Alternative Dispute Resolution: the myths and the facts!

Mediation offers a much better approach to dispute resolution and if embarked upon early, can save expensive court costs, and time away from your business. Mediation can also structure the path to a speedier resolution.

The mediator has to be independent to the case and acts as a facilitator to the resolution.

Mediation is often used in the corporate world to resolve disputes quickly, efficiently at a lower cost than having to go to court.

The overriding aim of workplace mediation is to restore and maintain the employment relationship wherever possible. This means the focus is on working together to move forward, not determining who was right or wrong in the past.

  • Shaun Jardine -  a lawyer, mediator and Chief Executive Officer at one of the UK’s leading regional law firms, Brethertons LLP, is a keen advocate of Alternative Dispute Resolution (ADR). A specialist in commercial litigation, Shaun gives us his views on the latest issues and recent developments surrounding ADR.
  • Sian Spencer - A Guide to Alternative Dispute Resolution.
  • Rashmi Dubè is the founder of Yorkshire and London-based Legatus law and a specialist in mediation as a form of alternative dispute resolution.
  • Dr. Abhijit Pandya - On the road to ending immunity for the enforcement of arbitration awards against states.

SHAUN JARDINE, A LAWYER, MEDIATOR AND CHIEF EXECUTIVE OFFICER AT ONE OF THE UK’S LEADING REGIONAL LAW FIRMS, BRETHERTONS LLP, IS A KEEN ADVOCATE OF ALTERNATIVE DISPUTE RESOLUTION (ADR). A SPECIALIST IN COMMERCIAL LITIGATION, SHAUN GIVES US HIS VIEWS ON THE LATEST ISSUES AND RECENT DEVELOPMENTS SURROUNDING ADR.

Having been a litigator all my working life, I can tell you that some cynical lawyers think ADR stands for Alarming Drop in Revenue! They take the view: “Why settle if the case can run for months and earn you lots of fees?!” However, I firmly believe ADR is a valuable method of achieving resolution for all parties. Of course there are compromises to be made on both sides, but it can help to soothe and diffuse what can be a pretty acrimonious dispute, hopefully amicably and with fewer disturbances than a lengthy, often expensive, Court battle. ADR is not as common as it should be and the reasons for this are many and varied. The most significant factors are listed below, along with some opinions of my own!

1.Lawyers don’t always trust ‘non lawyers’.

It can be difficult to put your faith in, and stake your reputation on, the judgment of a mediator who is not a lawyer. However, having a ‘non-lawyer’ conduct your mediation or arbitration can offer a valid and valuable point of view. The mediators skill is in rapport building, generating trust, communication and time management. These are not always qualities lawyers posses!.

2.Not all judges are in favour of ADR, despite what they say!

This harks back to my very first point: ADR is conducted outside the Courtroom. Less cases. Less need for judges.

3.The quality of mediators is variable.

You should select your mediator based on their experience and interests as this will determine their level of quality in that particular field. Also take references. There are many more mediators available than cases to do. Ask how many mediations the mediator has carried out.

4.The quality of case varies.

Many mediators specialize. Some referee contract matters, others work place mediation. I personally enjoy property boundary and neighbour disputes. They tend to be more time consuming and complex. I n such cases the issue is usually not the boundary. It takes time to unpick the quarrels to find the real root of the matter. It’s can be very rewarding and resolving these wrangles.

5.Sometimes mediation is viewed as an unnecessary layer of cost if it doesn’t settle.

Whilst mediators charge similar hourly fees to those of a litigation lawyer, the costs are divided between the parties. Disputes settled out of Court tend to do so much faster than those which must follow strict technical legal time tables and which must necessarily involve a judge. If you can’t reach an agreement a out of Court in most cases an unsuccessful mediation will result in the parties having made some progress. Even if it is a better understanding of the opponents case.

6.HM Court Service has Small Claims telephone mediation service.

This service is good as far as telephone mediation services go, but sometimes people need to be heard, and know they have been heard, and that can’t always happen in a one hour telephone mediation. This is certainly the case in building and neighbour disputes.

7.ADR is very much worth exploring before resorting to expensive and protracted litigation battles.

ADR can provide closure for the quarrelling parties, and resolve the dispute more quickly and for significantly less cost than in Court, and can help to retain relationships between the parties and protect reputations. For this reason alone, I believe many commercial contracts should have compulsory ADR written into the Terms and Conditions of trading which can go some way to avoiding costly and time consuming legal conflicts.

