Preliminary review

Project title: The development of Alternative Dispute Resolution (ADR) in Jersey

Recipient organisation

Name: Jersey Legal Information Board (JLIB)

Address: Royal Court House
Jersey
JE1 1BA

Tel. number: 01534 502409

Fax number: 01534 502417

Date of report: September 2002

Reporting period: July - August 2002

Author of report: Charles Dodson, Project Director and Technical Expert

Contents

Purpose of report & background

Summary of report’s recommendations

Definition and range of ADR

ADR
Conciliation and mediation
Mediation

Focus on mediation

Current level of mediation in Jersey

JACS
Small Claims Pilot
Family Mediation Service
Other

The English experience in developing mediation

SWOT for Jersey re ADR/mediation

Strengths
Weaknesses
Opportunities
Threats

Proposals for developing mediation in Jersey

Raising awareness and training
Need for and form of legislation

Factors in introducing mediation into Jersey

Timing of introduction of mediation rules
Speed of introduction
Impact of funding
Extent of fields to which mediation rules should apply

Other Issues

ADR co-ordinating body
Court-annexed or independent mediators
Funding mediation costs
Pilot project
Potential for IT

Action Plan

Conclusion

Appendices

Appendix One Persons consulted in the preparation of this report

Appendix Two Mediation in the mainstream of dispute resolution

Impact of CPR on ADR
Mediation in context
Scope of article
Distinguishing features of mediation
Getting a dispute to mediation
Setting up and preparing for a mediation
Using an ADR body
Dealing with the administrative aspects
Appointing a mediator
Putting together the mediation documentation
Making the final preparations
Participating in the mediation
Role of the Courts and Lawyers in mediation
Multi-party and cross-border disputes
Taking advantage of the mediation option
Example of an ADR order
The B & C mediation December 1998

AppendixThree English Court Practice Statements and CPR re ADR

Purpose of Report (back to contents)

1 The purpose of this report is to make proposals on increasing the role of ADR in Jersey.

2 The brief on the preliminary review was to:

· consider the strengths, weaknesses, opportunities and threats of the current policy for resolving civil disputes in Jersey; and

· assess the views and interests of some of the key stakeholders in respect of ADR and their ideas for developing existing policy.

3 The more specific purpose of this report is to:

· identify some key opportunities for the introduction of ADR to civil disputes in Jersey;

· summarise the interests and positions of some key stakeholders and their potential influence on future developments; and

· set out an action plan for the implementation of the proposals.

Background (back to contents)

4 The ‘Vision’^[1] of the Jersey Legal Information Board (‘JLIB’) is ‘To see Jersey’s legal system recognised as the global best for a small jurisdiction.’ The ‘Strategy’ states that ‘.. the approach of JLIB is a progressive and forward-looking one ..’, and the ‘elements of the Strategy’ include:

· making the law and legal processes more accessible to the public

· strengthening Jersey’s position as a leading business centre.

5 Consistent with this vision, in June of this year JLIB commissioned this report from CEDR Solve ^[2]. The purpose of this exercise, in broad terms, has been to identify practical measures which can be taken by JLIB to develop more effective ADR mechanisms for dispute resolution. The scope of the exercise was limited to a short ‘diagnostic’ stage and the production of initial recommendations in a report. It has involved three days of work covering:

· initial discussions with the Bailiff and another JLIB board member, Melanie Cavey, to confirm the brief;

· a one-day series of meetings in Jersey with various stakeholders (see Appendix One). In some cases these meetings have been followed up on the telephone;

· discussions on the telephone with others (see also Appendix One);

· some research on the use of ADR in other jurisdictions – see paragraphs 15 to 22; and

· writing of the report.

6 It is proposed that consultation on the report will be conducted by JLIB over two months with the stakeholders. Some specific issues for consultation are raised in the report.

Summary of report’s recommendations (back to contents)

7 The following are the key recommendations in this report:

· ADR. Jersey should adopt a relatively bold approach to incorporating ADR into its legal system. This is consistent with its broader ambitions for the legal system and its standing as an international finance centre. Jersey can take advantage of the lessons learnt in other countries.

· Mediation. Mediation should be the type of ADR on which Jersey focuses.

· Time, investment and culture change. Incorporating mediation will take time, and require commitment and investment. It will have to involve a degree of culture change amongst stakeholders.

· Multi-faceted approach. Implementing any plan to introduce mediation will require taking a number of actions in parallel, from appropriate legislation/court rules to training and awareness courses.

· Consultation and implementation plan. There should be wide consultation about any ADR project, although within a short time. A plan for the implementation of the project should be drawn up, and its progress monitored by JLIB.

· IT and ODR. The JLIB website, and information technology (‘IT’) generally, should be used as widely as possible in the consultation about, and implementation of, any ADR project. In addition, further research should be carried out into the scope for utilising information technology for online dispute resolution (‘ODR’).

Definition and range of ADR (back to contents)

ADR (back to contents)

8 The term ‘Alternative Dispute Resolution’ (‘ADR’) is not used consistently – for example in the United States it usually includes arbitration, whereas in England it usually does not. Recently the term ‘EDR’ (‘Effective Dispute Resolution’) has been adopted by CEDR to reflect the fact that typical ADR processes such as mediation are now mainstream dispute resolution techniques, in parts at least, of the English legal system.

9 For the purposes of this report, the term ADR is used and refers to the range of dispute resolution techniques in the spectrum between litigation (including in tribunals) and arbitration on the one hand and face-to-face negotiation on the other. Within this range there are two distinct types of ADR:

· alternative adjudication, such as –

o expert determination: a well established final and binding inquisitorial process conducted by a technical expert, usually provided for in commercial contracts to resolve a technical issue arising out of the contract.

o adjudication: a relatively recent hybrid fast-track process used almost exclusively in construction disputes.^[3]

· assisted negotiation, such as –

o early neutral evaluation: a judge or senior lawyer reviews the papers in a case and expresses a non-binding view on the likely outcome at trial. This option was provided for in the [1996] Commercial Court Practice Statement^[4] but its take up has been minimal.

o mediation: see para 12 below

o executive tribunal: this is essentially a mediation with a more formal opening stage at which presentations are made to a panel consisting of the lead negotiators for each party and the neutral/mediator. The panel members then seek to negotiate a settlement as in a mediation. This form of ADR is called ‘mini-trial’ in the United States and it is far less common than mediation. It is rarely used in England.

Conciliation and mediation (back to contents)

10 There is little consensus on the differences, if any, between mediation and conciliation. The point is raised because a distinction between the two is made at the Jersey Advisory and Conciliation Service (‘JACS’). JACS regard mediation as a process in which the neutral plays an ‘honest broker’ role, conciliation involving a more pro-active role on the part of the neutral, including suggesting settlement solutions to the parties. This might be regarded by some ADR practitioners as the distinction between facilitative and evaluative mediation. For the purposes of this report the term ‘mediation’ is used to embrace both approaches.

Mediation (back to contents)

11 The most common type of ADR in England, and other jurisdictions such as New Zealand, has been mediation. Frequently the term ‘ADR’ is used synonymously with the term ‘mediation’. Mediation is essentially settlement negotiation with the assistance of a neutral third party, a simple concept although quite subtle in practice. In most jurisdictions over 90 per cent of court cases never reach trial, usually because they are settled beforehand. The role of mediation is to enable this settlement process to work more effectively and to reduce legal costs. It achieves this by overcoming some of the hurdles of conventional face-to-face negotiation, and tends to result in earlier settlement than is usually the case. Mediation is not strictly ‘alternative’ to litigation as they often run in parallel, further it can offer a fall-back from conventional negotiation rather than an alternative to it.

12 The purpose of mediation is to provide a cost-effective dispute resolution option, and it has been described as ‘…the preferred dispute resolution route in most disputes when conventional negotiation has failed or is making slow progress.’^[5] It can be regarded as a technique for enhancing negotiation, the most common form of dispute resolution.

13 It is difficult to establish the ‘success rate’ of mediation, although research done by CEDR indicates that 77 per cent of CEDR Solve mediations in 2001/2002 resulted in settlement at, or shortly after, mediation^[6].

