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ADR or Court?

Posted on 25th February, 2019

Before issuing court proceedings, parties to a dispute are expected to comply with the Pre-Action Protocols (“the Protocols”) under the Civil Procedure Rules (“CPR”). Failure to comply with the Protocols can result in the defaulting party being ordered to pay towards their opponent’s costs, win or lose.

The Protocols provide for a Letter of Claim to be submitted setting out in detail the legal nature of the claim, documents relied upon, remedy sought and reasonable period within which a Letter of Response is expected. The formal Letter of Response should detail any allegations that are accepted, those that are disputed, documents relied upon and set out a response to the remedy sought.

As a result of the Protocols, parties have to undertake substantial investigations before troubling the court and litigation costs are heavily front loaded. CPR was designed to encourage parties to further the stated overriding objective under rule 1.1 of CPR to include:

Dealing with cases justly and proportionately:

  • Saving expense;
  • Ensuring cases are conducted in a proportionate manner to the importance of the case and complexity;
  • Expeditiously and fairly;
  • An appropriate share of the court’s resources;
  • Ensuring compliance with rules.

Under rule 1.4 of CPR, the courts are encouraged to further the overriding objective and actively manage cases, to include:

  • Encouraging the parties to co-operate;
  • Encourage the parties to use Alternative Dispute Resolution (“ADR”); and
  • Helping the parties to settle.

Parties are encouraged to only trouble the courts as a last resort.

If a Letter of Response is not forthcoming, the Protocols provide liberty for claimants to commence court proceedings and to seek a costs sanction against defaulting defendants.

Statements of Case for the claim and defence are expected to be based upon the matters set out in the Letter of Claim and Letter of Response. In the Business and Property Court, the claim and defence ought to be accompanied by an initial disclosure of documentation the parties consider are relevant.

On the multi-track, for matters valued at over £25,000, costs budgets must be prepared and discussed with a view to agreeing them, together with disclosure discussions with a view to agreeing which documents should be exchanged and an appropriate directions timetable to trial, to include consideration of any expert evidence required. If agreement cannot be reached a judge will issue directions at a costs and case management conference.

Substantial costs can be incurred in relation to disclosure, witness statements and expert evidence.

Those costs can pale into insignificance compared to trial costs, due to the fees charged by experts and counsel.

Under CPR the parties are encouraged to consider alternative dispute resolution (“ADR”) whether that is in its simplest form as a round table meeting between the parties, expert determination, or mediation, again highlighting that the courts are only to be used as a last resort. To try and enforce a change of culture, costs sanctions can be imposed against parties who fail to engage in ADR without good reason.

In part, this is due to the workloads the courts are expected to get through and to free the courts up to deal with other matters.

Parties are encouraged to consider engaging in ADR throughout a claim. Parties often consider engaging in ADR before costs incurred become a stumbling block to achieving a settlement, but that is not to say ADR cannot be a success at any time.

Approaching a mediation with a desire to find an outcome which all parties can live with is essential. However entrenched participants are, the mediator’s task is to encourage them to aim for a pragmatic resolution. At the end of the day, rarely does anyone leave a final trial feeling fully justified, compensated and reimbursed for all the costs they have incurred. Therefore, ADR has substantial merit.

Quite often the parties to a dispute have an established working relationship and can ill afford spending substantial time away from the day to day running of their business and spending all their energy and time on a commercial dispute. Most parties want to find a quick and easy resolution, although that is not to say that pushed into a corner, they will not stick to their guns and be prepared to play the long game.

The advantages of ADR are that it can provide a relatively quick, cheap and pragmatic approach; mediation does not face the same legal constraints that a judge does and is a forum in which the participants are able to explore novel avenues. Mediation is consensual, no settlement can be imposed upon the parties.

Try it, before the dispute takes over lives and business!

Should you require further details on ADR or Court procedure, do not hesitate to contact Inderjit Gill in our Dispute Resolution Team.

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