Shaun has practised litigation for over 30 years and has a particular interest in property related disputes ranging from neighbour and boundary disagreements to commercial property contract disputes. He’s written and lectured widely on the topic of mediation and ADR and presents a one hour webinar for the specialist property management sector entitled ‘Training Your Staff for Mediation’. He’s a panel member (and previous Chair) of the Oxford Mediation Group and, prior to becoming Chief Executive Officer at Brethertons, led the firm’s Dispute Resolution team –To discuss a dispute you would like to explore settling through ADR, contact Shaun on 01295 270999 or at shaunjardine@brethertons.co.uk

Dispute Resolution solicitor Sian Spencer provides a guide to alternative dispute resolution, in particular mediation, in seven easy steps.

By Sian Spencer.

When wondering about alternative means of dispute resolution, people often become confused as to its various types, in particular: ‘mediation’. Mediation is commonly confused with other forms of alternative dispute resolution such as arbitration or litigation. This guide will dispel the myths surrounding alternative dispute resolution, with a particular focus on explaining exactly what mediation entails in seven easy steps:-

Step 1 - What is mediation?

Mediation is a type of alternative dispute resolution (often shortened to "ADR" by legal professionals). When I say alternative, I mean alternative means of dispute resolution to litigation. Litigation refers to the court process of resolving disputes. Litigation starts with issuing and serving a claim form at Court and (unless the claim is discontinued or settled earlier, or subsequently appealed) it ends with a judgment being handed down by a Judge at trial. Mediation does not require any court process. It is entirely separate to the Court's system of resolving disputes. Other forms of alternative dispute resolution include arbitration, adjudication and expert determination. Those other forms of alternative dispute resolution are completely separate and distinct and should not be confused with mediation.

Step 2 - What happens at a mediation?

Firstly, it is important to understand that parties in dispute are under no obligation to mediate or indeed to attempt any other form of alternative dispute resolution (subject to an express obligation agreed contractually / implied by statute). Mediation is an option open to any party to a dispute, the value of which justifies the expense of holding the mediation. However, any party who unreasonably refuses to mediate can face court sanctions later on in their dispute, if it goes before a judge.

If the parties agree to mediate, they usually also agree to share the task of choosing, instructing and paying for a mediator. A mediator is an independent third party who reviews the facts in dispute and, in an entirely confidential and without prejudice setting, tries to bring the parties together sufficiently to enable settlement to take place. The mediator will be chosen based on his or her skills and background and how they best fit the dispute in question. Often, but not always, mediators are legally qualified. Instructions will then be sent to the mediator, and a date will be set for the mediation, which usually takes place somewhere neutral, but this will add to the cost if a venue has to be hired, and it is not absolutely essential.

The following paragraph describes what typically happens in a mediation involving a fairly significant value, where both parties have solicitors, but it is important to remember that mediation is a flexible tool, and can be adapted to different situations.

The parties usually share the task of drafting written instructions and compiling a lever arch file full of relevant documents to which the instructions will refer ("the mediation bundle"). Sometimes though, in very contentious matters, the parties will separately instruct the mediator. Three rooms are usually required, a meeting room for all the parties to gather in at the start of the day to open the mediation (and for the mediator to retire to throughout the day) and two separate rooms, one for each party. On the day of the mediation, it usually opens with the parties making opening statements to the mediator, stating their case. The parties will then each retire to their separate rooms and the mediator will act as a shuttle diplomat, going back and forth between the two rooms, examining strengths and weaknesses of either parties' case and slowly bringing the parties together, toward settlement. If settlement is reached, it will not be binding on the parties until it is recorded in writing and signed by the parties, which should, if possible, be done on the day of the mediation..

Step 3 - Does the mediator decide who is right and who is wrong?

No, it is a common misconception that the mediator decides who has the better case and gives a judgment like a judge might in court. The mediator is not there to decide who has the better case and tell the parties who has 'won'. He or she is there to assist an alternative means of dispute resolution to take place. He aims to help the parties identify strengths and weaknesses in their respective cases with a view to narrowing the issues in dispute and helping the parties reach settlement. There is no obligation on the parties to agree settlement at the end of the day. If no settlement is reached, the parties simply walk away and continue their dispute. However, the vast majority of cases that go to mediation do settle either at mediation or shortly afterwards.

Step 4 - Is mediation really expensive?

