1. Overview
1.1 The Dispute Resolution Guidance (DRG) is aimed at encouraging the increased use of flexible, creative and constructive approaches to dispute resolution. The DRG offers the opportunity for government and businesses to demonstrate a best practice approach to business, and in particular, how disputes are resolved without resorting to costly litigation. It allows government and business to demonstrate a clear commitment to having in place mechanisms to avoid disputes, where possible; and, when disputes cannot be avoided, a commitment to quickly and effectively manage and resolve them utilising the most appropriate dispute resolution mechanism/s.
2. TERMS
EDRM - Equal Dispute Resolution Mechanisms
ADR - Alternative Dispute Resolution
CPR - Civil Procedure Rules 1999
DRG - Dispute Resolution Guidance
Government - the group of people with the authority to govern a country or state Business.
Litigation – the term used to describe proceedings initiated between two opposing parties to enforce or defend a legal right.
FPD - Fellow Prime Dispute
MPD - Member Prime Dispute
APD - Associate Prime Dispute
Trainee - Trainee Prime Dispute
3. Introduction
3.1 This guidance gives an overview of the key mechanisms that are available for the resolution of disputes. Proactive dispute resolution or management involves selecting and using the most appropriate resolution procedure available.
3.2 In the past litigation has been seen as the only option when dealing with disputes. Government and business can all find themselves involved in court action when their disagreements or disputes would have been better addressed and resolved at a much earlier stage. There are a range of alternatives to court action available to government and business, including mediation, early neutral evaluation, adjudication and arbitration.
3.3 Government and business should be clear in encouraging industry and individuals in proactively avoiding the Court process by promoting the use of ADR and training their people in dispute resolution techniques.
3.4 Conflict and disputes are time consuming, expensive and can have an adverse impact on the brand. They can also destroy relationships which have been developed over a long period of time and can impact the supply chain process within an organisation. Additionally, they can add substantially to the cost of the contract, as well as invalidating some or all of its benefits or advantages. It is in everyone’s interest to understand the psychology and dynamics of disputes and to implement processes which help to avoid disputes arising in the first place thereby improving relationships between the client and supplier through teamwork and partnering.
3.5 Government and business objectives should be focussed on ensuring that relationships between the client and supplier are non-adversarial, that contracts contain provision for the early resolution of disputes having regard to their nature and substance and that such provision should, so far as possible, ensure that relationships within industry are maintained. In particular it should be government and business’ commercial policy that litigation is treated as the dispute resolution method of last resort.
3.6 When contemplating arbitration or EDRM or how to reach an enforceable settlement it is essential to obtain legal advice or consult an FPD (Fellow Prime Dispute) member.
4. Dispute Resolution Commitment
4.1 Prime Dispute encourages government and business to consider the benefits of relevant ADR clauses and include them within their contracts.
4.2 Government and business should demonstrate a clear intention to use dispute avoidance techniques as an alternative to court in the event of a dispute. We encourage government and business to provide basic dispute resolution training to all employees, either as part of their HR strategy or part of the development programme for employees.
4.3 We encourage Government and business to incorporate these commitments into their policies or strategies;
(a) be proactive in the management of potential disputes and in working to prevent disputes arising or escalating, in order to avoid the need to resort to the use of formal court-based processes;
(b) use prompt, cost effective and efficient processes for undertaking and completing negotiations and resolving disputes;
(c) choose processes appropriate in style and proportionate in costs to the issues that need to be resolved;
(d) make informed choices by considering the benefits all parties to a dispute of all the available processes in achieving resolution;
(e) recognise that the use of appropriate dispute resolution processes can often avoid the high cost in time and resources of going to court;
(f) include dispute resolution mechanisms within their complaints and disputes handling procedures;
(g) engage in a process of appropriate dispute resolution strategies in respect of any dispute which has not been resolved through their normal complaints procedure, as an alternative to litigation;
(h) adopt appropriate dispute resolution processes in their contracts with other parties;
(i) educate their employees and officials in appropriate dispute resolution techniques in order to enable the best possible chance of success when using them;
(j) as a basic standard we encourage all individuals working within government or professionals within the business world, to hold one of the following designations; Trainee Prime Dispute, APD, MPD or FPD which encourages them to develop their skills in dispute resolution and support the organisation strategy.