14 For more information on mediation, its essential features and the nature of the process, see Appendix 2.

Focus on mediation (back to contents)

15 Mediation emerged as a modern dispute resolution technique in the mid 1980’s in the United States, largely as a reaction to the expense and unpredictability of the courts and arbitration. Since then it has experienced steady growth in the United States, to the extent that in some states (Florida and Texas for example) it is now compulsory pre-trial in many cases. This reflects the broad recognition and use of mediation in the United States, from small insurance claims to the largest disputes; most significantly in the last year, the Microsoft anti-trust case and the litigation arising out of the collapse of Andersen. The developments in the US have been followed by similar developments in a number of other common law jurisdictions.

16 In England, mediation is now firmly part of mainstream dispute resolution. Most significantly, ADR was specifically incorporated into the new Court Procedure Rules in 1998 ^[7] and courts (with large regional variations) are frequently adjourning cases for at least a month for the parties to attempt settlement, either specifically or in practice in most cases, by mediation. In 2001/2002 31 per cent of commercial mediations referred to CEDR Solve were court referred. The leading ADR bodies are handling over 750 mediations a year and in addition many mediations are happening without the involvement of an ADR body. These mediations are happening across a broad spectrum of cases including construction, employment, professional negligence, high tech, insurance and personal injury^[8].

17 In March 2001 the Lord Chancellor announced ‘.. a major new initiative.. to promote ADR in place of litigation’ in Government Departments^[9]. The acceptance by the judiciary of the potential of mediation has been reflected in a number of recent decisions in which the scope for penalising parties in costs for failure to try to settle litigation by mediation has been examined. Lord Woolf states in one such case, Cowl v Plymouth CC (January 2002), ‘Today sufficient should be known about ADR to make the failure to adopt it … indefensible’^[10].

18 Australia and New Zealand have adopted a broad range of ADR techniques, ranging from community based mediation services, backed by legislation and administrative services, in Australia (starting with the New South Wales ‘Community Justices Centre Pilot’ in 1980) to family group conferencing for youth offences in New Zealand (introduced in 1989). The range and extent of ADR in Australia is apparent from the extent of the statistics on its use^[11] as well as the extent of ADR legislation – over 100 statutes. The New South Wales Supreme Court Rules give the courts the power to order mediation, this led to the listing interval for civil appeals being reduced to about four months from 22 months by the late 1990’s.

19 Singapore has been similarly robust about developing mediation. The Singapore Mediation Centre ^[12] was launched in August 1997. By May 2000, 585 matters had been referred for mediation, with 372 resulting in mediations with an average settlement rate of 74.5 per cent.

20 Another Asian country that has adopted mediation enthusiastically is Sri Lanka, in both community and commercial fields. The Mediation Boards Act 1988 provides for mandatory referral to mediation of most small value civil claims. More recently the Commercial Mediation Centre of Sri Lanka Act 2000 has been passed; the Centre provides a completely voluntary mediation process with restrictions on the involvement of lawyers^[13].

21 The less adversarial nature of litigation in civil law systems has meant that there has been less incentive to adopt ADR. Nonetheless there are recent significant developments in continental Europe, most notably the publication of a European Commission Green Paper on ‘ alternative dispute resolution in civil and commercial law’.

22 An UNCITRAL model law on mediation was adopted in June of this year.

23 Internationally, these developments make a persuasive case for the adoption of mediation in Jersey sooner rather than later. Jersey cannot afford not to do so if it is to strengthen its position as a leading business centre and to have a legal system that is ‘the global best for a small jurisdiction’. Adopting this course should also assist the strategy of ‘making legal processes more accessible to the public’. It makes sense to focus initially on a limited area of ADR for introduction into the Jersey system and mediation is the obvious area given the developments elsewhere.

Current level of mediation in Jersey (back to contents)

JACS (back to contents)

24 There is a useful and encouraging precedent for mediation in Jersey in the form of the work being done by JACS^[14]. JACS started operating in April 2001 exclusively in the employment field. It is funded by the States and employs three full-time staff operating from a small office in St. Helier. In the first 14 months of its existence it handled about 2,500 referrals and in that time it appears to have achieved a high level of recognition and respect. Although its primary role is advisory, it also conducts mediations and arbitrations. The mediations are conducted in writing, over the telephone and in some cases, face-to-face. Its success can be gauged by the very few cases that have gone on to court proceedings. This has been achieved despite the fact that involvement of JACS by parties to an employment dispute is voluntary; JACS has no mandatory powers^[15].

Small Claims Pilot (back to contents)

25 This scheme, which relates to claims of up to £2,500, only started operating in March 2002 so it may be too early to draw any clear lessons from it. The mediation element operates as follows:

· the Magistrate decides which contested cases are suitable for mediation;

· any such case comes before the Master of the Royal Court (John Wheeler) (‘the judge mediator’) on ten days notice, allocated a maximum of 45 minutes;

· lawyers are not expected to participate in the mediation; and

· the judge mediator, who has read the outline of the dispute, tends to adopt a facilitative approach initially, but then becomes more evaluative if he thinks that is necessary.

In four months, 22 cases have come to mediation and 50 per cent have settled at this stage. If the case does not settle at mediation, directions are given for the case to proceed to trial.

Family Mediation Service (back to contents)

26 The Jersey Family Mediation Service (‘JFMS’) was set up in 1999. It is funded by the Department of Health and Social Security, commercial donations and fees generated through mediation. This service is limited to child-related cases and it is handling about 30 cases a year, which it is estimated represents 10 per cent of the total cases which could be referred to mediation. Those involved with JFMS feel frustrated about the limited impact that their service has had and have clear views on the steps needed to increase its impact.

Other (back to contents)

27 Apart from these instances, the level of awareness and use of mediation in Jersey appears to be relatively low. There have been very few commercial dispute mediations and those consulted in the preparation of this report were not aware of any formally trained Jersey-based commercial mediators. Further, the Citizen’s Advice Bureau has had limited experience of using mediation in its field, including consumer disputes.

The English experience in developing mediation (back to contents)

28 Given the similarities and links between the English and Jersey legal systems, it is useful to look briefly at the English experience on developing mediation.

29 In contrast to Jersey, the initiative to develop ADR did not come from the judiciary but from a limited number of individuals, mainly lawyers, some of whom had had experience of the use of ADR in the United States. This led to the creation in the commercial field of CEDR and the ADR Group in the early 90’s. Both organisations grew relatively slowly and had minimal support or recognition from the judiciary for several years.

30 The Commercial Court was the first to see the potential of ADR, but its first practice direction in 1993^[16], which stated that judges would ‘.. in appropriate cases invite parties to consider whether their case … could be resolved by means of ADR’, had negligible impact. The 1996 Commercial Court Practice Direction, however, gave the judge powers to adjourn a hearing to enable the parties to attempt settlement. In the next two years about 100 such orders were made and the number of cases that returned to court, because settlement was not achieved, was in the region of five per cent. The Commercial Court model was adopted for the Civil Procedure Rules (‘CPR’) in 1998. In the first year after the introduction of CPR, the number of cases referred to CEDR for mediation doubled, from about 250 to 500 a year.

31 Although awareness courses for the judiciary were held in London, few have been held elsewhere in the country. This may be a factor in the apparently lower level of ADR orders being made in the courts outside London.

SWOT for Jersey re ADR/mediation (back to contents)

32 The following appear to be obvious strengths, weaknesses, threats and opportunities facing the development of mediation in Jersey:

Strengths (back to contents)

· Raising awareness and changing a culture, as well as the implementation of any initiative, should be easier in a relatively small society; and

· The initiative for introducing ADR has come from the senior judiciary who appear to be willing to take the necessary steps to implement it.

Weaknesses (back to contents)

· A relatively low awareness and experience of mediation, other than in the employment field and even there the experience is very recent, means that there will be a steep learning curve.

Opportunities (back to contents)

· Jersey can benefit from the experience of introducing ADR in other countries, and to some extent ‘leapfrog’ those countries, particularly by avoiding the mistakes that have been made elsewhere, such as in England;

· JACS may provide a useful springboard;

· The potential for boosting Jersey’s international commercial standing – a jurisdiction with a cost-effective dispute resolution culture, as well as a respected court system is attractive for businesses. In the longer term it may be feasible for Jersey to build a reputation as a neutral international mediation centre for, in particular, trust/financial services disputes; and

· JLIB’s focus on and achievements in utilising information technology should be useful in the mediation field.

