UK: Civil Justice Council report on ADR calls for review of Halsey guidelines but stops short of recommending mandatory mediation

The Civil Justice Council’s ADR working group has released its final report on ADR and Civil Justice, following consultation on its interim report released last year. The broad mandate of the review was “to maintain the search for the right relationship between civil justice and ADR” and to promote debate over possible reforms.

The report includes various recommendations aimed at improving the awareness of ADR (both in the general public and in the professions/judiciary) and the availability of ADR (both in terms of funding/logistics and regulation of the professionals involved).

However the recommendations likely to be of most interest to users of the civil justice system in the short term are those that relate to Court/Government encouragement of ADR.  In this regard:

  • The report does not support blanket compulsion of ADR in the sense of requiring proof of ADR activity as an administrative precondition to any particular step in the litigation.
  • It also rejects the introduction of mandatory Mediation Information and Advice Meetings (as used in the family courts) as a precondition to pursuing civil claims.

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UK commercial mediation market grows 20% – CEDR mediation audit results published

The Centre for Effective Dispute Resolution (CEDR) has released the results of its Mediation Audit 2018, based on a survey of practising mediators in the UK. (The results of parallel surveys of lawyer attitudes to mediation, and of US practitioners’ views, are to be published separately).

The audit is the eighth biennial survey CEDR has conducted in the last 16 years (in conjunction with the Civil Mediation Council).  The 2018 audit received 336 responses from UK mediators.

While it is important to bear in mind the empirical limitations of such reviews based on survey responses from a sample of market participants, the audit does indicate a number of interesting trends in civil and commercial mediation in the UK.    CEDR’s key findings from the responses include: Continue reading

ADR in employment disputes

The Herbert Smith Freehills employment team has published a briefing examining the role of ADR within employment disputes, including considering the findings outlined in the recently released Global Pound Conference Report in the context of employment disputes in the key jurisdictions of Australia, France, Germany, Spain and the UK.

The briefing discusses the availability – and pros and cons – of various ADR methods for employment issues in those jurisdictions.  As we have previously reported, one of our London partners, Peter Frost, has co-chaired (with Paul Goulding QC of Blackstone Chambers) various reports on this issue by the Employment Lawyers Association’s Arbitration and ADR Group, and the article also reflects on those findings.

Click here to read the briefing.

Article published – ADR reform: one size does not fit all

On 6 March, the Civil Justice Council held a workshop to discuss the recommendations made in its interim report on ADR, which was subject to consultation late last year. The interim report addresses concerns regarding a perceived underuse of ADR within some sections of the civil justice system and suggests a variety of possible corrective measures. The proposals include a power for the court to determine whether costs sanctions should be imposed for unreasonable conduct relating to ADR (such as an unreasonable refusal to mediate) not only at the end of a case, as currently, but during the matter when the decisions regarding ADR are taken.

Jan O’Neill has published a post on Practical Law’s Dispute Resolution blog in which she questions how realistic the suggestion of “midstream” assessment of parties’ conduct relating to ADR would be in practice. She suggests that many of the concerns expressed in the report as to the underuse of ADR are not relevant to many larger, complex claims, and urges the working group to tailor any final recommendations to the specific courts or dispute types for which the evidence suggests they are needed and practicable.

Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).

 

 

Global Pound Conference series – new online voting system now open

The Global Pound Conference (GPC) series concluded on 6 July, with the final conference held at the Guildhall in London. This landmark project (of which Herbert Smith Freehills is the lead sponsor)  has seen more than 3,000 corporate and disputes professionals come together in conferences spanning 29 cities across the globe throughout 2016-17, with many more following and discussing the series online and at other events.

Through interactive electronic voting at the individual conferences on a set of core questions, the series has gathered data aimed at improving systems for the resolution of commercial disputes in the 21st century – spanning court processes, arbitration and ADR.   We believe this is a unique set of data that has never been collected before.  Amongst other things, it will provide a unique insight into what organisations are currently doing to avoid conflict and save money through innovative uses of the key dispute resolution processes.

However, given that many people were unable to attend a local GPC event, GPC has now opened an online voting system, to allow a wider audience to provide input on the core questions.  If you were unable to vote and would like to do so, please click here to vote now.   The online voting system will be open until 31 July 2017  and should take no more than 15 minutes to complete.

We encourage you to add your voices about how to shape the future of commercial dispute resolution and improve access to justice in the 21st century.

 

High Court decision potentially extends exceptions to without prejudice protection

In a recent decision, the High Court has found that documents relating to negotiations regarding recoverable litigation costs had to be disclosed to a third party (the claimant in the present action) who had an interest in the outcome of the negotiations: EMW Law LLP v Halborg [2017] EWHC 1014.

The documents could normally have been withheld on the basis of the without prejudice ("WP") rule, which (in general) prevents negotiations genuinely aimed at settlement from being admitted in evidence in proceedings. However, the judge found that exceptions to the WP rule applied in this case, essentially on the basis that justice clearly demanded that an exception be made as there was a live issue as to whether the negotiations had led to a concluded settlement and that issue could not be determined without access to the documents.

The decision may be seen to expand existing exceptions to the WP rule. Although there is a recognised exception where documents are relevant to whether a concluded agreement has been reached, in previous cases it had been one of the parties to the litigation who alleged that an agreement had been reached. Here that question was put in issue by a stranger to the negotiations. The judge was also prepared to craft a new exception by analogy to the (much-criticised) exception established in Muller v Linsley & Mortimer [1996] 1 PNLR 74, where the WP communications were relevant to whether a party had reasonably mitigated his loss in negotiating a compromise of separate proceedings.