4.4 In making its commitment to the use of appropriate and proportionate dispute resolution techniques, a key objective is to actively consider the use of ADR mechanisms whilst recognising that court action should be the last resort wherever possible. However, if either party believes that the dispute is not suitable for dispute resolution techniques, or if such techniques do not produce results or a satisfactory settlement agreement the right of either or all parties to initiate formal legal proceedings must be preserved (as stipulated within the Jackson Reforms).
5. Dispute Avoidance
5.1 In relation to contractual matters, clear wording in the contract reflecting the intentions of the parties is imperative. That wording should include provision for the appropriate dispute resolution mechanisms to be applied in the event of a dispute arising, or the requirement to seek appropriate professional advice.
5.2 Contract management techniques should include monitoring for the early detection of any problems. In any contract both parties should be required to give the earliest possible warning of any potential dispute and regular discussions between the parties should include reviews of possible areas of conflict(s).
5.3 When a contract is initially established parties should consider how the expiry of the contract is to be managed and have a clear step by step process.
5.4 For non-contractual disputes the first important step is to establish and promote a clear framework of dispute resolution techniques and processes within the organisations’ complaints handling and/or their dispute resolution policy or procedure. That wording should include provision for the appropriate dispute resolution techniques to be applied in the event of a dispute arising, with suitable arrangements for escalation that will provide guidance to all involved. The complaints handling procedure should be reviewed by an FPD member of Prime Dispute.
5.5 Government and business should produce, publish and make available a clearly defined complaint and dispute handling procedure.
6. Dispute Management
6.1 Government and business should be aware delays and inefficiency can lead to rapid escalation of costs and further damage key relationships. This may involve making an apology and/ or where possible, correcting any error which may have been made.
6.2 Unnecessary delays may cause the initial dispute to escalate to a point where the use of dispute resolution mechanisms outside of court are not deemed possible, as the other party may become unwilling to utilise a less formal, flexible approach. It is important to manage them positively and encourage early and effective settlement.
7. ADR
7.1 ADR is a commonly used term to include a range of processes which involve the use of neutrals who helps resolve disputes an alternative to litigation. ADR is defined in the Civil Procedure Rules glossary as:
(a) “a collective description of methods for resolving disputes otherwise than through the normal trial process”.
7.2 There is interconnections between litigation and ADR - the Pre-action Protocols, introduced under the Civil Procedure Rules in relation to civil court claims, and intended to streamline the pre-action conduct of the parties, emphasise the importance of parties taking active steps to achieve a settlement where possible before issuing proceedings, whether by ADR or other means. Also, within civil proceedings parties may be directed by a judge to consider mediation with the aim of resolving the dispute collaboratively between the parties facilitated by an experienced mediator, prior to the matter moving to judicial determination via a court hearing.
7.3 In respect of the Dispute Resolution Commitment government and business should consider all forms of dispute resolution techniques from negotiation and mediation through to litigation if necessary. A key objective is to actively consider and utilise the most proportionate and suitable dispute resolution mechanisms whilst making going to court to resolve the dispute the final option.
7.4 Dispute resolution mechanisms include:
(a) Negotiation - the most common form of dispute resolution where the parties themselves attempt to resolve the dispute. Negotiation also covers round-table discussions and similar face-to-face meetings between the parties;
(b) Mediation - a private and structured form of negotiation assisted by a third party that is initially non-binding. If settlement is reached it can become a legally binding contract;
(d) Early Neutral Evaluation) - a private and non-binding technique whereby a third party, usually legally qualified, gives an opinion on the likely outcome at trial as a basis for settlement discussions;
(e) Expert determination - a private process involving an independent expert with inquisitorial powers who gives a binding decision;
(d) Adjudication - an expert is instructed to rule on a technical issue. This is primarily used in construction disputes as set out in the Housing Grants, Construction and Regeneration Act 1996 where awards are binding on the parties at least on an interim basis - i.e. until a further process is invoked;
(e) Arbitration - a formal, private and binding process where the dispute is resolved by the decision of a nominated third party, the arbitrator or arbitrators;
(f) Litigation - the formal process whereby claims are taken through the civil courts and conducted in public. Judgments are binding on parties subject to rights of appeal.