Threats (back to contents)

· Changing a longstanding culture of resolving disputes primarily through the courts will not be easy and will take time. The ‘if it ain’t broke, don’t fix it’ mentality can be a serious hurdle. Less enlightened lawyers may see mediation as a threat to their litigation practices and resist change. (The more enlightened, if the English experience is typical, will however see it as an opportunity); and

· Insufficient funding from the government.

Proposals for developing mediation in Jersey (back to contents)

33 There are a number of essential elements required for the successful development of mediation in any country, as set out below. A number of these elements are then discussed in the specific context of Jersey.

· Changing the culture. Experience in other countries (most specifically England) has shown that the successful development of mediation requires a real change of culture and mindset, particularly amongst the judiciary and lawyers, but also in the community. Simply introducing legislation requiring the use of mediation is unlikely to be productive. To succeed it also needs the support and enthusiasm of stakeholders.

· Raising awareness. To achieve this, awareness about mediation needs to be raised, particularly within the legal community. Training is an important element of this.

· Realistic expectations about the rate of change. Raising awareness and changing the culture takes time – years rather than months. Any initiative needs to be planned on this basis.

· Need for legislation. Specific legislation or amendments to the court rules is essential. Judicial and governmental encouragement and support by itself is unlikely to be successful.

· Funding. Governmental funding will greatly assist as well as accelerate the development of mediation.

· Multi-faceted approach. Success will depend on all of the above happening, in parallel, over a number of years. There is no quick or simple fix.

Raising awareness and training (back to contents)

34 The most important aspect of raising awareness is the running of courses for the judiciary and lawyers.

35 The typical format for training lawyers about mediation has been a one-day course, for up to 24 people at a time. Such a course would explain mediation, equip lawyers to advise their clients about it, enable them to prepare for and participate in mediation. In particular, litigation lawyers should be encouraged to attend.

Specific consultation issues

· How would attendance of a reasonable number of lawyers, representing all law firms, at such courses be achieved?

· What existing legal training organisational facilities are available?

· How would these courses be funded – for example, by the participants/the Law Society/the States?

36 Ideally, a one-day mediation awareness course should be run for judges of all courts. This could be incorporated into JLIB’s Judicial Training programme.

37 Jersey should develop its own mediators. In the short term, mediators from England are obviously available (and even in the longer term may be required for some disputes where somebody from outside the island is preferred). However, the island’s credibility as a mediation forum, cost effectiveness and the necessary culture change all favour developing home-grown talent. Using untrained mediators should be avoided, so mediator training should be implemented. The best regarded course in England is the CEDR Mediator Skills Training course, which takes five days and is funded by the individual participants^[17]. Initially, a number of potential mediators from Jersey could attend the standard courses run by CEDR, with the possibility of a bespoke course being run at some stage in Jersey.

Specific consultation issues

· What approach should be adopted for training Jersey-based mediators?

· How would training be funded? Is there sufficient interest amongst potential mediators for individuals to pay to attend such a course?^[18] Would the States be willing to fund say one initial course in Jersey, to kick-start this?

38 Consideration should also be given to raising awareness amongst other interested parties/stakeholders, such as representatives of companies in the financial services/trust industry. One way of achieving this would be to hold a series of short seminars, possibly under the auspices of trade organisations, run by a body such as JLIB or JACS^[19].

Need for and form of legislation (back to contents)

39 The rules required to implement the Small Claims pilot may be a precedent for the sort of ‘legislation’ that might be required for the introduction of any mediation element into the court procedure. It appears that this might be achieved by amendment of the court rules allied to the use of Practice Directions^[20].

40 It is recommended that the rules should provide for the following:

· the requirement for the judge to raise, with the parties, at any case management type hearing (e.g. summons for directions), the suitability of the case for mediation;

· the ability of any party to apply to court for a short adjournment to enable the parties to try to settle the case by mediation (‘a mediation adjournment’);

· the power for the judge at any time, whether at his own discretion, or at the request of one or more parties, to grant a mediation adjournment; and

· the power for the judge to make discriminatory costs orders against any party, which he considers has deliberately thwarted an attempt to settle the case by mediation^[21]. This however should not extend to the power to require any party to the mediation, including the mediator, to divulge any confidential information or any information about how a party behaved at the mediation itself.

41 The alternatives to this approach include:

· only requiring the parties’ lawyers to report to the court that they have considered and discussed the possibility of mediation with their clients. Experience in England of this type of approach is that it is ineffective; and

· at the other end of the spectrum, requiring all cases to go to mediation at some stage during the proceedings. Given the lack of awareness of mediation in Jersey at the moment, this is almost certainly too big a leap. If this route was to be seriously considered, now or at a later date, research should be done as to the success of this type of approach in jurisdictions that have adopted it, such as Texas.

Specific consultation issues

· Do the recommendations in para 40 seem to strike the right balance, in the Jersey context, between the alternatives mentioned in para 41? Or should the court have the power to review all cases shortly after issue of proceedings and decide which are suitable for mediation, which would then be mandatory in those cases? This, it is understood, is the approach being adopted in the Small Claims pilot.

Factors in introducing mediation into Jersey (back to contents)

Timing of introduction of mediation rules (back to contents)

42 Any legislation in relation to mediation, whether by Practice Directions or otherwise, (‘mediation rules’) should not come into effect until the other necessary elements of this project (such as consultation, awareness raising and training have been put in place. There may, however, be a case for the mediation rules being promulgated at a relatively early stage with their implementation being delayed until a fixed date some way into the future.

Specific consultation issues

· What advantages would there be in issuing a Practice Direction containing the mediation rules at a relatively early stage with an implementation date say nine months later?

Speed of introduction (back to contents)

43 Getting the correct balance between -

· trying to do too much too quickly, resulting in unsatisfactory experiences for those involved in early mediations, thereby undermining the general credibility of the project; and

· being too cautious and pusillanimous about its introduction^[22], resulting in minimal progress and risking the impression that it is a low priority exercise, is important and difficult.

44 Jersey is better placed than many countries to take a relatively bold approach to introducing mediation into its judicial system and culture^[23]. Also, given its close-links with the English legal system, it should not be seen to be lagging behind developments in this field.

45 Raising awareness and training, at the very least, are essential precursors to the implementation of any mediation rules.

Impact of funding (back to contents)

46 There is a persuasive case for regarding the development of mediation as an investment that will generate dividends in the form of a more efficient business environment, which is attractive to overseas business^[24]. States assistance, particularly in the form of funding for a co-ordinating body and training, is likely to significantly improve the chances of success of this project, or at the very least the speed of its introduction. The State have already demonstrated that it is capable of adopting a proactive approach to this sort of challenge with its funding of JACS – and that such funding can quite quickly achieve results.

47 In the long run, a further dividend albeit more nebulous, is the potential for a more harmonious, less contentious society with more effective, quicker and cheaper options for resolving disputes from commercial to family and from trusts to neighbourhood.

Extent of fields to which mediation rules should apply (back to contents)

48 It is suggested that the mediation rules should be of general applicability and not restricted to particular types of case (such as commercial, as distinct from medical negligence) or to the size of the claim (under/over £10,000) or to particular courts. How this would dovetail with the mediation element of the Small Claims pilot would need to be sorted. How mediation should operate in the family field needs further research, but there seems no reason why the general approach recommended (adapted as necessary for the particular features of family mediation) should not apply to all family cases, particularly as there is a precedent for mediation in part of this field.^[25]

Specific consultation issues

· Is there any reason why this suggestion for across-the-board application of any mediation rules might be unworkable or undesirable?

Other Issues (back to contents)

ADR co-ordinating body (back to contents)

49 Some form of mediation co-ordinating body would be useful, if not essential. This body would do some or all of the following:

· act as a neutral body in relation to the appointment of mediators;

· organise training of lawyers and the judiciary;

· manage the awareness raising seminars;

· draw up mediation procedures etc;

· monitor the development of mediation as the project proceeds; and

· act as an advisory body responding, for example, to general inquiries about ADR/mediation.

