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Not quite so Alternative after all – the future of Alternative Dispute Resolution

It’s no secret that disputes are a timely and costly thing to get involved in. There have been numerous attempts to get round that, one of which has been the growth of Alternative Dispute Resolution (ADR).

ADR is a generic term used for numerous forms of dispute resolution outside of full-blown court litigation or arbitration. The most commonly recognised form is mediation, although in the construction world we’re also familiar with adjudication as a go-to form of dispute resolution. 

ADR has been around for decades, with increasing popularity in recent years, but it has always remained – so far as the courts are concerned – a voluntary process. While there can be costs sanctions if a court considers a party’s conduct to be unreasonable (and on numerous occasions the courts have made clear that a party refusing to engage in ADR will likely be unreasonable) the courts have, at least until now, refrained from forcing parties to partake.

The voluntary nature of ADR in recent years dates back to the 2004 case of Halsey v. Milton Keynes General NHS Trust, where the judge expressed concerns about both the legality and desirability of compulsory mediation. It was said that requiring unwilling parties to refer their dispute to mediation “would be to impose an unacceptable obstruction to their right of access to the court”. This was unsurprising given that the right to a fair trial is a fundamental principle enshrined in Article 6 of the European Convention on Human Rights.

However, in 2019 the Court of Appeal in Lomax v. Lomax held that the court has the power to order Early Neutral Evaluation (a form of ADR) even where one party objects. The court didn’t need to consider whether a court could order other forms of ADR if one party was opposed (such as mediation) but did note that “the court’s engagement with mediation has progressed significantly since Halsey was decided”.

The question arose again in 2020 in McParland v Whitehead. In this case the parties agreed to a direction to mediate so the point did not need to be ultimately decided but this case undoubtedly prompted Sir Geoffrey Vos’s subsequent decision in January 2021, as Master of the Rolls (one of the most senior civil judges), to ask the Civil Justice Council (CJC) to consider the legality and desirability of compulsory ADR.

On 12 July 2021 CJC produced a report which concluded that mandatory ADR is compatible with Article 6 European Convention on Human Rights.  

The Judicial/ADR Liaison Committee chair, Lady Justice Asplin, commented that “‘This report addresses questions which are central to the shape and design of dispute resolution in the twenty-first century”. She said that while ADR could be made compulsory, “More work is necessary to determine the type of claim and the situations in which compulsory (A)DR would be appropriate and most effective for all concerned, both in the present system and in relation to online justice.’.

Sir Geoffrey Vos agreed, saying “ADR is not alternative” and that “Dispute resolution needs to become an integrated process in which the parties feel that there is a continuing drive to help them find the best way to reach a satisfactory solution”. He also suggested that the profession should stop referring to mediation as ‘alternative’ at all, stating that it should be ‘part and parcel’ of resolving all disputes.

It therefore seems likely that more widespread use of ADR (or DR?) will become mandatory, but it remains to be seen when and how this will be formally introduced. The ramifications of the detail may be huge. Careful consideration will need to be given to things such as:

  1. Whether a specific form of DR will become mandatory. There are many forms of dispute resolution available, and there is no ‘one size fits all’ solution. But if no specific form is chosen it will be difficult to monitor compliance. It seems possible that mediation may be the preferred method, but will that effectively put an end to other forms?
  2. The point in time when DR must be undertaken. At present mediation is a widely successful method of dispute resolution, but only when used at the right time. When used too early, before proceedings are issued, success rates are far lower because the incentive for the paying party to settle is far less. If too late, positions become entrenched and costs are already incurred so the incentive to settle is reduced. If not carefully balanced, mandatory mediation may just add cost. 
  3. What the consequences for failing to undertake ‘mandatory’ ADR will be. What if neither party really wants to take part, but one uses it to gain a tactical advantage. Will the court consider striking out cases or defences, or imposing real costs sanctions – or is that unfair when all that is really lost by failing to, for example, meditate, is the loss of a chance to settle which may ultimately never have happened? 

Regardless of the mechanics, one thing is clear: whatever steps are now taken to implement this decision, it could fundamentally change the way in which disputes are managed. Whether that has as large a potential impact in construction disputes as other sectors is questionable given the widespread use of adjudication as an alternative to court proceedings anyway, but it will be an interesting issue to keep an eye on. It may ultimately make court claims a more attractive option if the currently off-putting timescales and costs can be avoided.

Author: Carolyn Porter

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