Could Alternative Dispute Resolution become compulsory?

3rd August 2021

Over the last three decades, we have seen increasingly widespread use of Alternative Dispute Resolution, as parties with disputes have sought swifter and less expensive ways of settling claims.

In an article first published in Business Matters on 27 July, Blake Morgan Construction Partner Richard Wade looks at Alternative Dispute Resolution (ADR) and whether it could and should become compulsory.

Alternative Dispute Resolution is a generic term that covers various means of resolving disputes other than by litigation or arbitration. Negotiation and mediation are the prime examples of ADR, but other methods have developed in recent years, including adjudication and neutral evaluation. A question has frequently arisen about whether parties should be compelled to seek ADR before being allowed to ‘have their day’ in court.

The courts have, on occasions, been called upon to rule on whether litigants should be forced to engage in some form of Alternative Dispute Resolution as a pre-condition to pursuing legal due process. In most cases, parties have been left in no doubt that they should strain every sinew in exhausting an ‘alternative’ process, with a potential sanction hanging over their heads (in terms of adverse costs orders) should they engage in what the court might view as ‘conduct unbecoming’. Thus, for example, unreasonably refusing to engage properly in dialogue with a view to settling could be considered to be such ‘conduct unbecoming’.

However, in certain circumstances, some parties have been free to pursue their case through the courts without engaging in Alternative Dispute Resolution with litigants having access to justice.

Compulsory Alternative Dispute Resolution report

The Civil Justice Council had been asked to look at the ‘legality and desirability’ of compulsory ADR and, in a report published on 12 July, it concluded that mandatory (alternative) dispute resolution (note the parentheses applied to the word ‘alternative’) would be compatible with Article 6 European Convention on Human Rights. The Judicial/ADR Liaison Committee chair, Lady Justice Asplin, commented that:

(A)DR can be made compulsory, subject to several factors. More work is necessary to determine the type of claim and the situations in which compulsory (A)DR would be appropriate and most effective.

Although this is a comment and report, with several qualifications – rarely are there ‘absolutes’ in questions of law – the report is seen as potentially shifting the dial significantly and permanently. It could well be that Alternative Dispute Resolution will be considered a requirement (other than, perhaps, in a very small minority of cases), thus fundamentally changing how disputes are handled.

Whilst most (reasonable) advisers have for many years given serious and considered thought to – and advice upon – the merits of Alternative Dispute Resolution, it was generally viewed as being a key option and, when used correctly and for the right type of dispute, the best way of bringing about the conclusion of the case. However, the (alternative) option of litigation/arbitration could equally be cited as a powerful incentive to drive parties to take matters into their own hands. There must be a risk that, by removing that element, parties might be forced into more protracted and costly bouts of discussion and mediation without being able to force things along.

There is a distinct possibility of the unintended consequence that, should Alternative Dispute Resolution be made compulsory, it will open the door to more frivolous claims. This could result in the party on the receiving end being ‘bounced’ into settlement discussions due to the dilution of its right to put the matter before a judge to make a decision. A parallel may exist here with the move towards Conditional Fee Agreements that rose (and then fell) in use when the true impact that such arrangements had on legal costs and process became clear. One thing is sure – this is an area of legal development to watch closely as the debate about the merits of compulsory ADR continues.

Read the article in full here.

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