Crowther Clayton Associates

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Crowther Clayton Associates
Alternative Dispute Resolution
and
Mediation
Rolf Clayton
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Crowther Clayton Associates
Disputes will arise in all Construction Contracts.
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Crowther Clayton Associates
Disputes will arise in all Construction Contracts.
Over 90 are fairly quickly resolved by
discussion between the parties involved.
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Crowther Clayton Associates
Disputes will arise in all Construction Contracts.
Over 90 are fairly quickly resolved by
discussion between the parties involved.
However, a few disputes become too serious and
require a third party to help to resolve the
dispute.
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Crowther Clayton Associates
Disputes will arise in all Construction Contracts.
Over 90 are fairly quickly resolved by
discussion between the parties involved.
However, a few disputes become too serious and
require a third party to help to resolve the
dispute.
This can mean litigation - !
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Crowther Clayton Associates
Dispute Resolution
Litigation
Arbitration
Expert Determination
Mediation-arbitration
Adjudication
Executive hearing
Ombudsman
Evaluation
Conciliation
Mediation
Inter-party negotiation
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Crowther Clayton Associates
The Academy of Experts defines ADR as
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Crowther Clayton Associates
The Academy of Experts defines ADR as
"any method of resolving an issue susceptible to
normal legal process by agreement rather
than an imposed binding decision."
A better definition would be
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Crowther Clayton Associates
The Academy of Experts defines ADR as
"any method of resolving an issue susceptible to
normal legal process by agreement rather
than an imposed binding decision."
A better definition would be
"The resolution of a dispute by means other than
litigation."
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by kind permission of the Academy of Experts
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Crowther Clayton Associates
It is interesting to note that all editions of
the IChemE Red Green Books, with the exception
of the third edition of the Red Book, cite only
expert determination and arbitration as methods
of dispute resolution. The third edition of the
Red Book also included mediation, but it has
again been left out of the 4th and 5th editions.
In my opinion this is a mistake!
Mediation should always be an option.
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Crowther Clayton Associates
In April 1999 the Civil Procedure Rules (SI 3132)
were introduced. These introduced a fundamental
change in the way civil litigation is undertaken
in England Wales, and among many other
concepts, it introduced the idea of case
management by the judge (who now become, in
effect, Project Managers), and the option of
resolving the dispute by means of ADR techniques
such as Mediation.
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CPR Rule 1.4 provides "1.4(1) The court must
further the overriding objective by actively
managing cases. 1.4(2) Active case management
includes (e) encouraging the parties to use an
alternative dispute resolution procedure if the
court considers that appropriate and
facilitating the use of such procedure."
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The overriding objective 1.1 - (1) These
Rules are a new procedural code with the
overriding objective of enabling the court to
deal with cases justly. (2) Dealing with a
case justly includes, so far as is practicable -
(a) ensuring that the parties are on an equal
footing (b) saving expense (c) dealing with the
case in ways which are proportionate -
(i) to the amount of money involved (ii)
to the importance of the case (iii) to
the complexity of the issues and (iv) to
the financial position of each party (d)
ensuring that it is dealt with expeditiously and
fairly and (e) allotting to it an appropriate
share of the court's resources, while taking
into account the need to allot resources to other
cases.
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CPR Rule 1.4 provides "1.4(1) The court must
further the overriding objective by actively
managing cases. 1.4(2) Active case management
includes (e) encouraging the parties to use an
alternative dispute resolution procedure if the
court considers that appropriate and
facilitating the use of such procedure."
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Crowther Clayton Associates
Dispute Resolution
Litigation
Arbitration
Expert Determination
Mediation-arbitration
Adjudication
Executive hearing
Ombudsman
Evaluation
Conciliation
Mediation
Inter-party negotiation
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Crowther Clayton Associates
Mediation
Mediation succeeds in resolving between 77-90
of cases where mediation is tried.
Up to a further 10 of cases which are not
settled in the mediation are subsequently
settled without recourse to further litigation.
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Crowther Clayton Associates
Experience in civil litigation shows that even
in litigation in the period prior to the
introduction of the CPR in April 1999
approximately 85 of all cases settled before
getting to court, a large percentage of which
were settled on the court steps. It may be that
mediation has not greatly increased the number of
cases which settle out of court, but it has
speeded up the process of settlement and
reduced the costs incurred by both the state and
the parties.
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Crowther Clayton Associates
Judges may now suggest to litigants that they try
mediation. The Commercial Court has adopted the
practice of issuing Court Orders to try ADR. Such
orders are not mandatory but are merely
persuasive. However, if they are ignored,
penalties may arise as has been shown by the
case of Dunnett v. Railtrack.
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Crowther Clayton Associates
The penalties for refusal to try ADR can mean
that the refusing party has to pay all costs and
a punitive interest rate on those costs even if
they win their case.
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The new Civil Procedure Rules (CPR) of 1998 (with
amendments) permit a judge to award costs
against the winner if the winner has refused to
try ADR before going to litigation.
In the case of Dunnett versus Railtrack,
Railtrack won the case in the Court of Appeal
but the Court declined to make an order on
Railtrack's application for the costs of their
appeal solely because they had refused to
contemplate mediation after the Claimant, Ms
Dunnett, had suggested mediation on the advice
of the trial judge, Lord Justice Konrad
Schiemann.
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Refusal to mediate by a successful litigant does
not always lead to having to pay costs. In the
case of Hurst v. Leeming in 2002 Mr Leeming was
sued for costs by the unsuccessful claimant,
but won on the grounds that there was no prospect
of a mediation succeeding, and that Mr Hurst
was obsessive.
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Crowther Clayton Associates
If mediation can have no real prospect of
success of a party may, with impunity, refuse to
proceed to mediation on this ground. But refusal
is a high risk course to take, for if the court
finds that there was a real prospect, the party
refusing to proceed to mediation may, as I have
said, be severely penalised. "Further, the
hurdle in the way of a party refusing to proceed
to mediation on this ground is high, for in
making this objective assessment of the prospects
of mediation, the starting point must surely be
the fact that the mediation process itself can
and does often bring about a more sensible and
more conciliatory attitude on the part of the
parties than might otherwise be expected to
prevail before the mediation, and may produce a
recognition of the strengths and weaknesses by
each party of his own case and of that of his
opponent, and a willingness to accept the give
and take essential to a successful mediation.
"What appears to be incapable of mediation
before the mediation process begins often proves
capable of satisfactory resolution later.

