Another String to the Bow!

By Philip Norman¹

It has become increasingly obvious to those in the construction industry that they have a choice in the way their disputes are resolved and managed. They are no longer required to submit to the sovereign jurisdiction of the national courts and adopt the procedural and evidential burdens that proving cases in those courts require². More frequently, by reason of the increasing popularity of ADR, companies prefer the possibility of retaining control in the resolution of disputes rather than handing their fate over to a third party judge.

This has resulted in a change in the manner project contracts are made. Many, including standard forms, require that parties undertake a process of amicable dispute resolution before issuing proceedings. In Project Alliancing contracts, the parties agree to a "No Blame No Dispute" clause, which precludes adversarial litigation.

Whilst still in its infancy, the modern trend is to avoid conflict and adversarial contracting. This process is supported by the changing dispute resolution processes, which are equally geared away from resolving the disputes in a confrontational manner. Mediation for example focuses on the parties’ needs and not necessarily their rights, in an attempt to find creative solutions.

The table below shows the statistics of the Royal Courts of Justice Technology and Construction Court sitting in London.³

It is obvious that the traditional work of the TCC is on the wane. This is partly due to the changing nature of contracting in the construction industry, partly due to the Adjudication process in the UK and partly due to the provisions in the CPR which have promoted early settlements, by requiring exchanges of information at the earliest possible stages through pre-action protocols and by formalising costs penalties in connection with offers to settle. Further there has been judicial support for dispute resolution by mediation, to the extent that parties refusing to mediate may suffer costs sanctions⁴.

No doubt these issues prompted the senior judiciary to consider how to improve the TCC to better provide for the modern construction industry. On 7 June 2005, the Lord Chief Justice issued a statement committing to modernising the TCC and implementing interim arrangements, which included allocating a High Court Judge to the TCC on a full time basis⁵. Contemporaneously, HHJ Toulmin CMG QC began considering a proposal that TCC judges should offer services in ADR⁶. Upon his appointment to the High Court Bench in November 2005, Mr. Justice Vivian Ramsey assisted HHJ Toulmin, resulting in a proposal⁷ being published on 8 December 2005, entitled "Court Settlement Process" (CSP).

What is being proposed is that TCC judges, who have specialist expertise, should be able to use their case management role to assist parties in achieving settlement of their disputes. There are two conditions to this, firstly, that either the judge or the parties must consider that there is a possibility that amicable settlement will be reached, and secondly that the judge is "particularly able to assist in achieving that settlement".

If the CSP does not result in settlement, the judge will recuse himself from further participation in the disposal of the case.

There is no express definition or description of what CSP is. This is probably to allow Judges the flexibility to adopt the best suited process to resolve the dispute. There are however hints as to the range of processes which may be adopted by a judge. For example, the first sentence of the Paper states: "The specialist judges of the Technology and Construction Court have particular expertise in the evaluation of the disputes which are dealt with in that court", suggesting a process similar to Early Neutral Evaluation.

Later in the paper, under the section entitled "Court Settlement Order" it provides that the process is "a confidential, voluntary and non-binding dispute resolution process in which the Settlement Judge assists the Parties in cases before the Court to reach an amicable settlement at a Court Settlement Conference" and provides that the judge may conduct the process "in such manner, as the Judge considers appropriate, taking into account the circumstances of the case, the wishes of the Parties and the overriding objective" of the CPR.

The further description of the powers granted to the judge by the Court Settlement Order suggest a process which is similar to that of a mediator, so that the Judge (absent objection) "may communicate with the Parties together or with any Party separately, including private meetings at which the Settlement Judge may express views on the disputes."

The Settlement Meeting is envisaged to last no longer than a day and the issues of confidentiality, costs, exclusion of liability and the judge’s recusal are provided for in similar terms to those contained in contracts governing the established methods of ADR.

Upon invitation, the Chartered Institute of Arbitrators responded to this Paper on 27 February 2006, with emphatic objections to the proposals. The CIArb considered that the expression "CSP" clearly means mediation and on that basis sets out 5 reasons in support of its objections:

• Mediation by judges is inconsistent with the overriding objective of the CPR for dealing with cases justly. They argue that allowing judges to act as mediators gives too generous an interpretation of the CPR and that judges should be limited in assisting parties to settle the whole or part of the dispute, by granting the parties time to pursue ADR outside of court. They also state that the caucus process in mediation could be seen to be a breach of natural justice;
• Mediation by judges is not a judicial function. The argument is that judges are chosen for their skills of considering, weighing and determining issues and not as negotiators/facilitators. These skills are different and there is no reason to believe that a good judge is of necessity a good mediator;
• Mediation by judges threatens public confidence in the court, as by so acting they compromise the impartiality and neutrality of courts, and the appearance of such. In particular the focus is on undue coercion, role confusion, competence and training and the appearance of impropriety;
• No measures are to be adopted to alleviate the above concerns. By reference to the Superior Court of New Hampshire, which has such a scheme, the CIArb point out that no mitigating measure, such as training, selection of location for the mediation and safeguards preventing the Settlement Judge from speaking to the ultimate Trial Judge, have been considered or proposed;
• The proposal is no improvement on Early Neutral Evaluation.

I do not consider that what is being proposed is mediation in its strict sense. Parties are likely to still be encouraged to attend mediation outside of the court process. The impression that is given by the "CSP" is that it is intended to allow a judge the opportunity to "bang the parties’ heads together".

Often, during a preliminary hearing that judges express views or reservations about cases, subject to full argument. They do this in various ways, for example by posing probing questions to counsel or by making the subtle comment, always careful to avoid any breach of natural justice. The CSP allows judges to set out their views confidentially and robustly, if necessary, without the possibility that the litigation will flounder for a breach of natural justice.

The process will be useful where litigation progresses to trial solely because of the characters involved (clients and lawyers alike), whose participation has avoided early settlement. A judge’s views will bring into sharp focus the merits, and more importantly the litigation risk in each party’s case. This is particularly so because of the judge’s status; he brings with him the imprimatur of authority. It will be someone like him, with the same training and attributes who will eventually determine the dispute, should there be no settlement. No matter how competent a mediator is, he does not have that gravitas.

Unless controlled very carefully, it is unlikely that the CSP will concentrate on the parties’ needs. Inevitably any Settlement Meeting will be attended by lawyers, they will be cagey about the weaknesses of their case and will treat the judge as a judge. More importantly, they will press for their client’s rights and are likely only to produce documents which support their client’s case. This is all in aid of obtaining a positive view on the merits from the judge; which may not result in settlement at that meeting, but could be used as a tool to bring a settlement about later on.

However the CSP evolves, it at least creates a further option in the array of dispute resolution mechanisms available. This can only be good for business. The CSP makes the services of the TCC more relevant and will no doubt form a consideration in parties’ minds when they chose their dispute resolution forum.