This does not need to be a heavily staffed operation. The amount achieved by JACS with its relatively small team supports this view.

Specific consultation issues

· Would it make sense to extend JACS’ role to embrace these new, more extensive activities? Would JLIB be an appropriate body to take on this role?

· Could the Family Mediation Service be integrated into the same body, thus maximising current resources in terms of premises and staff and reducing the extent of the need for further funding?

Court-annexed or independent mediators (back to contents)

50 It is understood that in some jurisdictions there are court employed mediators, to whom cases are assigned by the court. A variant of this model has been adopted for the Small Claims pilot, but in this pilot the mediator reverts to his judicial role if the case does not settle at mediation – cost and time effectiveness is a major factor in this approach. For the broader approach to mediation discussed in this paper, it is recommended that judges should not act as mediators and that the mediators should be entirely independent (i.e. not employed or appointed by the court), in most cases being appointed by agreement between the parties. This is likely to result in a greater range of mediators being available for appointment and should reduce state funding costs.

Funding mediation costs (back to contents)

51 In a typical commercial mediation in England (and other jurisdictions) the parties share the costs of the actual mediation, essentially the mediator’s fees (and the fees of the ADR body if one has been involved in organising the mediation). They each bear their own costs of preparing for, and attending, the mediation.

52 Problems obviously arise where one of the parties cannot afford these costs. Legal aid funding in England does extend to mediation costs.

Specific consultation issues

· What approach should be adopted in Jersey for the funding of mediation costs in the case of an impecunious party?

Pilot project (back to contents)

53 It is obviously an option to set up this project as a pilot, as has been done for the Small Claims project. It is suggested that it should not be treated as a pilot, but be implemented (subject to the consultation referred to below) on the basis that it has been decided that the adoption of ADR into Jersey is essential. This does not preclude keeping its development under close review. Jersey can treat the developments in England as equivalent to a pilot.

Potential for IT (back to contents)

54 The JLIB website should be used as an awareness raising vehicle, with as much information as is feasible about the project and ADR and mediation generally (including developments in other jurisdictions), being included on it, and updated regularly. A facility for raising queries or making comments by email could be included on this website. The public consultation recommended in this report should include posting the report, to which the consultation relates, on the JLIB website with an email response facility.

55 If an ADR co-ordinating body is set up (see para 50) it should adopt a minimum paper approach using modern, tried and tested IT systems. This should help to further the overall objective of a cheaper and quicker dispute resolution system^[26].

56 The scope for being more adventurous about the role IT can play in developing ADR should be explored. The developments proposed in this report will bring Jersey into line with comparative jurisdictions but do not amount to particularly ‘progressive and forward looking’ steps and the proposals in paras 57 and 58 are essentially about using IT to enhance the potential of tried and tested ADR concepts. More research needs to be done on how the internet-based ODR systems work, as well as how successful they have proved to be, or could be, in any particular field. This research should extend to looking at the scope such systems have for expanding the opportunities for making dispute resolution, or ‘justice’, available for a broader spectrum of users and disputes^[27]. The availability of existing ODR systems^[28] should in the meantime be referred to on the JLIB website for anybody who wants to try them.

Action plan (back to contents)

57 The following course of action is proposed:

· Initial consultation. This report should be circulated to a limited number of people who are in a position to respond to the points raised and to comment generally on the proposals in the report. These should include:

o those who were consulted as part of the preparation of the report (see Appendix 1);

o representatives of organisations whose members are likely to be directly affected by the implementation of the report, such as the Jersey Law Society ;

o appropriate States officials, particularly those who may be involved in any decisions on funding; and

o senior members of the judiciary.

This initial consultation period should be relatively short, say two months.

· Further report. A further report should be prepared, essentially a revised version of this report taking into account the comments on the initial consultation^[29]. This report should be made generally available in Jersey and comments should be requested within three months. It should be included on the JLIB website – see para 57. The feedback on that report should be analysed and where appropriate, incorporated into the implementation plan.

· Implementation plan. Whilst this broad consultation is taking place, an implementation plan should be drawn up. JLIB seems to be the obvious candidate for this work. This should set out:

o what actions are to be taken;

o who is responsible for those actions being taken; and

o by when.

It should provide, in particular, for:

o the steps needed for the drafting and issuing of the mediation rules/relevant Practice Directions;

o judicial awareness courses;

o mediator and lawyer training courses; and

o creating an ADR co-ordination body.

· Monitoring implementation. JLIB, or possibly a specific working group under the auspices of the JLIB Board, should monitor and evaluate the progress of the implementation plan. This should meet, say monthly, and issue a short report after each meeting, for publication on the website.

Conclusion (back to contents)

58 This report is the first step in this project. Further consultation and research is necessary, but there is every reason to believe that the prospect of mediation, and subsequently other elements of ADR, being introduced and developed in Jersey is promising.

Charles Dodson

Sept 2002

Appendix One (back to contents)

Persons consulted in the preparation of this report (back to contents)

Sir Philip Bailhache The Bailiff

Senator Christopher Lakeman President, Privileges and Procedures Committee, States of Jersey

Michael Wilkins Judicial Greffier

Ian Christmas Assistant Magistrate

David Mallett Assistant Greffier

Matthew Thompson Advocate/Partner, Ogier & Le Masurier

Judy O’Sullivan Mediator, Jersey Family Mediation Service

Pauline Michaels Administrator, Jersey Family Mediation Service

Sue Monks Citizen’s Advice Bureau

Trevor Leroux Trading Standards Office

Anita Regal Advocate/Partner, Bedell Cristin/Consumer Council member

David Wilson Advocate/Partner, Mourant

Richard Plaster Human Resources Manager, The Jersey Electricity Co Ltd

David Witherington Director, Jersey Advisory and Conciliation Service

June Sumner-Shaw Jersey Advisory and Conciliation Service

Professor Richard Susskind Adviser to the JLIB Board

Melanie Cavey Project Manager, ADR, JLIB

Michael Mills Vice Chair, LEADER (Australia)

CPD

Sept 02

Appendix Two (back to contents)

MEDIATION in the MAINSTREAM of DISPUTE RESOLUTION (back to contents)

[This note is based on an article, ‘A commercial approach to dispute resolution’, by Charles Dodson for PLC magazine Vol X No.9 Oct 99. It is aimed at English lawyers and reflects the position in relation to ADR at that time. It nonetheless gives a useful overview of mediation.]

Impact of CPR on ADR (back to contents)

Until the advent of the new Civil Procedure Rules (‘CPR’), many lawyers saw mediation as an optional dispute resolution technique. Previous Practice Directions had done little to change this perception other than for lawyers in the Commercial Court. The indications now are that many judges, in their new case management role, are using the CPR’s Alternative Dispute Resolution (‘ADR’) provisions to require parties to try mediation. Most dispute resolution lawyers are therefore likely in the foreseeable future to have to address a judge on the question of mediation – and no longer will a tick in a box satisfy most judges and masters, many of whom now have a good understanding of mediation.

In the past, the greatest hurdle for a party wanting to use mediation was persuading the other party to mediate. Once that hurdle had been surmounted, the chances of resolving the dispute were (and are) high – about 85 per cent. That hurdle has now been significantly lowered.

Both the CPR and mediation were born of an awareness that traditional litigation (and arbitration) were not cost effective ways of resolving disputes. Quite apart from CPR, commercially astute businesses are able to see the potential of mediation, not only in the context of litigation but also as a means of avoiding litigation. Astute lawyers should be alert to the potential of mediation as a means of resolving their clients’ business problems, whether in contract negotiations, pre-litigation or during litigation.

Mediation in context (back to contents)

Negotiation is by far the most common way of resolving disputes. The vast majority of litigation is settled, in most cases by negotiation. In many cases negotiation is and will continue to be, the quickest, cheapest and most effective way of settling a dispute.

Mediation is the medicine for sick negotiation – negotiation that has become deadlocked, or is making such slow progress that the related litigation costs and disruption are mounting up. It is then that mediation can make the difference. This is reflected in the increased use of multi-step dispute resolution clauses in contracts – typically negotiation, then mediation and finally arbitration. In some cases the likelihood of deadlocked or extended negotiations will persuade parties to go straight to mediation. The challenge for mediation is to enable the 95 per cent of litigation that settles, to happen at a much earlier stage than is usually the case – and in some cases to prevent litigation happening at all.