Mr Justice Lightman in his judgement

in Hurst v. Leeming.
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Halsey v Milton Keynes General NHS Trust 2004
was another case in which an unsuccessful
litigant applied for costs on the grounds that
the successful defendant had refused to try
mediation. The application for costs by the
unsuccessful litigant was rejected by the trial
judge and went to the the Court of Appeal which
upheld the rejection.
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The fundamental principle was that such departure
was not justified unless it was shown that the
successful party acted unreasonably in refusing
to agree to alternative dispute resolution.
Mediation and other alternative dispute
resolution processes was not appropriate for
every case and so there should not be a
presumption in favour of mediation. The question
whether a party acted unreasonably in refusing
alternative dispute resolution must be
determined having regard to all the
circumstances of the particular case.
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Crowther Clayton Associates
Examples of points to consider as to whether a
party unreasonably refused ADR would include
(but not be limited to) the nature of the
dispute the merits of the case the
extent to which other settlement methods had been
attempted whether the costs of the
alternative dispute resolution would have
been disproportionately high whether any
delay in setting up and attending the ADR would
have been prejudicial whether the
alternative dispute resolution had a reasonable
prospect of success.
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Nevertheless -
Refusal to try ADR is a high-risk strategy!!
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In Cowl v Plymouth City Council (reported in The
Times 8 Jan 2002) the Lord Chief Justice Lord
Woolf said "It is indeed unfortunate that, the
process having started, instead of the parties
focussing on the future they insisted on arguing
about what had happened in the past the parties
should have been able to come to a sensible
conclusion as to how to dispose of the issues
which divided them. If they could not do this
without help, then an independent mediator should
have been recruited to assist. That would have
been a far cheaper course to adopt. Today
sufficient should be known about ADR to make the
failure to adopt it, in particular when public
money is involved, indefensible."
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Crowther Clayton Associates
Some judges are not happy about the degree
of compulsion involved in the powers in the
CPR which, in effect, force litigants to try ADR
who are otherwise at risk of severe penalties
even if they win their case. There is a body of
judicial opinion that this is in conflict with
Human Rights legislation and Natural Justice.
Nevertheless, the use of ADR is now widespread.
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Crowther Clayton Associates
In summary, mediation is more flexible
than litigation. is quicker and cheaper than
litigation. should always be attempted before
proceeding to litigation. may initially be
adversarial, but the mediator tries to make it
a reconciliation. requires compromise and
consensus from the parties. requires giving up
total victory in order to eliminate the risk
of total loss. (Even winners in court or
arbitration may not recover all their costs,
for example the costs of employees' time
spent on a case is not recoverable).
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Crowther Clayton Associates
Any questions?