Mediation often involves the costs of paying for one's own solicitor to instruct the mediator and attend the mediation. It also involves a 'disbursement' of (usually half) the mediator's fees for reading into the matter and attending the mediation on the day. This can be prohibitively expensive for smaller value matters. However, for small claims (under the small claims threshold of £10,000), the court offers a free small claims mediation service which is a very simplified version of mediation, held over the phone. A court appointed mediator will telephone each party with a view to helping the parties achieve settlement. For higher value matters, the cost of mediation as a means of alternative dispute resolution may look high, but can often come out looking very reasonable when compared with the cost of litigation, which can run into the tens or even hundreds of thousands depending on the complexities of the case and the figures involved. The saving of cost is a key reason why many parties to disputes turn to alternative dispute resolution.

Step 5 - Is mediation a confidential process?

Yes, mediation is an entirely confidential alternative dispute resolution process, unlike litigation (pleadings to litigated matters - the claim form, defence, reply to defence etc are all publicly accessible documents). Therefore mediation is very well suited to matters where parties do not want the facts in dispute to become public knowledge. Mediation is also 'without prejudice'. This means that facts and matters discussed during mediation cannot be referred to in front of a judge until after the dispute has been decided at trial or formally settled.

Step 6 - But I don't want to mediate - I just want to fight it out in Court

If a party to a dispute has offered mediation as a means of alternative dispute resolution and the other one unreasonably refuses to mediate, the refusing party can face costs sanctions later on in the proceedings, even if the refusing party is ultimately successful at trial. The key word here is 'unreasonably'. What is and isn't unreasonable, will come down to the facts and circumstances of each individual case. For example, it may well be perfectly reasonable to refuse mediation if you have no idea what the other side is arguing as they have provided you with too little / no information.

Step 7 - Won't mediation be really time consuming?

No, on most cases, the mediation process can usually be started and finish within one month. Typically, in a relatively substantial case, mediation will last a day.. In more complex or substantial case it can last longer, or in relatively simple matters it can be completed in only an hour or two. Compare this with the standard litigated matter. It can take years before a dispute even makes it to Court. Once at Court, it can take a further 1-2 years before a matter is decided by a Judge. In all, most agree that mediation is a far quicker means of resolving disputes than the Court process. Time saving is another key reason many turn to mediation as a means of alternative dispute resolution.

If you would like to discuss alternative dispute resolution and mediation in further detail, please contact Sian Spencer at sls@burnetts.co.uk

Rashmi Dubè is the founder of Yorkshire and London-based Legatus Law and a specialist in mediation as a form of alternative dispute resolution.

By Rashmi Dubè

The aim of mediation is simple – to help parties come to a quicker resolution without the need for a long and often protracted court process. When you break it down into just basic terms, it seems clear that it has an important role to play within the legal system yet there has been a traditional reluctance for that to happen. This is, thankfully, changing.

In England and Wales, mediation has been introduced into the legal system both by European legislation and the UK Civil Procedure Rules. As more and more mediators enter the arena, this is creating more and more ethical issues which lawyers are dealing with – for example, the appropriate level of candour for the dialogue that occurs during the mediations and the appropriate division of authority between lawyer and client before and during the mediations.

The process is sometimes based on a share bargaining negotiation so it is important for the mediator to understand that what has been, said between the mediator and the party, is not what is always to be disclosed to the other party. This can be a challenge as, despite sometimes having the vision of seeing the finish line and a “success”, it is not for the mediator to decide but for them to facilitate the parties to reach their own resolution.

The second issue regards the involvement of lawyers’ during the mediation. The lawyer should advise on the legal implications of any agreement and, to some degree, assist their client in understanding the impact of argument presented. However, at all times it is always the lawyers’ position to work and assist with the mediation to ensure a successful outcome and not to see it as lip service to the courts.

In one recent case, that of Colin Wright v Michael Wright Supplies Ltd, Turner Wright Investments Ltd C/A 2013, the Court held that in this case the parties were ill advised not to seek mediation particularly as: “This litigation arises out of a breakdown of trust and friendship. That is always tinged with recrimination, bitterness, and a sense of betrayal”. The court also addressed the issue of costs and how mediation would have assisted both parties in saving money.

Mediation may be new to the way cases are dealt with in our legal system but it is a hugely effective way of dealing with issues around the world. We have all heard of peacekeeping missions around the world – basically, this is mediation on a different scale. All of these include a number of universal issues with mediation which need to be taken into consideration.

