By now we should all be familiar with the new overriding objective contained in part 1 of the Civil Procedure Rules. That’s the rule that brings to the forefront of litigation the principle that cases must be dealt with at a proportionate cost.
Couple the new overriding objective with the increased sanctions available to the court when managing cases and dealing with costs, and it is clear the face of litigation has completely changed.
The full extent of these changes are yet to be seen but it is clear that alternatives to litigation should be considered and used at an early stage, not only to try to settle a matter but to evidence to the court that alternatives have been considered and deter any possible cost sanctions.
So what are the alternatives and when are they best utilised?
There has certainly been a growing trend in recent times towards alternative dispute resolution (ADR) rather than turning to litigation. Many commercial contracts include arbitration or mediation clauses ensuring any dispute arising out of the contract is dealt with without the need for litigation or is at least attempted prior to litigation. The area of family law has also utilised the value in mediation to resolve disputes without the matter coming before the courts. Perhaps the biggest acknowledgement for ADR comes from solicitors firms themselves in the re-naming of commercial litigation departments to commercial dispute resolution and commercial dispute solution departments.
Arbitration
Arbitration is becoming far more common in the commercial world and arbitration agreements are found within many commercial contracts. Arbitration is attractive to businesses because it allows them to resolve disputes in private, allows them to choose arbitrators who are experienced in their area of business and the enforcement of any arbitration decision is relatively easy all over the world which is increasingly important with the growth of cross-border commerce.
Mediation
This is by far the most popular form of ADR available to disputing parties and should be high on the solicitor’s overall strategy to resolve the dispute for the client on the best possible terms. Mediation is available at any point in the dispute (before litigation has been commenced or after). Mediation can be written into a contract or it can be entered into voluntarily and any settlement reached is agreed by the parties rather than being imposed on the parties by a court; there is no winner but merely two parties who have agreed a mutually acceptable settlement which can be very important if there is a business relationship to preserve.
There is clearly no better time to embrace ADR with the current cost implications and sanctions the court can impose. No matter what the dispute, it is important to assess whether clients` needs can be met by alternatives to litigation. They should not merely be a suggestion to clients, but a carefully considered option. In years to come it is unlikely that ADR will be optional and it is more likely to be a prerequisite to commencing litigation; better to embrace it now than be forced to adapt to another new regime.
