Non-Court-Based Dispute Resolution
Taehyun Baek
15th January 2024
Non-Court-Based (NCB) dispute resolution, more often referred to as Alternative Dispute Resolution (ADR), has been in the limelight recently with an important case law update (further details below). Now, more than ever, greater integration of NCB dispute resolution within the justice system seems inevitable. The significant delays in all areas of the court system, coupled with the costs and risk inherent in litigation, mean that many litigants are keen to find a quicker, cheaper route through their dispute.
This blog explores the court’s guidance and view on the use of NCB dispute resolution, and summarises the strengths and weakness of the most common types.
Court’s overriding objective
It is important to begin with the court’s overriding objective which underlies civil litigation in England and Wales.
The overriding objective is to enable the court to deal with cases justly and at proportionate cost. The court must further the overriding objective by actively managing cases, which includes, “encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate and facilitating the use of such procedure”. [Civil Procedure Rules, rule 1.4(2)(e)].
The Practice Direction on Pre-Action Conduct and Protocols confirms that litigation should be a last resort. Parties are obliged to consider whether negotiation or some other form of NCB dispute resolution would enable them to settle their dispute without commencing proceedings.
Unreasonably refusing to engage in dispute resolution may result in cost consequences.
Recent case law update: Churchill v Merthyr Tydfil County Borough Council
On 29 November 2023, the Court of Appeal ruled that the court can order parties to engage in NCB dispute resolution, so long as it does not restrict their ability to proceed to a judicial hearing.
In the case of Churchill v Merthyr Tydfil County Borough Council the Court of Appeal confirmed that ordering compulsory mediation does not breach article 6 of the European Convention on Human Rights, the right to fair trial, and that any form of compulsory ADR which is “not disproportionately onerous and does not foreclose the parties’ effective access to the court” is lawful.
The longstanding precedent of Halsey v Milton Keynes General NHS Trust, which previously indicated that parties could not be forced to engage in mediation, was reconsidered. The Court of Appeal deemed the remarks relating to mediation to be obiter and therefore not binding.
According to Churchill, when deciding to stay proceedings and order NCB dispute resolution, the court will need to consider “whether a particular process is or is not likely or appropriate for the purpose of achieving the important objective of bringing about a fair, speedy and cost-effective solution to the dispute and the proceedings, in accordance with the overriding objective.”
The Churchill decision may significantly impact how cases are managed before and during proceedings. We are likely to see an increase in the use of mediation and parties could be directed towards settling (or at least attempting to settle!) at earlier stages
Common forms of Non-Court-Based dispute resolution
Whilst there are various types of NCB dispute resolution processes, there is no ‘one-size-fits-all’ approach. Whether one particular method is appropriate and/or effective depends on a variety of issues including, for example, the circumstances and specific facts of the case, and the stage of the dispute or litigation. Parties could also employ several methods of NCB dispute resolution if the first one does not produce a result.
Below is a table of the common types of NCB dispute resolution. It outlines the main advantages and disadvantages of each method when compared to court litigation.
|
Type |
Summary |
Advantage |
Disadvantage |
|
Negotiation |
Without prejudice discussions |
- Flexible - Informal - Private |
- Not legally binding - Likely result in deadlock - Low prospect of success without 3rd party |
|
Mediation |
Third party facilitated resolution |
- Flexible - Parties maintain control - Private - Cheaper - Consensual agreement reduces risk of damage to relationship |
- No guarantee of settlement - Cannot compel production of evidence - May be more costly for low-value disputes |
|
Early Neutral Evaluation |
Third party providing non-binding opinion on dispute |
- Quicker / Cheaper - Identify risks and weaknesses - Provide reality check - Helpful for claims which turn on an issue of law |
- One party may become more entrenched in their position if evaluation is in their favour, hindering settlement - Not suitable for large, complex disputes |
|
Expert Determination |
Expert decides on (usually technical) issue and produces contractually binding decision |
- Quicker / Cheaper - Good for technical disputes - Experts can be sued for negligence, providing assurance in decision |
- Not suitable for fact-heavy disputes - Generally, decisions cannot be enforced without further litigation - Limited route to appeal |
|
Arbitration |
Third party (panel) decides dispute and makes a binding award |
- Private / Confidential - Flexible - Option for neutral forum (international disputes) - Enforcement |
- Award (although persuasive) does not give rise to binding precedent in law or protection of res judicata - Can be costly - Limited route to appeal / challenge |
Conclusion
The court encourages and is now able to compel parties to resolve disputes through Non-Court-Based processes. Whilst parties remain entitled to the recourse of judicial decision-making, it is expected that other dispute resolution processes, especially mediation, will be more routinely utilised.