The way lawyers and their clients approach commercial disputes has evolved significantly. The Civil Procedure Rules (CPR) governing how court cases are run positively encourages early and alternative dispute settlement methods through pre-action protocols that require early exchange of information. Someone bringing a claim is likely to be sanctioned by the court in terms of costs if they don’t properly engage with these rules. Nath Solicitors can advise on all forms of alternative dispute resolution (ADR) that businesses can use to find practical and cost-effective ways to settle commercial disputes – no matter how complex or valuable the claim. Here we look at some of these methods and also consider if the Covid19 pandemic that started in 2019 has changed the way businesses approach the possibility of bringing a case to court.
Covid19: More Conciliation, Less Litigation?
Following a 2021 survey Ernst and Young the global accountancy firm reported the following:
- Two thirds of businesses (FTSE and private organisations) had adopted a more conciliatory approach to legal disputes since the emergence of Covid19
- Instead of launching legal claims, 81% of companies when asked said they had adopted a more lenient approach to contract terms, for example by granting time extensions or renegotiating particular terms of contracts.
- 77% of companies used ADR to settle disputes during the pandemic
The sheer impracticality of mounting a formal legal case during the worldwide pandemic may of course explain these findings. However we believe that many businesses, having experienced the benefits of ADR may well be more inclined to rely on it in future, even after the logistical challenges presented by the pandemic have dissipated.
Government Guidance
The trend toward greater use of alternative dispute methods might also be explained – in the UK at least – by Cabinet Office guidance on responsible contractual behaviour during the pandemic published in May 2020.
In the recommendations the government acknowledged that a sharp rise in Covid19-related contractual disputes would be ‘destructive to good contractual outcomes and the effective operation of markets’. As a result it encourages contractual parties to resolve contractual issues responsibly, and specifies negotiation, mediation or other alternative or fast-track dispute resolution as ways to settle what could become formal, intractable disputes. It refers too to the Low Value Disputes Model Adjudication Procedure developed by the Construction Industry Council and the Conflict Avoidance Pledge promoted by the Royal Institution of Chartered Surveyors (RICS.)
Arbitration v Litigation
We advise on all forms of ADR, including negotiation, mediation, adjudication and early neutral evaluation. Some differences between arbitration and litigation for example include:
· Control over the process – Compared to court procedures, arbitration is generally more flexible. Parties can control the way they run the arbitration, opting to follow rules of a recognised body such as the LCIA (the London Court of International Arbitration) or to develop their own rules
- Cost – This will very much depend on the nature of the dispute and how far apart the parties are. Arbitration can be cheaper but parties must pay the fees of the arbitrator themselves. (In contrast they don’t have to pay for a judge in court)
- Multi-party disputes – Arbitration may involve several parties but the process can become cumbersome and you may have to get consent of others to the dispute before adding in another party
- International recognition – Like court judgments international conventions allow a successful party in an arbitration to enforce the decision (‘award) overseas
- Choice of arbitrator –It’s possible to choose someone to be an arbitrator with specific expertise in the area of dispute. In complex cases this is useful because not all court-appointed judges will have the technical knowledge required to quickly get to grips with the key issues in a complex commercial disagreement
- Privacy – Arbitrations are held in private so sensitive commercial information can be shielded from the publicity generated by reports of court proceedings
- Finality – It’s usually more difficult to appeal an arbitration award than a court judgment. For many this makes the outcome of an arbitration more robust and final.
How We Can Help
Of course some cases will be so divisive and intractable that court proceedings the only option. Nath Solicitors has just brought a serious libel case to the High Court in London for example. But as the Ernst and Young report we’ve mentioned suggests, it’s likely that there will be a greater take up of ADR following Covid19. We are well-placed to advise businesses on their options and the ways they can resolve disputes to their satisfaction without going to court.
Contact Us
For more information on how we can advise your business on contractual disputes contact our director Shubha Nath at Nath Solicitors on 44 (0) 203 983 8278 or contact the firm online.