8. Overview
The purpose of this next section is to summarise how in practice the most appropriate procedure or procedures should be selected.
9. Negotiation
9.1 Negotiation is by far the most common form of dispute resolution. The objective of sensible dispute management should be to negotiate a settlement as soon as possible. Negotiation can be, and usually is, the most efficient form of dispute resolution in terms of management time, costs and preservation of relationships. Negotiation should be seen as the preferred route in most disputes. Its advantages are:
(a) speed;
(b) cost saving;
(c) confidentiality;
(d) preservation of relationships;
(e) range of possible solutions;
(f) control of process and outcome.
9.1 If you are unable to achieve a settlement through negotiation, you will need to consider what other method or methods of dispute resolution would be suitable. But remember it will still be possible or may be necessary to continue negotiating as part of or alongside other forms of dispute resolution.
10. Mediation
10.1 Mediation is negotiation with the assistance of a neutral third party. It has all the advantages of conventional negotiation as set out above but the focussed involvement of the neutral can make the negotiation more effective. It should be seen as the preferred dispute resolution route in most disputes when conventional negotiation has failed or is making slow progress. Mediation is now being used extensively for civil and commercial cases (including cases involving government departments), frequently for multi-party and high value disputes. Some 80% of commercial mediations result in a settlement either at the time of the mediation or within a short time thereafter.
10.2 Use of mediation has increased significantly since the introduction of the CPR in 1999. The CPR state that “Active case management includes encouraging the parties to use an ADR procedure if the court considers that appropriate”. CPR Part 26 includes specific provisions about using ADR.
10.3 Mediation is a voluntary and flexible process with no fixed procedures (Please refer to Prime Dispute Mediation Rules). At an opening joint meeting each party briefly sets out its position. This is followed by a series of private confidential meetings between the mediator and each of the teams present at the mediation. This may lead to joint meetings between some or all members of each of the teams, or separate meetings with each of the parties with the mediator acting as go-between between each of the parties.
10.4 Most commercial mediations last one day, with very few running for more than three days. A considerable number take place within a month of being initiated and this period can be shortened to days where necessary.
10.5 The mediator’s role is to facilitate the negotiations. The mediator will not express views on any party’s position, although he/she may question the parties on their positions to ensure they are being as objective as possible about the strengths and weaknesses of their own and the other parties legal and commercial stances.
10.6 The mediator does not have the authority to impose a settlement or resolution on the parties, the mediators’ role is to facilitate the process and help the parties reach a mutually satisfactory resolution of their dispute.
10.7 The mediator will try to get the parties to focus on looking to the future and their commercial needs rather than analysing past events and trying to establish their legal rights. It is essential that the mediator has mediation training; it is not essential that the mediator has experience, or even knowledge, of the subject matter of the dispute. The most obvious method of identifying an appropriate mediator is to use the resources of a mediation provider organisation such as Prime Dispute.
10.8 Each party usually prepares a brief summary of its position for the mediator and the other party, with the key supporting documents. These are exchanged between the parties, and sent to the mediator, at least a week before the mediation. The parties should enter into a mediation agreement once the details of the mediation (e.g. place, time, name of mediator) have been agreed.
10.9 Approach - most mediations go through a stage where it seems unlikely that there will be any useful outcome, however, the majority eventually settle, so optimism and determination to solve the problem is essential.
10.11 Enforceability - whether a mediation agreement is enforceable, should a party or parties renege on the agreement, depends on the type of agreement reached between the parties.
10.12 In many cases it is sensible to involve a neutral mediation provider organisation, such as Prime Dispute, to assist in setting up a mediation and helping the parties to select a mediator. The advantages of their neutrality and experience and advice, and the saving of the parties’ own time in dealing with the administration, will usually outweigh the cost.
11. Early Neutral Evaluation
11.1 Early Neutral Evaluation is to test the strength of the legal points in the case. It can be particularly useful where the dispute turns on a point of law. Each side submits an outline of their case with an indication of what evidence they would be able to produce at trial. A neutral third party, gives a confidential opinion as to the likely outcome of a trial. This procedure can be carried out entirely on paper, saving the parties the time and expense of an oral hearing. The opinion can then be used as a basis for settlement or for further negotiation.
