UK: The Importance of Considering ADR

Last Updated: 30 May 2003

ADR is not mandatory in the UK, save where agreed by the parties in contract (although there have been orders made by individual judges in exceptional cases). That said, the use of ADR is now firmly enshrined in the English Civil Procedure Rules. The court has a positive obligation to encourage parties to use an ADR procedure if the court considers it appropriate and to facilitate the use of such a procedure. Failure to consider ADR can result in adverse costs consequences. Recent cases have highlighted the importance the court is attaching to ADR.

In April 2002, the Court of Appeal’s decision in Dunnett v Railtrack Plc [2002] 2 All ER 850 highlighted the necessity for lawyers and parties to consider Alternative Dispute Resolution (ADR), failing which a party may be penalised in costs. This decision was not wholly unexpected. In the earlier case of Cowl v Plymouth City Council [2002] 1 WLR 803, Lord Woolf, in his judgment in the Court of Appeal, stated in the context of a judicial review that: "both sides must by now be acutely conscious of the contribution alternative dispute resolution can make to resolving disputes in a manner which both meets the needs of the parties and the public and saves time, expense and stress."

In Dunnett, the claimant lost at first instance and applied for permission to appeal. Before granting permission to appeal, Lord Justice Schiemann advised her to explore the possibility of ADR. The claimant referred this suggestion to the defendant who was not willing to consider it. The claimant lost her appeal and the defendant asked the court for an order that the claimant pay its costs of the appeal. The Court of Appeal refused this request and made no order as to costs saying that the defendant should not have dismissed Schiemann LJ’s suggestion of ADR out of hand. Lord Justice Brooke (with whom Lord Justice Robert Walker and Lord Justice Sedley agreed) specifically stated that he hoped any publicity given to this part of his judgment would draw the attention of lawyers to their duties to further the overriding objective, which include encouraging parties to use ADR, and, if they turn down "out of hand" the chance of ADR when suggested by the court, they may have to face "uncomfortable costs consequences".

In Hurst v Leeming [2002] EWHC 1051 and EWCA Civ 1173, Mr Hurst brought a claim against his counsel, Mr Leeming QC, alleging negligence in respect of a previous unsuccessful piece of litigation in which he was represented by Mr Leeming. (Mr Hurst had already unsuccessfully brought actions against his former solicitors in respect of the same in both the Chancery Division and the Queen’s Bench Division).

This action was dismissed by Mr Justice Lightman who then had to deal with the issue of the costs of the action. In the ordinary case Mr Leeming would be entitled to his costs as the successful party, but Mr Hurst submitted that no such order should be made as both prior to and after the commencement of the proceedings, he had invited Mr Leeming to proceed to mediation and Mr Leeming had refused.

The Judge had to consider whether Mr Leeming was justified in refusing to proceed to mediation. Lightman J concluded after "anxious consideration" that "quite exceptionally" the defendant was justified in taking the view that mediation was not appropriate because, viewed objectively, it had no realistic prospect of success. Amongst the factors he took into account were the previous actions commenced by Mr Hurst against his solicitors, the fact that as a bankrupt he had nothing to lose in the proceedings, together with Mr Hurst’s underlying motivations. Mr Leeming was therefore awarded his costs. Mr Hurst sought permission to appeal which was refused.

Lightman J acknowledged that mediation is not compulsory in law. Nevertheless, referring to the decisions of the Court of Appeal in Dunnett and in Cowl, he said:

"..alternative dispute resolution is at the heart of today’s civil justice system, and any unjustified failure to give proper attention to the opportunities afforded by mediation, and in particular, in any case where mediation affords a realistic prospect of resolution of dispute, there must be anticipated as a real possibility that adverse consequences may be attracted." 

Although he accepted that a party may refuse to proceed to mediation with impunity if there is, objectively assessed, no real prospect of success (as was exceptionally the case in these proceedings), he described such a refusal as "a high risk course to take".

In refusing permission to appeal, Keene LJ described Lightman J’s conclusion that the rejection of mediation was justified as "unusual" but said that it was fully borne out by the evidence in the case.

The trend towards mediation as "a firmly established, significant and growing facet of English procedure" was confirmed by Colman J in Cable & Wireless Plc v IBM United Kingdom Ltd [2002] EWHC 2059. In that case, a dispute arose under an agreement entered into by the claimant and the defendant for the supply of information technology. An application was made to stay the proceedings pending the dispute being referred to ADR on the basis of an ADR clause in the agreement. The application for a stay raised the issue of the effect, if any, which the court should give to agreements to refer disputes to ADR. The relevant clause provided as follows: "The Parties shall attempt in good faith to resolve any dispute or claim arising out of or relating to this Agreement…promptly through negotiations…If the matter is not resolved through negotiation, the Parties shall attempt in good faith to resolve the dispute or claim through an ADR procedure as recommended to the Parties by the Centre for Dispute Resolution. However, an ADR procedure which is being followed shall not prevent any Party from issuing proceedings." Cable & Wireless submitted that the clause was unenforceable as it lacked certainty and imposed no more than an agreement to negotiate.

Colman J held that the ADR clause contained an enforceable obligation to participate in ADR procedures recommended by the Centre for Dispute Resolution (CEDR). He also held that the clause was more than an agreement to negotiate as it had identified a particular procedure, namely an ADR procedure as recommended by CEDR. The Judge also stated: "For the courts now to decline to enforce contractual references to ADR on the grounds of intrinsic uncertainty would be to fly in the face of public policy as expressed in the CPR and as reflected in the judgment of the Court of Appeal in Dunnett v Railtrack."

Finally, the Court of Appeal has applied Dunnett v Railtrack again in March 2003 in Leicester Circuits Ltd v Coates Brothers plc [2003] EWCA Civ 333 in which a successful party which had withdrawn at the "11th hour" from a mediation arranged pre-trial was denied some of its costs.

Comment

These cases highlight the increasing move by the courts to actively encourage parties to consider ADR. This is consistent with Lord Woolf’s desire for judges to take a more proactive role in deciding the best way of dealing with a particular case and recommending ADR to litigants where relevant. In a recent interview for a Southeast European Regional Conference on Dispute Resolution, Lord Woolf said that, although the Civil Procedure Rules had influenced people’s thinking in respect of ADR, he did not believe that they had gone nearly far enough. He said: "It’s my belief that any sensible system is run where the litigants feel that going to court is the last resort, not the first resort, and that is the culture I would like to encourage."

More developments in this area therefore seem likely.

Article by Christa Band

© Herbert Smith 2003

The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.

For more information on this or other Herbert Smith publications, please email us.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.