M34A12 Commercial Law

Introduction:

In England and Wales, generally disputes are solved either by judge or by an arbitrator. There are some detailed rules which govern the process of litigation, and because of this, process becomes complex, time consuming, and expensive.  Generally, process related to arbitration is also conducted on similar basis and this process has similar limitations. Alternative Dispute Resolution ("ADR") provides various options which fall between the litigation and arbitration for the purpose of resolving the disputes in efficient manner. As stated there are number of options related to ADR such as Meditation, expert determination, Adjudication, and early neutral evaluation. Meditation is the option which is used on frequent basis.

This paper states the answer of the question “To what extent of present rules and policy is adaptable to depend on ADR and how much these rules is motivated and demotivated to access to ADR where the parties are not agreed?”, and also contain the recommendations for adopting the ADR in case agreement are not concluded by the parties. Subsequently, this paper is concluded with brief conclusion.

Support to ADR: 

European Commission recognized the importance of ADR, for this purpose they enacted the Meditation Directive. This directive mainly provides the facility for accessing to ADR, and it also promotes the method of meditation for the purpose of resolving the disputes. This directive also helps in maintaining the balance between the meditation and judicial proceedings. On 13^th June 2008, this directive was come into force and it was applicable on all the member states of EU apart from Denmark. In England and Wales, this directive was applied on most civil and commercial cross border meditations, but it does not applied on domestic meditations.

Government of UK also supports the ADR, and this is proved by the example of measures stated in Civil Procedure Rules 1998 (the "CPR") which are designed for the purpose of encouraging the use of ADR. As per the requirements of CPR, parties at different stages such as before the litigation or during the litigation can consider the ADR as appropriate means of resolving their dispute. In case parties choose to adopt the ADR, then generally Court stays the proceedings conducted by parties. Government of UK also take pledge to use the ADR in all the suitable cases which involves the departments of government.

Additionally, final report related to civil litigation of 2010 of Lord Justice Jackson's, states the complete benefits of ADR. He further stated that parties should not be forced to meditate, and he also requested to Courts to take necessary steps for the purpose of encouraging the meditation. He also makes recommendation that those parties who refused to meditate on unreasonable ground must be penalized in costs. There are number of cases which give boost to the use of ADR as a dispute resolution process in recent years, and in some of these cases parties refused to meditate on the basis of unreasonable ground. Such parties have been penalized by Court after the trial, no matter whether such parties are successful or unsuccessful. However, in 2004 landmark decision was given by Court of Appeal in case law Halsey v Milton Keynes General NHS Trust, in which stated that Court must take such steps which encourage the party to refer their disputes to some form of ADR, but Court cannot compel them to do so. 

It must be noted that compulsion would not be able to achieve anything except it increase the cost incurred by the parties, delay the dispute, and also damage the effectiveness of ADR process. However, Court also stated that those parties, who refuse to adopt the ADR or those who agree to adopt the ADR late in the proceedings, must prepare the arguments which justify their position. In case, judge has the opinion that case is suitable for ADR process then in such case judge is not obliged to accept the opposition of the parties. Instead, he should explore the reasons for any resistance to ADR, and reasons given by parties for not choosing the ADR can be used as defense against the order related to cost.

As stated above, if any party refused to attempt ADR proceedings on the basis of unreasonable ground, then such party may face penalty at the end of the litigation, and this principle is now included in the CPR also. Circumstances of each case are analyzed for the purpose of deciding whether parties acted reasonably or not, and following are some factors which are relevant and include nature of the dispute, merits of the case, extent up to which parties attempt the other methods of settlement also, whether cost incurred in ADR proceedings would be disproportionately high, whether any delay in considering the ADR would be considered as prejudicial, and whether the ADR had any prospect of success.

Situations when ADR is not suitable: it is very difficult to adopt ADR proceedings when parties related to dispute refuse to accept that there is any problem, and does not want to engage in negotiations. However, there are some situations in which parties to the dispute agreed to negotiate, but there are no or less chances of successful result. This can be understood through example, when one party file case against the other party for making the trouble or when one party claims the large sum of amount on unreasonable ground.

Court imposes pressure on disputants for trying the negotiations before litigation, even though they also accept that parties have reasonable ground to refuse mediation.

It must be noted that ADR is not the effective option in those cases where one party wants to stop the actions of other party on immediate basis. This can be understood through example, where one party wants to stop the other party from selling the goods with similar design and function of its own or where one party wants to stop the harassment by the other party.

ADR proceedings are confidential in nature, and it is not suitable for those parties which want to give out a message, not just to the other party, but to everyone. This can be understood through example, when the holder of intellectual property right wants to give the message that if anyone infringes the right then they will face litigation.

On the basis of above facts, it is clear that ADR proceedings are good option as compared to Court proceedings because they are less expensive in nature and less time consuming. However, it must be noted that ADR proceedings are not suitable for some cases as stated above. Therefore, ADR proceedings must be choose as per the circumstances of the case.

Recommendation related to ADR:

Almost hundreds of cases are filed in Court on the daily basis for resolving the disputes between the parties, but these proceedings are expensive and time consuming in nature. For getting rid of these problems, ADR was introduced for resolving the disputes.

ADR is used to resolve the disputes without going to the Court, and the most common method used in ADR is meditation, with conciliation sometimes. Both these methods of ADR involve the third party for resolving the dispute. Other methods of ADR such as arbitration, adjudication, and expert determination are also used sometimes. However, this procedure is very similar to the procedure of Court as it involves the resolution of the solution by the third party instead of facilitating negotiation.

There are number of benefits of ADR such as ADR processes are cheaper and quicker as compared to proceedings of the Court. As stated above, ADR procedures are confidential in nature which means that they are beneficial for resolving the disputes on those matters which are confidential in nature such as those matters which involve industrial secret and commercially sensitive terms of trade.

Mediation is considered as good way for resolving the dispute in those cases in which parties want to continue their relationship, and also because it can give such outcome from which all the parties get the benefit. It is also useful as it does not make the proceedings public and kept the matter confidential. Therefore, Judges always recommended the parties to use ADR under Civil Procedure Rules before adopting the court proceedings. CPR also states the rules which encourage the ADR proceedings, and penalized the parties if they refused to adopt the ADR proceedings on the basis of unreasonable ground. In this third person resolve the dispute between the parties and that third party is neutral with both the parties to the dispute. Therefore, for resolving the disputes ADR proceedings are recommended by the Court also.

Conclusion:

This paper states the various factors in support of ADR and also the factors which do not support the ADR, and on the basis of these factors it is clear that ADR proceedings are beneficial as compared to court proceeding, but it is necessary to choose these proceedings after considering the circumstances of the case. ADR proceedings are recommended by Court also and for this purpose rules in CPR are stated.

Bibliography: 

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