11.2 The parties to a dispute may have diametrically opposed perceptions about the law affecting their dispute or the weight or effect of the documentary evidence. Where such parties are both keen to find a commercial resolution but their widely differing perceptions of the issues in the case are getting in the way, an early neutral evaluation of those issues may assist. An independent view of the case or issues can sometimes clear the way for more constructive negotiations to take place.
12. Expert Determination
12.1 This process can be useful where the dispute is about a technical matter. The expert will commonly be given powers to investigate the background of the dispute himself, rather than just relying on the evidence the parties choose to present. In expert determination, the parties agree to be bound by the decision of an expert in the field of dispute.
13. Adjudication
13.1 The term “adjudication” is used almost exclusively for dispute resolution under Part II of the Housing Grants, Construction and Regeneration Act 1996 (HGCR). Under the HGCR Act construction contracts must include a provision for adjudication, with the adjudicator giving a decision within 28 days of referral. The adjudicator’s decision is binding until a final determination reached by agreement, arbitration or litigation, or the parties may take the adjudicator’s decision as final. Adjudication is, therefore, different from other forms of ADR, which are optional and less tied to a single subject area. Like litigation and arbitration, adjudication is an adversarial process.
14. Arbitration
14.1 Arbitration is governed by statute, principally the Arbitration Act 1996. It is a process for resolving disputes in which both sides agree to be bound by the decision of a third party, the arbitrator. If court proceedings are begun by one of the parties the proceedings will normally be stayed on the application of the other party relying on the arbitration clause.
14.2 The Arbitration Act gives the widest discretion to the parties to decide between themselves how their dispute is to be resolved but provides a fallback position if agreement cannot be reached. Like litigation and adjudication arbitration is an adversarial process. The grounds for appeal are limited. Advantages:
(a) some control of process - parties/arbitrator can tailor procedures;
(b) possible cost saving over litigation;
(c) confidentiality;
(d) parties can choose an arbitrator who is an expert in the relevant field;
(e) resolution is guaranteed;
(f) decisions are legally binding and enforceable.
15. Litigation
15.1 If the use of a consensual process is not provided for in the contract and cannot otherwise be agreed, the only alternative is litigation. Litigation will involve preparation for trial before a judge, and may well be a lengthy, drawn out and costly process. Parties often agree a settlement before the case comes to court but in some cases months or even years of effort have been spent on expensive preparatory work.
15.2 Advantages:
(a) it is possible to bring an unwilling party into the procedure;
(b) the solution will be enforceable without further agreement.
15.3 Disadvantages:
(a) potentially lengthy and costly;
(b) adversarial process likely to damage business relationships;
(c) the outcome is in the hands of a third party, the judge.
15.4 It should be noted that the court can refer parties to mediation or another form of alternative dispute resolution, if appropriate.
15.5 As part of the case management process where litigation has been issued, round-table settlement meetings are often undertaken, with the aim of gaining a settlement agreement on the issues at dispute, without the need for a court trial and judicial determination. Use of round-table settlement meetings, utilising negotiation between the legal representatives for each party can allow a flexible settlement to be reached, which may not be possible via a judicial determination, substantial savings in terms of time and costs can be achieved through avoidance of the trial process.
16. ADR Contract Clauses
16.1 Including alternative dispute resolution clauses in contracts allows the settlement process to begin at an early stage and obviates the frequent problem of persuading the other party to the dispute to engage in an ADR process. Model clauses are available under 'Authority' on the Prime Dispute website and the Dispute Resolution Commitment (see above) requires that an appropriate clause be incorporated into all contracts.
17. Legal
17.1 This guidance is drafted on the basis that the law of England and Wales applies and you should consult an FPD member if the contract is made under the law of Scotland or Northern Ireland or an International Jurisdiction. Use of this guidance is not mandatory, but a statement of good professional practice. Government and Business should consider consulting an FPD (Fellow Prime Dispute) member or take legal advice.
18. Liability
18.1 Neither Prime Dispute (LTD); President; Vice President, Trustees, Directors, Executives, Case Officers, Employees, Consultants, Neutral, Member, Dispute avoidance/resolution specialist and Judges, shall be under any legal obligation to make any statements to any person about any matter concerning the case(s) or, nor shall any party seek to make any of these persons a witness in any legal or other proceedings arising out of an case(s).