Scope of article (back to contents)

This article:

· outlines what mediation is;

· sets out the distinguishing features of mediation;

· explains how to:

o get a dispute to mediation

o set up and prepare for a mediation

o participate in a mediation

· looks at the role of the courts and lawyers in mediation; and

· looks at the role of mediation in multi-party and cross-border disputes

Mediation is..

Although quite subtle in operation, the concept of mediation is simple – it is settlement negotiation with the assistance of a neutral third party. It is by far the most common form of ADR. More specifically, the settlement negotiations in a typical mediation will be led by the principals and will involve all the parties being physically present at the mediation; they will not be conducted by lawyers over the telephone, as so often happens in the typical litigation scenario.

The mediator has no adjudicative powers and will rarely risk compromising his neutrality by even expressing a view on the merits of a party’s case - although he/she may ‘reality test’ a party as a means of helping that party to adopt a greater sense of objectivity, both about its and the other party’s positions.

The process is entirely confidential and without prejudice. The parties can walk away from it at any time. Only when a settlement is reached are the parties bound.

Distinguishing features of mediation (back to contents)

The main features of mediation which distinguish it from litigation and conventional arbitration are:

· it is a consensual, not an adjudicative, process – no judge or arbitrator imposes the settlement on the parties. There is none of the unpredictability of outcome that is an inherent feature of relying on a third party to impose a binding solution. Only if both parties are willing to accept a particular solution does it become binding. In about 85 per cent of mediations the parties are willing to accept and be bound by the solution they have devised.

· the time and cost of resolving the dispute are likely to be significantly less than if litigation takes its normal course. A mediation is usually set up and takes place in a matter of weeks – sometimes days.

· it focuses on the current and future problem that the dispute poses for both parties, rather than on who is to blame for what has happened in the past. This tends to move the emphasis away from strict legal rights (which are rarely cut and dried) to commercial interests. A good mediator will do his/her utmost to move the parties away from debating the legal strengths of their cases, to what they want to achieve from a business standpoint, including a possible continuing, or even new, business relationship.

· there are many and various options for solving the problem open to the parties. The options open to a judge (or arbitrator) when delivering a judgement are limited and essentially involve one party succeeding, the other failing.

· it is a flexible and adaptable process. Mediations tend to be run by reference to model procedures rather than rules. Both the preparatory stage and the conduct of the mediation can and often are, adapted (often on an ad hoc basis) to suit the needs of the parties. This is one of the reasons why mediation is being increasingly used for complex multi-party disputes (see below).

All of these features distinguish not only mediation, but also negotiation, from litigation (and arbitration). Like arbitration, mediation and negotiation are private and confidential.

The features of mediation which distinguish it from negotiation are less obvious but nonetheless significant. They include:

· the fact that it is distinct process. Although mediation is flexible and adaptable, it is a distinct process, agreed beforehand by the adoption of a model procedure - it is sometimes described as structured negotiation. Apart from giving the parties a framework within which to negotiate, this can in some cases make a proposal for mediation psychologically easier than a proposal for a settlement negotiation, which is sometimes regarded as a sign of weakness. The ADR provisions of the CPR and the increasing use of ADR clauses in contracts both negate the psychological hurdle of the opening settlement proposal.

· the creation of the best possible negotiation scenario – a mediation should:

o bring together relatively senior people who should both have a degree of objectivity by virtue of not having been directly involved in the dispute and have the necessary authority to agree a settlement;

o be in the same place (ideally neutral);

o at the same time; and

o with the same objective - settling the dispute.

The combined effect of all these factors – most, if not all of which, are rarely evident in a typical negotiation – can not be underestimated and can give the mediation similar dynamics to those of a court steps settlement negotiation, hopefully at a much earlier stage.

· the involvement of an independent neutral person – the mediator - in the process. This is the one obvious and crucial feature differentiating mediation from negotiation. The mediator, by virtue of his neutral position, is better able to:

o focus the parties on the problem rather than the dispute, on their commercial interests rather than their strict legal rights, on the future rather than the past - ie on the key features that distinguish mediation, as explained above;

o enable the parties to see their own and the other party’s case objectively and realistically – which is notoriously difficult to do when horns are locked in litigation;

o remind the parties of the alternatives to settlement (usually unpalatable and expensive);

o keep momentum in the negotiations, particularly by diverting the parties from wild goose chases and useless tangents – one of the aspects of ‘structured negotiation’;

o dissipate the emotional elements that so often lie below the surface of many disputes, even commercial disputes; and

o facilitate communication by avoiding the need for face-to-face confrontational dialogue. For example, making the opening offer or giving an apology, can often be more easily facilitated through a mediator.

It is some or all of these features that enables mediation to succeed where negotiations have ground to a halt.

Getting a dispute to mediation (back to contents)

One of the frequently asked questions is ‘What cases are suitable for mediation?’ On the basis that over 95 per cent of cases are settled by negotiation before trial, over 95 per cent of cases are potentially suitable for mediation. The real issue is ‘When is a case suitable for mediation?’ A simple initial test is:

· Is there enough information to negotiate?

If ‘Yes’- try negotiation.

· Are the negotiations making progress?

If ‘No’- try mediation.

This still leaves the issue of what is ‘enough information’. There is no clear-cut answer, but the pitfall to avoid is thinking that only once the disclosure stage in litigation is complete will there be enough information.

When and how to initiate a settlement initiative will vary from case to case but the lawyer needs to have firmly in mind that mediation is about cost-effective dispute resolution and the later the settlement is, the less cost-effective the process has been. A failed attempt to initiate settlement (even a failed negotiation or mediation) costs little and does not stop a subsequent initiative. The danger is that the litigation becomes an end in itself rather than a means to an end.

It is sometimes said that certain types of case, such as fraud cases, are unsuitable for mediation. In fact many fraud cases are settled by negotiation and therefore are just as, if not more, suitable for mediation at some stage. There are numerous examples, in the UK and elsewhere, of fraud cases settled by mediation.

Cases where interlocutory orders are deemed necessary to protect assets are also cited as examples of cases unsuitable for mediation. On one level that is correct, but experience shows that many such cases are settled – often aided by the existence of the injunction; mediation can be and is, used after the injunction stage.

The problem in getting a dispute to mediation is that ‘it takes two to tango’. One party may have decided that the time is right but persuading the other party (or parties) is often very difficult. As discussed above, the CPR should make that easier. One increasingly likely scenario is a party to a dispute wishing to try mediation suggesting to the other party that the likelihood of an ‘ADR order’ is a good reason for going to mediation sooner rather than later – in effect pre-empting the court.

In other cases, or in the case of disputes that have not yet gone to court, there are some techniques for getting a dispute to mediation which can assist, such as:

· if there is a mediation clause in the contract to which the dispute relates, this is the obvious route – and this should avoid the usual (albeit often misplaced) concern that making the opening approach is an indication of weakness;

· contacting the opposite party direct rather than through lawyers;

· using a neutral third party, such as an ADR organisation/body to approach, or discuss mediation with the other, often hesitant, party;

· avoiding the jargon – a party unfamiliar with and therefore hesitant about mediation may be more receptive if it is suggested that there be a ‘settlement meeting chaired by a neutral third party’; or

· pointing out that if the dispute does escalate into litigation, the court may require the parties to try mediation, so why not pre-empt compulsion.

Probably the most persuasive argument is that there is little downside in trying mediation whilst the upside has considerable potential.

Setting up and preparing for a mediation (back to contents)

Assuming that the persuasion has been effective (or a court order has been made) and the greatest hurdle to settling the dispute by mediation has therefore been surmounted, what has to be done prior to the mediation itself? Unlike going to trial, there are no hard and fast rules governing the preparation for, or conduct of, a mediation. A mediation of a commercial dispute tends to follow a typical pattern and often a model procedure will be adopted but this can be varied to suit the particular circumstances of the dispute or the particular requirements of the parties. Usually the following will be involved:

· deciding whether to use an ADR body to help in setting up and running the process;

· sorting out the administrative aspects, such as where, when and for how long the mediation should take place, who will attend it and what form of mediation procedure and agreement will be adopted;

· appointing a mediator; and

· preparing the written case summary and supporting documents.

