ADR: remedies for scepticism

Caroline Cummins looks at why ADR is still not widely used and examines some of the ideas in the Government's Discussion Paper on increasing the use of ADR

Although a good many people have paid a good deal of lip service to the promotion of Alternative Dispute Resolution ("ADR") for some time, it remains a fact that ADR has not taken over from the traditional forms of dispute resolution in the way that opinion formers predicted throughout the 1990s. There remains a general scepticism about ADR which is not easy to explain.

From our experience of disputes resolution in the construction industry, it is clear that a number of factors will influence clients against proposing or participating in mediation (in our experience the most common form of ADR). These include:

• a lack of confidence in the opposing party's good faith
• a requirement for an enforceable judgment or order as soon as possible
• a feeling that the time is not yet right for mediation, or that it is too late
• a reluctance to submit to what might become a commercial "carve up"
• a reluctance to reveal weak points in the case or expose strategic objectives
• a lack of confidence in the process and/or the skills of a third party mediator

All of these concerns are valid and are rooted, to a greater or lesser extent, in the reality of what mediation involves. However, clients who have experienced long drawn out litigation or arbitration will confirm that those processes are also often far from satisfactory. The obvious advantage of mediation, which cannot be overstated, is that if it brings about a satisfactory settlement this is such an excellent result that it is probably worth attempting mediation on every dispute, even knowing that there is a risk that you will not settle. ADR bodies tell us that statistically the chances of reaching a settlement in a mediation are extremely high - "you must believe in the process" - but even if that is not our experience entirely it is always heartening when the most difficult cases do settle against expectations.

What is always emphasised to parties embarking on a mediation is that the process is confidential and entirely voluntary - anybody can walk out at any time. These are the foundation stones of the process. If they were taken away, there would be repercussions.

The Government's position

The Government has picked up on the apparent reluctance to use ADR and, it appears, would like to reverse the tide and actively encourage the use of ADR as an integral part of the new civil justice system. Its research identifies the chief reason for the failure to use ADR as ignorance - people do not realise that there are real alternatives to litigation. Of course, it has in mind all users of the civil justice system; our experience indicates that construction industry clients are well aware of alternatives. However, in order to combat this perceived ignorance, in November 1999 the Lord Chancellor's Department issued a Discussion Paper seeking views from "customers" of the civil justice system about ADR and in particular views on the methods by which the Government might encourage its use.

The new Civil Procedure Rules which came into effect on 26 April 1999 are designed to facilitate the settlement of disputes at the earliest possible stage. The key to achieving this was seen as effective case management by the courts. As part of their responsibility for case management the courts were put under a duty to encourage the use of ADR in appropriate cases. Encouragement has not so far amounted to compulsion, although to ignore a court's positive encouragement in this respect might prove hazardous in terms of costs.

At the moment the Civil Procedure Rules enable a party to ask for a stay of proceedings in order to explore ADR as part of the case management routine. In Technology and Construction Court cases (which are all multi track) this is done at the case management conference stage. One party may request a stay of up to one month (initially) and, if the other party is against it, that party will have to provide a good reason to the judge why it will not participate in such a process. There is a danger that such a party, in the absence of a persuasive reason for not trying ADR (and it is difficult to cite the reasons set out above without appearing aggressive or implacable), will find itself subject to an order for a stay against its wishes.

The pre action protocols (currently being developed - see the article on protocols in this Bulletin) do not go so far as to compel ADR although it appears that there may be a trend for the yet to be published protocols to require parties to consider whether some form of ADR procedure would be more suitable than litigation, and if so, to endeavour to agree which form to adopt (with possible costs consequences if a party will not co-operate).

However, the Discussion Paper suggests that the influence of the courts might be further harnessed to overcome the reluctance of litigants and lawyers to use ADR. It suggests that the solution to the oft heard view that suggesting or agreeing to a form of ADR is a sign of weakness is for the court to be the one to make the suggestion to both parties. It floats the idea that some degree of compulsion might be beneficial. Compulsion might also overcome the (perceived) problem of advisers not promoting the benefits of ADR to their clients and lead to better understanding of the process and a gradual culture change.

The Discussion Paper acknowledges that it would be contrary to the European Convention on Human Rights to deny access to the courts in favour of ADR - this is not proposed. It is also acknowledged that there is also a danger if ADR is made compulsory it might become merely another hurdle in the process of litigation and consequently subject to tactical abuse.

It is not the Government's aim, it is said, to prevent or overly discourage access to the courts. What is required, it is said, is a balance between increasing the use of ADR and maintaining access to the courts. One solution proposed is to require parties to opt out of ADR rather than opt in (as is the current system) but allowing them to opt out if they want to. However, the report does refer to the costs rules and indicates that attitudes towards ADR and behaviour during ADR processes could be relevant in determining where costs will lie.

Of course, if it became commonplace for a party who unreasonably, in the eyes of the court, decided against ADR, to be routinely penalised in costs, this is likely to have the same effect as compelling that party to participate in ADR against his will. The difficulty is that it is impossible sometimes for a court to assess the real motivation and bona fides of a party (particularly when that party has engaged a skilled and experienced advocate) and there is real scope for abuse in this area. Compulsion may undermine the credibility of the process which would cut across the purpose of the Government's initiative.

The court would also require a party to act reasonably in the mediation process. If a party misconducts itself, logically costs sanctions should also be imposed. However, as the key to mediation is confidentiality (which enables parties to be reasonably open about the strengths and weaknesses of their case at least to the mediator) it is difficult to see how the court can be appraised of the parties' conduct if the mediation fails to bring about a settlement. The Paper therefore looks at the possibility of asking a mediator to report back to the court on the attitude of the parties during the mediation process. There are obvious problems with that idea: the role and status of the mediator is irreversibly changed. Alternatively, the court might be permitted to ask certain basic questions about how the mediation went and thereby form its own view on the attitude of the parties. Again this might be open to abuse. There seems to be no certain way for a court to judge behaviour without participating in the process itself, which is what the process is designed to avoid.

The purpose of the Discussion Paper is to encourage debate about ADR and how its use can be encouraged and increased. Some of the ideas it puts forward, if enforced, might be detrimental to the process. Confidentiality, in particular, is crucial and should not be compromised. Prominent persons have already voiced strong concerns against any form of coercion saying that the voluntary nature of ADR is the key to its success.

In my own view, on the basis that in most cases I would urge a client to consider ADR as part of the disputes resolution process, I would also be in favour of the courts' adopting an "opt out" as opposed to "opt in" policy if only for a trial period. My main reason for saying this is that sometimes before making that leap of faith we all need a good shove - and experience shows that the process can make even the most hardened cynic roll up his sleeves and make a genuine effort to sort the problem out. Although an "opt out" system with costs sanctions for not participating is in a sense a form of judicial coercion, the parties are not being coerced into a settlement - that remains voluntary - but simply into taking part in an attempt to settle. Although one's instinct may be against such an approach, perhaps new approaches are required for new solutions.

However, I would rule out costs sanctions for bad behaviour during ADR : it would be impossible to police and, if there, would prevent an honest exchange of views (however disagreeable).

The Lord Chancellor's Department has requested responses to the Paper by 25 February 2000. The paper itself is available on the LCD web site.

For further information please contact Caroline at [email protected] or on +44 20 7367 2914.