1.1 The Dispute Resolution Guidance (DRG) is aimed at encouraging the increased use of flexible, creative and constructive approaches to dispute resolution. The DRG offers the opportunity for government and businesses to demonstrate a best practice approach to business, and in particular, how disputes are resolved without resorting to costly litigation. It allows government and business to demonstrate a clear commitment to having in place mechanisms to avoid disputes, where possible; and, when disputes cannot be avoided, a commitment to quickly and effectively manage and resolve them utilising the most appropriate dispute resolution mechanism/s.
2. TERMS
EDRM - Equal Dispute Resolution Mechanisms
ADR - Alternative Dispute Resolution
CPR - Civil Procedure Rules 1999
DRG - Dispute Resolution Guidance
Government - the group of people with the authority to govern a country or state Business.
Litigation – the term used to describe proceedings initiated between two opposing parties to enforce or defend a legal right.
FPD - Fellow Prime Dispute
MPD - Member Prime Dispute
APD - Associate Prime Dispute
Trainee - Trainee Prime Dispute
3. Introduction
3.1 This guidance gives an overview of the key mechanisms that are available for the resolution of disputes. Proactive dispute resolution or management involves selecting and using the most appropriate resolution procedure available.
3.2 In the past litigation has been seen as the only option when dealing with disputes. Government and business can all find themselves involved in court action when their disagreements or disputes would have been better addressed and resolved at a much earlier stage. There are a range of alternatives to court action available to government and business, including mediation, early neutral evaluation, adjudication and arbitration.
3.3 Government and business should be clear in encouraging industry and individuals in proactively avoiding the Court process by promoting the use of ADR and training their people in dispute resolution techniques.
3.4 Conflict and disputes are time consuming, expensive and can have an adverse impact on the brand. They can also destroy relationships which have been developed over a long period of time and can impact the supply chain process within an organisation. Additionally, they can add substantially to the cost of the contract, as well as invalidating some or all of its benefits or advantages. It is in everyone’s interest to understand the psychology and dynamics of disputes and to implement processes which help to avoid disputes arising in the first place thereby improving relationships between the client and supplier through teamwork and partnering.
3.5 Government and business objectives should be focussed on ensuring that relationships between the client and supplier are non-adversarial, that contracts contain provision for the early resolution of disputes having regard to their nature and substance and that such provision should, so far as possible, ensure that relationships within industry are maintained. In particular it should be government and business’ commercial policy that litigation is treated as the dispute resolution method of last resort.
3.6 When contemplating arbitration or EDRM or how to reach an enforceable settlement it is essential to obtain legal advice or consult an FPD (Fellow Prime Dispute) member.
4. Dispute Resolution Commitment
4.1 Prime Dispute encourages government and business to consider the benefits of relevant ADR clauses and include them within their contracts.
4.2 Government and business should demonstrate a clear intention to use dispute avoidance techniques as an alternative to court in the event of a dispute. We encourage government and business to provide basic dispute resolution training to all employees, either as part of their HR strategy or part of the development programme for employees.
4.3 We encourage Government and business to incorporate these commitments into their policies or strategies;
(a) be proactive in the management of potential disputes and in working to prevent disputes arising or escalating, in order to avoid the need to resort to the use of formal court-based processes;
(b) use prompt, cost effective and efficient processes for undertaking and completing negotiations and resolving disputes;
(c) choose processes appropriate in style and proportionate in costs to the issues that need to be resolved;
(d) make informed choices by considering the benefits all parties to a dispute of all the available processes in achieving resolution;
(e) recognise that the use of appropriate dispute resolution processes can often avoid the high cost in time and resources of going to court;
(f) include dispute resolution mechanisms within their complaints and disputes handling procedures;
(g) engage in a process of appropriate dispute resolution strategies in respect of any dispute which has not been resolved through their normal complaints procedure, as an alternative to litigation;
(h) adopt appropriate dispute resolution processes in their contracts with other parties;
(i) educate their employees and officials in appropriate dispute resolution techniques in order to enable the best possible chance of success when using them;
(j) as a basic standard we encourage all individuals working within government or professionals within the business world, to hold one of the following designations; Trainee Prime Dispute, APD, MPD or FPD which encourages them to develop their skills in dispute resolution and support the organisation strategy.
