Why is it important to engage in alternative dispute resolution before commencing proceedings?

The Civil Procedure Rules state that litigation should be a last resort for resolving a dispute. There are a number of steps that the courts expect parties to have taken in an attempt to try and settle before commencing proceedings.

These are set out in the various pre-action protocols, which are specific to the type of case e.g. debt claims, professional negligence claims, media and communications claims.

There is also a general Practice Direction for Pre-Action conduct and protocols, which states:

Objectives of pre-action conduct and protocols

  1. Before commencing proceedings, the court will expect the parties to have exchanged sufficient information to—

    (a) understand each other’s position;

(b) make decisions about how to proceed;

(c) try to settle the issues without proceedings;

(d) consider a form of Alternative Dispute Resolution (ADR) to assist with settlement;

(e) support the efficient management of those proceedings; and

(f) reduce the costs of resolving the dispute.

This article will focus on the objectives ‘to try and settle the issues without proceedings’ and to ‘consider a form of Alternative Dispute Resolution to assist with settlement’.

It is important to adhere to these provisions as the main concern of the courts throughout the litigation process, is to prevent parties from wasting the court’s time and incurring costs unnecessarily where there is a chance that an agreement can be reached instead.

Failure to comply with these requirements is not taken lightly and parties can be penalised if they are seen not to have engaged in Alternative Dispute Resolution (ADR), especially if the invitation to do so has been put forward by one of the parties. This is demonstrated in paragraph 11 of the pre-action protocol which states:

  1. If proceedings are issued, the parties may be required by the court to provide evidence that ADR has been considered. A party’s silence in response to an invitation to participate or a refusal to participate in ADR might be considered unreasonable by the court and could lead to the court ordering that party to pay additional court costs.

Whether ADR has been considered by the parties will be taken into account throughout the management of the case, not just prior to the commencement of the proceedings, for example when awarding costs orders or imposing sanctions where the non-compliant party could be ordered to pay further costs. Therefore whilst there may be reluctance from some parties to engage in ADR, it is advisable in the first instance. If a settlement is not reached, fulfilling this obligation could still have a positive impact on the management and outcome of the case and likewise non-compliance could have the adverse effect.

Another reason why parties are encouraged to engage with ADR at the outset, is that it is generally less costly than litigation and often leads to a resolution quicker than proceedings.

The different forms of ADR are contained in paragraph 10 of the pre-action protocol:

  1. a) mediation, a third party facilitating a resolution;

(b) arbitration, a third party deciding the dispute;

(c) early neutral evaluation, a third party giving an informed opinion on the dispute; and

(d) Ombudsmen schemes.

If you are involved in a dispute and are considering alternative dispute resolution, or require advice from one of our solicitors, please contact our commercial mlitigation team or call 020 7632 4300.


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