Using an ADR body (back to contents)

The basic options open to the parties are either to set up the arrangements themselves, with or without the assistance of the mediator (often described as a ‘self administered’ mediation), or to use an ADR body (such as CEDR or the ADR Group). The points to consider in deciding which route to take are:

· Neutral role – parties in a dispute tend to have a knee-jerk reaction to whatever the other party suggests. This can make agreeing what should be a relatively straightforward issue (such as the location of the mediation) quite difficult – and more important issues (most obviously who should be the mediator) very difficult. Using a neutral third party can reduce the friction and speed up the preparations. The ADR bodies have a depth of experience in setting up mediations and often play a crucial diplomatic role in sorting out the difficulties of getting the mediation in place.

· Cost – an ADR body will obviously charge for its services but as is often the case with ‘outsourcing’ that cost may well be less than the cost, for example, of lawyers dealing with the administration. A mediator involved in the arrangements will probably charge at an hourly rate. What may at first sight look like a cheap option may be more expensive than paying the ADR body’s fee (which will usually include the mediator’s fee). On the other hand, if the parties in the mediation (and their lawyers, if any) are familiar with mediation and can in particular agree who should be the mediator then the self-administration route may make sense.

Dealing with the administrative aspects (back to contents)

If an ADR body is being used, most of the administrative aspects will be handled by it. These will include:

· when and for how longthe mediation will take place– Parkinson’s Law tends to apply to a mediation in that it is likely to run for the full time allocated. Usually a day, even if a long day, is sufficient. Even complex multi-party disputes rarely need to have more than three days set aside. If the parties are agreed on going to mediation, it rarely needs more than three or four weeks to set it up, and where the parties are in a hurry it can be done in days.

· where the mediation will take place – ideally the venue should be a neutral place but if the parties are willing to use the facilities of one of the parties, this will save costs. There should be a room for each of the parties and one room large enough for the mediator and all the parties.

· who will be there on the day – it is important that there is no element of surprise as to who will be attending. It is particularly important that the lead representative of each party has sufficient authority to settle the dispute on the day without having to refer to anybody else. Solicitors are usually present with their clients (see below). Barristers and experts are sometimes also present but they are rarely indispensable and if they do not appreciate the nature of mediation, there is a danger they will side track the negotiations.

· what documents should be produced and when– see below.

· how much it will cost – the most common approach to costs is for the mediation fees (including the mediator’s fees) to be shared equally by the parties and for each party to bear its own costs of preparing for, and participating in, the mediation.

All of these arrangements are usually tied up in a simple mediation agreement whose other purpose is to address some procedural aspects. This is usually done by incorporating the model procedure (or rules) of an ADR body. Typically these will include provisions as to the confidentiality and without prejudice nature of the mediation.^[30]

Appointing a mediator (back to contents)

Being a mediator requires quite distinct, subtle skills based on sound training. A CEDR accredited mediator, for example, will have been on a five-day intensive course and have attended two mediations as a ‘pupil’ before his/her first appointment as a mediator. The ‘great and the good’, such as a retired judges or QC’s, will rarely make good mediators unless they have been trained and accredited as mediators. It is more important that the mediator has been properly trained than that he/she knows about the subject matter of the dispute in question. Trained mediators however, come from a broad range of backgrounds and often a mediator with knowledge of the relevant subject-matter can be identified by the ADR bodies, such as CEDR and the ADR Group.

These bodies have trained and have access to a large number of mediators and are an obvious place to turn when looking for a mediator. An appointment of a mediator by such a neutral body will avoid the problem of one party suggesting a name and the other party objecting simply because it fears that the suggested appointee may be biased in favour of that party. Usually the ADR body will only appoint a person agreed by both parties. There is a risk of becoming too ‘hung up’ on who is appointed mediator given that the mediator, unlike an arbitrator, cannot make any binding decision – what really matters is that the mediator has been trained and ideally, has a mediation track record.

Putting together the mediation documentation (back to contents)

The usual documentation for a mediation consists of a short case ‘summary’ (or ‘submission’) and a set of key supporting documents, preferably a joint set agreed between the parties. The primary purpose of the summary is to explain as succinctly and persuasively as possible to the other party(ies) the party’s position and objective in the mediation – its case in related litigation (if any) will already be familiar to the other side from the court documentation. The secondary purpose is to explain the dispute and the party’s position in it, to the mediator.

The overriding approach should be that the documentation is kept short and consideration should be given to agree, specifically the maximum length/volume of these documents. The documentation is usually exchanged between the parties and supplied to the mediator at least a week before the mediation. If, involved, this may be done through an ADR body.

Making the final preparations (back to contents)

It is essential that a business manager, with sufficient authority to settle the dispute without recourse to others, is the lead representative for each party at the mediation. Ideally that person should be the one that makes the opening presentation although sometimes the lawyer will do this, if present at the mediation. Whoever does it should spend some time preparing, as it can play an important part in the process (see below). The team(s) present at the mediation should discuss their strategy and approach prior to the start of the mediation.

Participating in the mediation (back to contents)

A typical mediation will take the form of:

· a joint opening session chaired by the mediator, at which each of the parties will make its opening presentation. This may be followed by each party seeking further clarification of points, which may lead to initial discussions. The presentation should be addressed to the other party(ies) rather than to the mediator. Firstly, there is little to be gained by persuading a neutral who cannot make any decisions of the strength of the case. Secondly, it may be the first and last time that each party can get the full force of its case across, directly to a person in an executive role with the other party; it is a crucial opportunity to give that person an objective view of its case and to impress upon him/her a genuine desire to sort out the problem. It should be remembered that the whole process is ‘without prejudice’ – as nothing said can be used subsequently in court proceedings, this should encourage a degree of openness which may facilitate discussions.

· private sessions: as soon as the opening session has gone as far as it usefully can, the mediator is likely to ask to see the parties in private session (or ‘caucus’). It is important to appreciate and take advantage of the fact that these meetings are entirely confidential and anything said during them will only be passed on to the other party with the specific authority of that party.

· The initial purpose of these sessions is to enable the mediator to gain a better understanding of each party’s position including any hidden agendas or underlying issues not apparent from the written summaries and opening presentations. Trust in the mediator and a degree of frankness is likely to assist in the progress of the mediation. Gaining an overview of both parties interests and concerns will often enable the mediator to steer the parties towards fruitful negotiations.

· The private sessions are likely to take up most of the time of the mediation moving from the initial ‘exploratory’ private stage to the negotiating stage. The interposing of a neutral third party in the form of the mediator can overcome the reluctance, often encountered in typical negotiations, of making settlement proposals face to face. The teams representing each of the parties (particularly in multi-party cases) must expect and plan for spending a lot of time by themselves, not actively engaged in the process. The lawyers should, however, encourage their clients to use this time productively in exploring options and tactics in the light of the previous private session; sometimes the mediator will make specific suggestions as to what should be done, for example, financial projections before the next session.

· reconvened joint session: if the mediator thinks that negotiations have got to a stage where they are likely to make more progress face to face, he/she may bring some or all of each of the parties teams together. Sometimes ‘reducing the crowd’ and for example, bringing just the lead representatives together without lawyers, can be productive.

· settlement agreement; if the parties reach agreement the mediator will, wherever feasible, insist that it is written out and signed there and then. It is only then that it becomes binding. Even if it is impossible to produce a comprehensive agreement, as much as possible should be documented and signed – a ‘Heads of Agreement’. Sometimes it may be worth setting out what steps are to be taken to conclude the final agreement.

Role of the courts and lawyers in mediation (back to contents)

If the courts’ use of the ADR elements of the CPR follow the pattern set in the Commercial Court, in at least 30 per cent of cases the court is likely to require the parties, at some stage (probably earlier rather than later), to attempt to settle the dispute by mediation.

Business dispute mediation should be a business manager led process – in contrast to litigation which is a lawyer led process. It gives real control of solving the problem (which is what litigation is to the business manager) to those whose problem it is. Mediations can and do happen without the involvement of lawyers.