4.4 In making its commitment to the use of appropriate and proportionate dispute resolution techniques, a key objective is to actively consider the use of ADR mechanisms whilst recognising that court action should be the last resort wherever possible. However, if either party believes that the dispute is not suitable for dispute resolution techniques, or if such techniques do not produce results or a satisfactory settlement agreement the right of either or all parties to initiate formal legal proceedings must be preserved (as stipulated within the Jackson Reforms).
5. Dispute Avoidance
5.1 In relation to contractual matters, clear wording in the contract reflecting the intentions of the parties is imperative. That wording should include provision for the appropriate dispute resolution mechanisms to be applied in the event of a dispute arising, or the requirement to seek appropriate professional advice.
5.2 Contract management techniques should include monitoring for the early detection of any problems. In any contract both parties should be required to give the earliest possible warning of any potential dispute and regular discussions between the parties should include reviews of possible areas of conflict(s).
5.3 When a contract is initially established parties should consider how the expiry of the contract is to be managed and have a clear step by step process.
5.4 For non-contractual disputes the first important step is to establish and promote a clear framework of dispute resolution techniques and processes within the organisations’ complaints handling and/or their dispute resolution policy or procedure. That wording should include provision for the appropriate dispute resolution techniques to be applied in the event of a dispute arising, with suitable arrangements for escalation that will provide guidance to all involved. The complaints handling procedure should be reviewed by an FPD member of Prime Dispute.
5.5 Government and business should produce, publish and make available a clearly defined complaint and dispute handling procedure.
6. Dispute Management
6.1 Government and business should be aware delays and inefficiency can lead to rapid escalation of costs and further damage key relationships. This may involve making an apology and/ or where possible, correcting any error which may have been made.
6.2 Unnecessary delays may cause the initial dispute to escalate to a point where the use of dispute resolution mechanisms outside of court are not deemed possible, as the other party may become unwilling to utilise a less formal, flexible approach. It is important to manage them positively and encourage early and effective settlement.
7. ADR
7.1 ADR is a commonly used term to include a range of processes which involve the use of neutrals who helps resolve disputes an alternative to litigation. ADR is defined in the Civil Procedure Rules glossary as:
(a) “a collective description of methods for resolving disputes otherwise than through the normal trial process”.
7.2 There is interconnections between litigation and ADR - the Pre-action Protocols, introduced under the Civil Procedure Rules in relation to civil court claims, and intended to streamline the pre-action conduct of the parties, emphasise the importance of parties taking active steps to achieve a settlement where possible before issuing proceedings, whether by ADR or other means. Also, within civil proceedings parties may be directed by a judge to consider mediation with the aim of resolving the dispute collaboratively between the parties facilitated by an experienced mediator, prior to the matter moving to judicial determination via a court hearing.
7.3 In respect of the Dispute Resolution Commitment government and business should consider all forms of dispute resolution techniques from negotiation and mediation through to litigation if necessary. A key objective is to actively consider and utilise the most proportionate and suitable dispute resolution mechanisms whilst making going to court to resolve the dispute the final option.
7.4 Dispute resolution mechanisms include:
(a) Negotiation - the most common form of dispute resolution where the parties themselves attempt to resolve the dispute. Negotiation also covers round-table discussions and similar face-to-face meetings between the parties;
(b) Mediation - a private and structured form of negotiation assisted by a third party that is initially non-binding. If settlement is reached it can become a legally binding contract;
(d) Early Neutral Evaluation) - a private and non-binding technique whereby a third party, usually legally qualified, gives an opinion on the likely outcome at trial as a basis for settlement discussions;
(e) Expert determination - a private process involving an independent expert with inquisitorial powers who gives a binding decision;
(d) Adjudication - an expert is instructed to rule on a technical issue. This is primarily used in construction disputes as set out in the Housing Grants, Construction and Regeneration Act 1996 where awards are binding on the parties at least on an interim basis - i.e. until a further process is invoked;
(e) Arbitration - a formal, private and binding process where the dispute is resolved by the decision of a nominated third party, the arbitrator or arbitrators;
(f) Litigation - the formal process whereby claims are taken through the civil courts and conducted in public. Judgments are binding on parties subject to rights of appeal.