Although the issues in this case did not arise in the context of a mediation or other formal ADR process, they could potentially apply equally in that context. However, it is worth bearing in mind that, particularly in such formal ADR contexts, it is in practice very rare for the WP status of the discussions to subsequently be challenged and even more so for the challenge to be successful.  The courts' approach to the exceptions to WP could be expected to continue to be one of applying the exceptions narrowly and preventing erosions of the protection, to avoid undermining the policy of encouraging settlement discussions.

Click here to read more on the decision on our 'Litigation Notes' blog.

 

Court of Appeal sends further message on mediation: Don’t drag your heels in arranging it

A recent Court of Appeal decision is the latest instance of the court expressly sending a message to litigants confirming what it expects of them regarding mediation within the court process: Thakkar v Patel [2017] EWCA Civ 117.

Upholding a first instance decision which it described as "severe, but not so severe that this court should intervene", the court refused to overturn a costs sanction on a party who had agreed to mediate but then "dragged its heels" in the discussions over the arrangement of the mediation, to the point where the other party ultimately abandoned the process.

The Court of Appeal has in recent years made clear to litigants that it now expects them to be proactive and engage constructively with each other during proceedings to fully explore the potential for the dispute to be mediated – to the point where ignoring a mediation proposal will usually warrant a costs sanction even if the circumstances were such that an outright refusal to mediate would have been justified (PGF II SA v OMFS [2013] EWCA (Civ) 1288).

The present case confirms that, where mediation is appropriate, the constructive engagement expected by the court also requires that the parties cooperate and act proactively in the arrangement of the mediation: "It behoves both parties to get on with it. If one party frustrates the process by delaying and dragging its feet for no good reason, that will merit a costs sanction". 

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What do users of dispute resolution processes need and expect? Efficiency is key

With the first eight Global Pound Conference (GPC) events complete and more than 650 delegates sharing their views so far, some interesting data has started to emerge, particularly regarding the views expressed by those participating in the GPC as 'Users' of dispute resolution processes – in-house counsel and business executives whose organisations find themselves embroiled in commercial disputes.

One of the key themes to emerge from the Users at GPC events so far is that their highest priority when selecting which dispute resolution process to use (eg courts, arbitration, mediation or other ADR) is efficiency. They rate efficiency higher than they do the advice given by their advisors, which is revealing.  It reflects the extent to which commercial conflicts are a distraction from the day to day activity of Users, namely commerce.

Continue reading on our ADR Hub here.

 

Costs judge finds information from mediation is admissible when considering costs consequences of settlement

A costs judge has held that information about a party's costs provided for the purposes of a mediation could be used as evidence when considering the cost consequences of a subsequent settlement: Savings Advice Limited v EDF Energy Customers Ltd [2017] EWHC B1 (Costs) 

Documents produced for the purposes of mediation are generally covered by without prejudice privilege and, subject to limited exceptions, cannot subsequently be used as evidence. In the present case the costs information was provided in emails headed "without prejudice save as to costs", so it is perhaps not surprising that the costs judge concluded it could be used as evidence in subsequent cost proceedings.

However, other aspects of the reasoning for the decision are more surprising and arguably not supported by existing authorities regarding the without prejudice rule. In particular, the costs judge held that the costs information was not in any event covered by the privilege because it was a statement of pure fact rather than an admission or concession. Such distinction has been rejected in previous cases on the basis that requiring parties to a negotiation to constantly analyse whether they are making admissions or factual statements would undermine the privilege's purpose of enabling parties to speak freely in settlement negotiations (see for example the decision of the House of Lords in Ofulue v Bossert [2009] UKHL16, considered here).

While the decision will not necessarily be followed in future cases,  it serves as a reminder that parties should be aware of the limitations of without prejudice privilege and the circumstances in which information provided during mediation may be used in subsequent litigation. As a practice point, parties should ensure that they are clear as to what is intended when they provide or receive information  'without prejudice save as to costs' in the context of a mediation.

Gary Horlock (associate) and Jan O'Neill (professional support lawyer) in our dispute resolution team consider the decision further below.

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Settlement offer conveyed through a mediator found not to be protected by without prejudice privilege due to ‘unambiguous impropriety’

The Court of Appeal has recently applied the rarely invoked "unambiguous impropriety" exception to without prejudice ("WP") privilege, to find that a written settlement offer conveyed through a mediator following an unsuccessful mediation was not protected by WP: Ferster v Ferster [2016] EWCA Civ 717.   

Communications in connection with a mediation (including when the mediator acts as a conduit for negotiations after the mediation) will of course normally be protected by WP privilege. However, one of the narrow exceptions to the WP privilege is where the communication involved some 'unambiguous impropriety', in the sense of an attempt to abuse the protection afforded by the privilege.  In the present case, the Court of Appeal found that correspondence conveying a settlement offer on behalf of the claimants constituted an unambiguously improper threat against the defendant in the nature of blackmail and, as such, was not protected.

The decision serves as a reminder that WP privilege cannot be used as a cloak for impropriety.  It also underlines the fact that there is a distinction to be drawn between the use of proper leverage in the context of settlement discussions and the making of improper threats.  The courts will take a dim view of the latter.   Read more commentary on the decision here.