will be able to dedicate significant preparation time and as much hearing time as is necessary unlike a court FDR where preparation is constrained by other court matters.  If parties consent, a private ENE can be held in person at a venue which would enable all concerned to adhere to social distancing measures. Alternatively they can easily be held remotely as discussed above. In low value claims the assessment is often commissioned and provided on paper. In either case ENE can be arranged at relatively short notice and is thus a good way to progress cases given the current climate.

In Seals, Seals v. Williams [2015] EWHC 1829 (Ch), where Norris J, VC, highlighted the positive steps which could be taken by the court in being invited to undertake ENE. He stated at paragraph 3 of his judgment:

“The advantage of such a process over mediation itself is that the judge will evaluate their respective parties’ cases in a direct way and may well provide an authoritative (albeit provisional) view of the legal issues at the heart of the case and an experienced evaluation of the strength of the evidence available to deploy in addressing those legal issues. This process is particularly useful where the parties have very differing views of the prospect of success and perhaps an inadequate understanding of the risks of litigation itself”. 

Whilst an ENE can be voluntary the court confirmed in the recent case of Lomax v Lomax [2019] EWCA Civ 1467 that it might be ordered as part of the case management process.  The power stems from CPR r3.1(2)(m) which came into effect on 1st October 2015. The court may “…take any other step or make any other order for the purpose of managing the case and furthering the overriding objective , including hearing an Early Neutral Evaluation with the aim of helping the parties settle the case”. The Court of Appeal confirmed that the CPR did not contain an express requirement for the parties to consent before an ENE ordered and such consent was not thus required.

Although the CPR does not expressly provide for “Financial/ Family Dispute Resolution” hearings as in family proceedings, the CPR did initially intend CMC’s to be used in a manner very much akin to what is now a FDR. This approach is finding favour in an increasing number of County Courts around the country particularly by judges familiar with the benefits that have accrued in financial remedy proceedings but also notably in CLCC. It is a without prejudice court hearing conducted by a judge who will give an indication to the parties as to the merits of the case and the likely outcomes. The Judge who conducts the FDR will have no further involvement in the case. Like ENE’s the parties are at liberty to arrange a private FDR (indeed at this time the family courts are offering robust encouragement in this direction) whereby they appoint their own “Judge” (usually a specialist barrister). Although this involves additional cost -the Private FDR Judge’s fee- this is a good option if the court cannot accommodate a remote hearing and/ or is threatening to adjourn off the case to a later date.

The advantages of an FDR/ ENE over mediation are:

  1. The parties are likely to give the explicit view of a retired judge or senior barrister more weight than the implicit indications inferred from a mediator who is severely limited as to what he or she can express as to the merits of the case.
  2. A FDR/ ENE is particularly useful on cases involving questions of law such as construction of Wills rather than those involving questions of fact.
  3. FDR is particularly helpful for cases where the parties have divergent views and need to hear an indication on the merits combined with an indication of how a discretion might be exercised.

That said FDR/ENE should perhaps usually be regarded as a step to be taken after mediation (as in Seals rather than as an alternative to it).

 

Mediation v Arbitration

Mediation of disputes necessitates attendance by parties and their advisors at a mediation for which a day is usually allowed (although in particularly complex or multi-party disputes longer can be provided). “In person” mediations tend to involve each of the parties and their respective advisors sitting in separate rooms and the mediator shuttling between the rooms. If both parties agree the mediator may conduct what is known as a “ joint session” where all the parties get together to discuss an aspect of the case or set out their positions (in practice the joint session has in large part fallen out of favour where the parties are known to each other but is still popular where they are not). When a mediation is conducted remotely, the parties and their advisors will connect via a video conference which the mediator can simply join.  In the authors’ view little need be lost from the mediation by virtue of it being held remotely – we have in the past conducted and participated in mediations where parties have been present by video-link from overseas with or without their lawyers in the same room – modern video-conferencing software permits ‘break out rooms’ and mediators switching between them with impressive ease.  Costs, as ever, will be modest compared with full-scale litigation.  In low value and straightforward cases time-limited mediation might be considered.

Arbitration by way of contrast requires the parties to enter a binding agreement whereby they nominate a mutually agreed arbitrator to determine the case finally. It is a complete alternative to litigation. This is particularly attractive in the wake of the pandemic. The parties are free to design a process that is proportionate and appropriate to their case; they can choose the arbitrator, the timetable, the venue (which at the present time is likely to be online), the level of disclosure and the nature of the hearing and procedure (for example one could decide to dispense with oral evidence). An arbitration award is binding and like a court order is only appealable in certain circumstances and thus it brings finality which is not guaranteed with mediation. Indeed an arbitration award is in some regards less vulnerable to appeal than an order of a Court.

Both mediation and arbitration are voluntary processes however an arbitration is binding whilst a mediation is confidential and non-binding. In either case parties might at any stage of proceedings seek a stay to engage.

 

Conclusion

As lockdown continues, parties and their advisors are being forced to consider ADR as a real alternative to litigation.  Who knows whether it will represent a permanent shift away from the adversarial court system, but for now it is one of the few positive outcomes of this crisis and something Jackson would support.

 

This article was written by Mark Dubbery & Tara Lyons, if you would like to instruct either or have any other queries in relation to our remote ADR service please contact Jonathan Cue via our switchboard 020 7353 0711 or email.

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