The benefits of Alternate Dispute Resolution and a conciliatory approach to litigation during the pandemic
The Covid-19 pandemic has undoubtedly resulted in difficulties for all types of corporations, felt most significantly due to the financial strains and pressures which the pandemic has caused. The sources and causes of commercial disputes not only continue to exist, but have been amplified as a result of cash-flow concerns, supply and employment issues which have been caused as a result of the pandemic. In light of this, it is therefore no surprise that the former President of the Supreme Court Lord Neuberger has recently endorsed guidelines published by the British Institute of International and Comparative Law which urges businesses to seriously consider the possibility of Alternate Dispute Resolution (‘ADR’) in an attempt to resolve commercial disputes which they may have. Lord Neuberger said companies should consider the handing of their disputes ‘a key part of their environmental, social and governance responsibilities’ and ‘if we are to maintain respect for the rule of law, new approaches may be needed to resolve those disputes fairly’. The guidelines urge business to embrace the ‘efficient resolution of disputes’ in a manner which is likely to benefit not only the business itself, but the ‘wider public interest’.
ADR has always been an important early consideration for any corporate considering substantial proceedings. The Practice Direction on Pre-action Protocols requires parties to consider ADA. An unreasonable refusal to agree to ADR, risks an adverse costs order down the line (even if the party's case succeed). During the pandemic, the advantages of ADR have been made more attractive, not only as a result of the financial strains which come with pursuing litigation, but also as a result of court closures resulting in a large backlog of cases faced by the courts. Inevitable delay and adjournments further increase the cost of litigation. The situation is unlikely to resolve itself quickly when the pandemic passes (the courts were already stretched to breaking point when it began).
Companies are therefore being urged to consider the various forms of ADR which exist and, where appropriate, to adopt a ‘cards on the table’ approach. Where the professional relationship has not broken down, a good starting point for suitable cases might be bilateral negotiation. Negotiation has the objective of allowing the parties to gain an understanding of each other’s positions and to reach a settlement which is acceptable to both sides. This is something which can be undertaken by the party's respective solicitors without the need for the company to communicate directly with the other side, which may result in the process being less stressful than if this were to be undertaken by the company directly. A dispassionate approach will also mean there is less chance of negotiations breaking down.
Alternatively, mediation can be an effective form of ADR in more complex/substantial cases. Mediation is the process by which an impartial third party, a mediator, assists in resolving the dispute. The mediator may have expertise in the area of the dispute, such as Accountancy or Telecoms, which may provide a helpful insight into the dispute in question, aiding the existing knowledge of the party and their solicitor. Whilst the mediator does not arbitrate a dispute, they work on trying to find common ground and compromise.
Mediation can be carried out in a socially distanced world, via video conferencing facilities such as Zoom or Skype is any less effective than pre-Covid face-to-face mediation. Many mediation organisations, such as CEDR, are now using hosts such as Zoom and report great success in doing so. Virtual mediation, therefore, may be a solution for companies who find themselves contemplating litigation in the current global crisis and want to ensure a resolution is reached as expeditiously and as cost-effectively as possible.
By giving the courts more breathing space and by handling disputes in a more conciliatory way, business are able to help ensure the effective administration of justice, with scarce court resources being freed up for cases that really require them, in addition to potentially saving themselves money in the process.
To find out how Brett Wilson LLP can assist with commercial disputes and ADR, please contact our specialist solicitors on 02071838950.
Articles are intended as an introduction to the topic and do not constitute legal advice.