8. Overview
The purpose of this next section is to summarise how in practice the most appropriate procedure or procedures should be selected.
9. Negotiation
9.1 Negotiation is by far the most common form of dispute resolution. The objective of sensible dispute management should be to negotiate a settlement as soon as possible. Negotiation can be, and usually is, the most efficient form of dispute resolution in terms of management time, costs and preservation of relationships. Negotiation should be seen as the preferred route in most disputes. Its advantages are:
(a) speed;
(b) cost saving;
(c) confidentiality;
(d) preservation of relationships;
(e) range of possible solutions;
(f) control of process and outcome.
9.1 If you are unable to achieve a settlement through negotiation, you will need to consider what other method or methods of dispute resolution would be suitable. But remember it will still be possible or may be necessary to continue negotiating as part of or alongside other forms of dispute resolution.
10. Mediation
10.1 Mediation is negotiation with the assistance of a neutral third party. It has all the advantages of conventional negotiation as set out above but the focussed involvement of the neutral can make the negotiation more effective. It should be seen as the preferred dispute resolution route in most disputes when conventional negotiation has failed or is making slow progress. Mediation is now being used extensively for civil and commercial cases (including cases involving government departments), frequently for multi-party and high value disputes. Some 80% of commercial mediations result in a settlement either at the time of the mediation or within a short time thereafter.
10.2 Use of mediation has increased significantly since the introduction of the CPR in 1999. The CPR state that “Active case management includes encouraging the parties to use an ADR procedure if the court considers that appropriate”. CPR Part 26 includes specific provisions about using ADR.
10.3 Mediation is a voluntary and flexible process with no fixed procedures (Please refer to Prime Dispute Mediation Rules). At an opening joint meeting each party briefly sets out its position. This is followed by a series of private confidential meetings between the mediator and each of the teams present at the mediation. This may lead to joint meetings between some or all members of each of the teams, or separate meetings with each of the parties with the mediator acting as go-between between each of the parties.
10.4 Most commercial mediations last one day, with very few running for more than three days. A considerable number take place within a month of being initiated and this period can be shortened to days where necessary.
10.5 The mediator’s role is to facilitate the negotiations. The mediator will not express views on any party’s position, although he/she may question the parties on their positions to ensure they are being as objective as possible about the strengths and weaknesses of their own and the other parties legal and commercial stances.
10.6 The mediator does not have the authority to impose a settlement or resolution on the parties, the mediators’ role is to facilitate the process and help the parties reach a mutually satisfactory resolution of their dispute.
10.7 The mediator will try to get the parties to focus on looking to the future and their commercial needs rather than analysing past events and trying to establish their legal rights. It is essential that the mediator has mediation training; it is not essential that the mediator has experience, or even knowledge, of the subject matter of the dispute. The most obvious method of identifying an appropriate mediator is to use the resources of a mediation provider organisation such as Prime Dispute.
10.8 Each party usually prepares a brief summary of its position for the mediator and the other party, with the key supporting documents. These are exchanged between the parties, and sent to the mediator, at least a week before the mediation. The parties should enter into a mediation agreement once the details of the mediation (e.g. place, time, name of mediator) have been agreed.
10.9 Approach - most mediations go through a stage where it seems unlikely that there will be any useful outcome, however, the majority eventually settle, so optimism and determination to solve the problem is essential.
10.11 Enforceability - whether a mediation agreement is enforceable, should a party or parties renege on the agreement, depends on the type of agreement reached between the parties.
10.12 In many cases it is sensible to involve a neutral mediation provider organisation, such as Prime Dispute, to assist in setting up a mediation and helping the parties to select a mediator. The advantages of their neutrality and experience and advice, and the saving of the parties’ own time in dealing with the administration, will usually outweigh the cost.
11. Early Neutral Evaluation
11.1 Early Neutral Evaluation is to test the strength of the legal points in the case. It can be particularly useful where the dispute turns on a point of law. Each side submits an outline of their case with an indication of what evidence they would be able to produce at trial. A neutral third party, gives a confidential opinion as to the likely outcome of a trial. This procedure can be carried out entirely on paper, saving the parties the time and expense of an oral hearing. The opinion can then be used as a basis for settlement or for further negotiation.