Lawyers (external and in-house), however, can and do play an important role in the majority of mediations. Lawyers should, for example:

· advise if and when mediation should be tried, as part of their general dispute resolution role.

· assist in the preparations. This will include drafting the case summary and putting together the supporting document bundle, as well as sorting out the administrative aspects either with the ADR body or with the mediator and the other parties direct – usually very time consuming.

· ensure that the client understands the mediation process and his/her role in it. Ideally the lawyer should have a meeting with whoever is attending the mediation to discuss the process and tactics before the mediation itself.

· play a vital support role in the negotiations at the mediation. In this context the lawyer should be in ‘commercial mode’, helping the client to be:

o creative in looking for options that could lead to a settlement, such as a new or varied agreement with the other party or a deferred payment arrangement; and

o objective and realistic about his/her commercial and legal position. Often this will involve trying to persuade the client not to be over emotional about the dispute and the other party; and

o constructive in the approach to negotiating, insofar as possible avoiding the positional bargaining that typifies many negotiations. If there is scope for looking at the dispute as a problem for both parties which needs to be solved jointly, this should be encouraged as it will make settlement more likely and save a lot of time.

To some extent this role involves the lawyer appreciating what the mediator is trying to do and assisting him/her in that objective. It is important that the lawyer steps outside the usual litigation mindset and plays a more creative role than is typically the case.

· advise, before and at the mediation, on the legal alternatives if the case does not settle, including the prospects at trial and the costs. It is important that the lawyer has to hand at the mediation details of:

o legal costs to date;

o estimated costs of winning at trial i.e. own costs less costs recoverable from the other party;

o estimated costs of losing at trial i.e. own costs and the other party’s costs; and

o estimated costs of winning and losing on appeal.

· ensure the legal effectiveness of any settlement, including in particular drafting the settlement agreement at the end of the mediation. Sometimes this will involve sorting out related aspects such as tax or competition issues. In some cases, it will not be possible on the day the settlement is reached to draft all the documentation to put the settlement into effect, but as much as possible should be documented – a heads of agreement, for example.

A clear understanding of the dynamics of mediation on the part of the lawyer is essential. If the lawyer does not appreciate that his/her role involves a quite different mindset from that needed for litigation, that involvement may be detrimental. An ability to listen ‘actively’ to what the other party is saying so as to understand rather than simply refute, is essential. Any dispute resolution lawyer should be able to demonstrate more than just lip service to ADR and should have had actual training in understanding and using mediation as part of his/her practice.

One of the attractions of mediation for the business manager is that it should be a significantly more cost effective method of dispute resolution than litigation. That advantage, however, will to some extent be lost if the preparatory work for the mediation is ‘over lawyered’. Lengthy case summaries, voluminous documentation and a team at the mediation which includes numerous lawyers and experts are likely to be less effective and inevitably more costly than the short sharp approach suggested above.

Multi-party and cross-border disputes (back to contents)

The fact that an increasing volume of multi-party and cross-border disputes (often involving multi-million pound sums) are being referred to, and successfully resolved by, mediation adds weight to the view that the these types of dispute are particularly suited for mediation particularly given the cost of litigating them.

In cross-border disputes, for example, mediation should enable parties to side-step the jurisdictional issues that can bedevil and delay litigation and arbitration. Parties to an international mediation can achieve this by providing:

· a venue for the mediation in a neutral country;

· a mediator whose nationality is different from that of the parties;

· a mediation agreement confirming the without prejudice and confidential nature of the process; and

· confirmation of the right to pursue adjudicative remedies if the mediation fails.

The procedural complexity of managing the litigation of multi-party cases (see B&C mediation box) contrasts with the flexibility of mediation, where the mediator(s) can work with appropriate groups of the parties as seems productive as the mediation develops. If there are two mediators (either co-mediators or a lead and associate mediator) they can sometimes work with different groups to speed up the process. Those participating in such a mediation nonetheless need to come to it in the expectation that they may spend a considerable amount of time on the sidelines.

Taking advantage of the mediation option (back to contents)

Mediation is not a dispute resolution panacea; nor is it necessarily an alternative to litigation. Often it will be the fallback from negotiations and run in parallel with litigation (or arbitration), which will still be the longstop process. Nonetheless its focus on the future not the past, on commercial interests rather than strict legal rights and on preserving rather than damaging business relationships, should make it an attractive option to the business manager and legal advisors at the appropriate time in a commercial dispute.

Its potential can be increased by including it in dispute resolution clauses in commercial contracts and there is scope for using it as a way of clearing logjams in contract negotiations.

If in doubt about using mediation, the good dispute resolution lawyer should bear in mind in advising his/her client that the upside of a successful mediation in terms of savings in costs and management time will in most cases easily outweigh the downside of the relatively small chance of an unsuccessful mediation.

Example of an ADR order (back to contents)

1 These proceedings be stayed from the date of this order generally for the matter to be referred to mediation.

2 The parties will within 7 days jointly request [recognised neutral ADR body] to appoint an accredited mediator and shall each pay one half of such fee as the [ADR body] shall require for such appointment.

3 No party may terminate the mediation until each party has made its opening presentation and the mediator has met each party separately for at least one hour.

4 Each party be at liberty to restore the proceedings after a period of [42] days from the first referral of the matter to mediation. The timetable set out in the order dated … shall run from the date of restoration.

CEDRModel Mediation Procedure & Mediation Contract Clause– see CEDRwebsite

www.cedr.co.uk

The B & C mediation December 1998 (back to contents)

Settlement terms, as is normally the case, were confidential but the following details were reported in the press:

Background facts: British & Commonwealth goes into £1.5 billion liquidation in 1990 as a result of massive liabilities in its computer leasing subsidiary, Atlantic, acquired in 1988.

Litigation: Seven High Court actions, commencing in 1994 - B&C claims totalling £850 million for negligence against various professional advisers and for misrepresentation against Atlantic. Estimated legal fees - £100 million. Trial scheduled to start in May 2000 and to run for 15-20 months.

Mediation: Settled in three days in December 1998. Two mediators – Lord Griffiths (retired Law Lord) and Jonathan Marks (USA). Mediation organisation - CEDR.

‘Atlantic will convince people that even for large complex cases ADR is a useful tool. It’s especially useful in breaking log-jams when people want a settlement but don’t quite know how to get it – particularly in multi-party cases with lots of different issues, where you just can’t broker it in the age-old way over the telephone.’

Appendix Three (back to contents)

English Court Practice Statements and CPR re ADR (back to contents)

• Practice Statement 10 Dec 1993 – Commercial Court: Alternative dispute resolution - see attached
• Practice Direction 24 January 1995 – Civil litigation: Case management -see attached
• Practice Directions 7 June 1996 – Commercial Court: alternative dispute resolution see attached

CPR, 1998

Part 1Overriding Objective

1.4

(1) the court must further the overriding objective by actively managing cases.

(2) Active case management includes:

(e) encouraging the parties to use an alternative dispute resolution procedure if the court considers that appropriate and facilitating the use of such procedure.

Part 26 Case Management

26.4

(1) A party may, when filing the completed allocation questionnaire, make written request for the proceedings to be stayed while the parties try to settle the case by alternative dispute resolution or other means.

(2) Where:

(a) all parties request a stay under paragraph (1); or

the court, of its own initiative, considers that such a stay would be appropriate, the court will direct that the proceedings be stayed for one month.

All England Law Reports, All ER 1936 - to date, All ER 1994 Volume 1

AII ER 1994 Volume 1

[1994] 1 All ER34

Practice Note

(Commercial court: Alternative dispute resolution)

PRACTICE DIRECTIONS

QUEEN'S BENCH DIVISION (COMMERCLAL COURT)

CRESSWELL J

10 DECEMBER 1993

Commercial Court - Practice - Altemative dispute resolution - Role of Commercial Court -Encouragement of alternative dispute resolution - Circumstances where alternative dispute resolution may be appropriate - Court clerk to keep list of indíviduals and bodies offering mediation, conciliation and other altemative dispute resolution services - Legal advisers to ensure that partiesjully informed ofmost cost effective means of resolving particular dispute.