  • A pre-mediation assessment of the conflicting parties' cultures is needed, but stereotypes should be avoided.
  • Mediators shall be trained in cultural awareness and be taught about communication styles of different cultures.
  • Cultural ignorance must not be replaced by excessive comprehension for all acts allegedly justified by culture.
  • An analysis of the interests and objectives of the conflicting parties, in cultural terms, shall be conducted.
  • The encounter of different cultures in a mediation process shall not be systematically seen as a threat for the mediation process.
  • In conclusion, meditation is not the solution to all problems or conflicts but should be explored to enable parties reach a resolution that works for them.

On the Road to ending immunity for the enforcement of arbitration awards against states.

By Dr. Abhijit Pandya

Investment treaty arbitration has become the key form of alternative dispute resolution for foreign businessmen who do are either wary of using local courts or have not got a fair result from them. However, the major concern of using arbitration (as opposed to courts) has been about how to enforce a successful award and get the money that the arbitration process has said you are entitled to. A massive lift for potential claimants has been given by the reasoning of the Southern District New York Court on the 13 th February 2015.

There the learned District Judge Engelmayer was faced, amongst others, with one of the most prominent issues in the field that can determine whether the entire system is a viable method of alternative dispute resolution. This is whether Article 54 of the Convention on the Settlement of Disputes between States and Nationals of Other States 1966 (the ‘Settlement Convention’ hereinafter) that allows for automatic recognition of an arbitration award under the auspices of the Centre for the Settlement of Investment Disputes, can be circumvented by the State seeking to deny enforcement by the use of Article 55. The latter provision allows a state, at least in theory, to use the domestic laws on sovereign immunity of the country where the award is sought to be enforced to defeat enforcement by allowing the losing state party to use an immunity defence.

In the enforcement dispute of ExxonMobil v. Venezuela (14. Civ. 8163, 13.02.15)) before Engelmayer, he clearly stated that he was not buying this argument from the defendant (see p.24 and subsequent discussion). He dismissed it on three front:

Firstly, he used the authority in the case of Cargill Int’l S.A. v. M/T Pavel Dybenko, 991 F.2d 1012, 1017 (2d Cir. 1993) to state the proposition that a foreign state subject to an arbitration award that can be subject to an international treaty permitting recognition and enforcement (here the New York Convention (The Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958)) cannot be allowed to use the sovereign immunity defence.

Secondly, he said that Venezuela’s obligations under the Settlement Convention itself meant it had waived (done away with) the right to rely on a defence to preclude enforcement by using the domestic immunity laws of a state. This is quite radical, considering that Article 55 of the Settlement Convention preserves the right of immunity in the face of automatic recognition under Article 54. However it protects the alternative dispute resolution mechanism of the Settlement Convention by ensuring that the claimant seeking arbitration does not waste expense on the entire process only to be defeated by a wary domestic court who is not clear about the impact of the immunity reservation under Article 55.

In support of relying on the Settlement Convention obligations to defeat the immunity argument by Venezuela the learned judge then said that the domestic immunity laws did not allow immunity to be used in manner that would violate international obligations of the United States. Thus Venezuela, as it had actually agreed to arbitration through the Settlement Convention (subject to its consent) by signing that treaty, it could not evade those obligations now. Again this logic gives considerable support to the arbitration and alternative dispute resolution forum that the Settlement Convention was created to encourage in order to give businesses and investors some degree of comfort operating overseas.

Though not binding in other jurisdictions this judgment, nevertheless, will still be significantly persuasive in many of them and is a warning to State Parties to these types of arbitration disputes that they cannot just evade the enforcement of the award once it has been given. Ultimately the decision is creative, and has a strong purposive basis in ensuring that investment arbitration under the Settlement Convention is not undermined.

It should, however, be noted that the Court was not absolutely one sided in its defeat of the requirements to serve the State Party under the domestic immunity statute. It did comment on the fact that the claimant was not entitled to serve ex parte (without the other side being present or notified) the motion for enforcement. The difficulty with this reasoning is that it seems to create an unnecessary procedural hurdle once it is accepted that no substantive barrier to jurisdiction of the enforcing court has been put down by way of domestic sovereign immunity law. Here the judge seems not be sure whether only his left or right hand is tied by the domestic immunity law and renders the judgment, for all its significant good will towards the Settlement Convention, still a little uncertain as to where the final buck on domestic immunity laws lies. This minor criticism is only as strong as it is permissible to draw fine distinctions between procedural and substantive bars to the court’s jurisdiction on enforcement. These from the learned judge’s narrative were, in my respectful view, done away with through his use of the wavier argument.

Dr. Abhijit Pandya's biography can be accessed here:  http://www.taylor-rose.co.uk/