11.2 The parties to a dispute may have diametrically opposed perceptions about the law affecting their dispute or the weight or effect of the documentary evidence. Where such parties are both keen to find a commercial resolution but their widely differing perceptions of the issues in the case are getting in the way, an early neutral evaluation of those issues may assist. An independent view of the case or issues can sometimes clear the way for more constructive negotiations to take place.
12. Expert Determination
12.1 This process can be useful where the dispute is about a technical matter. The expert will commonly be given powers to investigate the background of the dispute himself, rather than just relying on the evidence the parties choose to present. In expert determination, the parties agree to be bound by the decision of an expert in the field of dispute.
13. Adjudication
13.1 The term “adjudication” is used almost exclusively for dispute resolution under Part II of the Housing Grants, Construction and Regeneration Act 1996 (HGCR). Under the HGCR Act construction contracts must include a provision for adjudication, with the adjudicator giving a decision within 28 days of referral. The adjudicator’s decision is binding until a final determination reached by agreement, arbitration or litigation, or the parties may take the adjudicator’s decision as final. Adjudication is, therefore, different from other forms of ADR, which are optional and less tied to a single subject area. Like litigation and arbitration, adjudication is an adversarial process.
14. Arbitration
14.1 Arbitration is governed by statute, principally the Arbitration Act 1996. It is a process for resolving disputes in which both sides agree to be bound by the decision of a third party, the arbitrator. If court proceedings are begun by one of the parties the proceedings will normally be stayed on the application of the other party relying on the arbitration clause.
14.2 The Arbitration Act gives the widest discretion to the parties to decide between themselves how their dispute is to be resolved but provides a fallback position if agreement cannot be reached. Like litigation and adjudication arbitration is an adversarial process. The grounds for appeal are limited. Advantages:
(a) some control of process - parties/arbitrator can tailor procedures;
(b) possible cost saving over litigation;
(c) confidentiality;
(d) parties can choose an arbitrator who is an expert in the relevant field;
(e) resolution is guaranteed;
(f) decisions are legally binding and enforceable.
15. Litigation
15.1 If the use of a consensual process is not provided for in the contract and cannot otherwise be agreed, the only alternative is litigation. Litigation will involve preparation for trial before a judge, and may well be a lengthy, drawn out and costly process. Parties often agree a settlement before the case comes to court but in some cases months or even years of effort have been spent on expensive preparatory work.
15.2 Advantages:
(a) it is possible to bring an unwilling party into the procedure;
(b) the solution will be enforceable without further agreement.
15.3 Disadvantages:
(a) potentially lengthy and costly;
(b) adversarial process likely to damage business relationships;
(c) the outcome is in the hands of a third party, the judge.
15.4 It should be noted that the court can refer parties to mediation or another form of alternative dispute resolution, if appropriate.
15.5 As part of the case management process where litigation has been issued, round-table settlement meetings are often undertaken, with the aim of gaining a settlement agreement on the issues at dispute, without the need for a court trial and judicial determination. Use of round-table settlement meetings, utilising negotiation between the legal representatives for each party can allow a flexible settlement to be reached, which may not be possible via a judicial determination, substantial savings in terms of time and costs can be achieved through avoidance of the trial process.
16. ADR Contract Clauses
16.1 Including alternative dispute resolution clauses in contracts allows the settlement process to begin at an early stage and obviates the frequent problem of persuading the other party to the dispute to engage in an ADR process. Model clauses are available under 'Authority' on the Prime Dispute website and the Dispute Resolution Commitment (see above) requires that an appropriate clause be incorporated into all contracts.
17. Legal
17.1 This guidance is drafted on the basis that the law of England and Wales applies and you should consult an FPD member if the contract is made under the law of Scotland or Northern Ireland or an International Jurisdiction. Use of this guidance is not mandatory, but a statement of good professional practice. Government and Business should consider consulting an FPD (Fellow Prime Dispute) member or take legal advice.
18. Liability
18.1 Neither Prime Dispute (LTD); President; Vice President, Trustees, Directors, Executives, Case Officers, Employees, Consultants, Neutral, Member, Dispute avoidance/resolution specialist and Judges, shall be under any legal obligation to make any statements to any person about any matter concerning the case(s) or, nor shall any party seek to make any of these persons a witness in any legal or other proceedings arising out of an case(s).