CRESSWELL J made the following statement at the sitting of the court. While emphasising the primary role of the Commercial Court as a forum for deciding commercial cases the judges of the court wish to encourage parties to consider the use of altemative dispute resolution (ADR), such as mediatíon and conciliation, as a possible additional means of resolving particular issues or disputes. The judges will not act as mediators or be involved in any ADR process but will in appropriate cases invite parties to consider whether their case, or certain issues in their case, could be resolved by means of ADR. By way of example only, ADR might be tried where the costs of litigation are likely to be wholly disproportionate to the amount at stake.

The Clerk to the Commercial Court will keep a list of individuals and bodies that offer mediation, concihation and other ADR services. It would be inappropriate for the Commercial Court to recommend any individual or organisation for this purpose. The list will also include individuals and bodies that offer arbitration services.

This practíce statement will be drawn to the attention of all persons commencing proceedings in the Commercial List.

Appendix IV (infomation for the summons for directions) and App VI (pre-trial check list) to the Guide to Commercial Court Practice (see The Supreme Court Practice 1993 vol 1, paras 72/Al- 72/A31) will be amended to include additional questions to ensure that legal advisers in all cases consider with their clients and other parries concemed the possibility of attempting to resolve the particular dispute or particular issues by mediation, conciliation or othervise.

While the Commercial Court will remain the appropriate forum for deciding most disputes in its list, legal advisers should ensure that parties are fully infonned as to the most cost effective means of resolving the particular dispute.

K Mydeen Esq Barrister.

All England Law Reports, All ER 1936 - to date, All ER 1995 Volume 1

AII ER 1995 Volume 1

[1995] 1 All ER385

Practice Note

(Civil litigation:Case Management)

PRACTICE DIRECTIONS

QUEEN'S BENCH DIVISION AND CHANCERY DIVISION

LORD TAYLOR OF GOSFORTH CJ, McKINNON AND JUDGE JJ

24 JANUARY 1995

Practice - Civil litigation - Case management - Importance ofreducing costs and delay of civil litigatton - Moves to speed up civíl htigation.

LORD TAYLOR OF GOSFORTH CJ gave the following practice direction at the sitting of the court.

1. The paramount importance of reducing the cost and delay of civil litigation makes it necessary for judges sitting at first instance to assert greater control over the preparation for and conduct of hearings than has hitherto been customary. Failure by practitioners to conduct cases economically will be visited by appropriate orders for costs, including wasted costs orders.

2. The court will accordingly exercise its discretion to limit: (a) discovery; (b) the length of oral submissions; (c) the time allowed for the examination and cross-examination of witnesses; (d) the issues on which it wishes to be addressed; and (e) reading aloud from documents and authorities.

3. Unless otherwise ordered, every witness statement shall stand as the evidence-in-chief of the witness concemed.

4. RSC Ord 18, r 7 (facts, not evidence, to be pleaded) will be strictly enforced. In advance oftrial parties should use their best endeavours to agree which are the issues or the main issues, and it is their duty so far as possible to reduce or eliminate the expert issues.

5. RSC Ord 34, r 10(2)(a) to (c) (the court bundle) will also be strictly enforced. Documents for use in court should be in A4 format where possible, contained in suitably secured bundles, and lodged with the court at least two clear days before the hearing of an application or a trial. Each bundle should be paginated, indexed, wholly legible, and arranged chronologically and contained in a ring binder or a lever-arch file. Where documents are copied unnecessarily or bundled incompetetly the cost will be disallowed.

6. In cases estimated to last for more than ten days a pre-trial review should be applied for or in default may be appointed by the court. It should when practicable be conducted by the trial judge between eight and four weeks before the date oftrial and should be attended by the advocates who are to represent the parties at trial.

7. Unless the court otherwise orders, there must be lodged with the listing officer (or equivalent) on behalf of each party no later than two months before the date of trial a completed pre-trial check-list in the form annexed to this practice direction.

8. Not less than three clear days before the hearing of an action or application each party should lodge with the court (with copies to other parties) a skeleton argument concisely summarising that party's submissions in relation to each of the issues, and citing the main authorities relied upon, which may be attached. Skeleton arguments should be as brief as the nature of the issues allows, and should not without leave ofthe court exceed 20 pages of double-spaced A4 paper.

9. The opening speech should be succinct. At its conclusion other parties may be invited briefly to amplify their skeleton arguments. ln a heavy case the court may in conjunction with final speeches require written submissions, including the findings of fact for which each party contends.

10. This direction applies to all lists in the Queen's Bench and Chancery Divisions, except where

other directions specifically apply.

PRE-TRIAL CHECK-LIST

[Short title of action]

[Folio number]

[Trial date]

[Party lodging check-list]

[Name of solicitor]

[Name(s) ofcounsel for trial (if known)]

Setting down

1. Has the action been set down?

Pleadings

2. (a) Do you intend to make any anaendment to your pleading?

(b)Ifso,when?

Interrogatories

3. (a) Are any interrogatories outstanding?

(b) If so, when served and upon whom?

Evidence

4. (a) Have all orders in relation to expert, factual and hearsay evidence been complied with? If not, specify what remains outstanding.

(b) Do you intend to serve/seek leave to serve/any further report or statement? If so, when and what report or statement?

(c) Have all other orders in relation to oral evidence been complied with?

(d) Do you require any further leave or orders in relation to evidence? Ifso, please specify and saywhen will you apply.

5. (a) What witnesses of fact do you intend to call? [Name]

(b) What expert witnesses do you intend to call? [Name]

(c) Will any witness require an interpreter? If so, which?

Documents

6. (a) Have all orders in relation to discovery been complied with?

(b) If not, what orders are outstanding?

(c) Do you intend to apply for any further orders relating to discovery?

(d) If so, what and when?

7. Will you not later than seven days before trial have prepared agreed paginated bundles of fully legible documents for the use of counsel and the court?

Pre-trial review

8. (a) Has a pre-trial review been ordered?

(b) If so, when is it to take place?

(c) If not, would it be useful to have one?

Length of trial

9. What are counsels' estimates ofthe minimum and maxinnim lengths of the trial? [The answer to question 9 should ordinarily be supported by an estimate of length signed by the counsel to be instructed.]

Alternative dispute resolution (See Practice Note [1994] 1 All ER 34, [1994] 1 WLR 14)

10. Have you or counsel discussed with your client(s) the possibility of attempting to resolve this dispute (or particular issues) by altemative dispute resolution (ADR)?

11. Might some forrn of ADR procedure assist to resolve or narrow the issues in this case?

12. Have you or your client(s) explored with the other parties the possibility of resolving this dispute (or particular issues) by ADR?

[Signature ofthe solicitor, date]

Note This check-list must be lodged not later than two months before the date of hearing with copies to the other parties.

Dilys Tausz Bamster

All England Law Reports, All ER 1936 - to date, All ER 1995 Volume 2

AII ER 1995 Volume2

[1995] 2 All ER512

Practice Note

(Chancery Division: Procedure and case management)

PRACTICE DIRECTIONS

CHANCERY DIVISION

SIR RICHARD SCOTT V C

25APRIL1995

Practice — Chancery Division - Chancery Guide - Practice directions - Provisíons of Chancery

Guide to prevail in case of inconsistency with any previous direction.

SIR RICHARD SCOTT V-C gave the following practice direction at the sitting of the court.

1. The provisions of the Chancery Guide shall apply to litigation in the Chancery Division of the High Court ofJustice.

2. In the case of any inconsistency between the provisions of the Chancery Guide and the provisions of any previous direction (including the practice direction of 24 January 1995 ([1995] 1 All ER 385, [1995] 1 WLR 262)) the provisions ofthe Chancery Guide shall prevail.

3. The provisions of the Chancery Guide are subject to any subsequent practice direction that may be made.

Celia Fox Bamster

All England Law Reports, All ER 1936 - to date, All ER 1996 Volume 3

AII ER 1996 Volume 3

[1996] 3 All ER383

Practice Note

(Commercial Court: alternative dispute resolution)

PRACTICE DIRECTIONS

QUEEN'S BENCH DIVISION (COMMERCIAL COURT)

WALLER J

7JUNE1996

Commercial Court - Practice - Altemative dispuie resolution - Role of Commercial Court - Encouragement of alternative dispute resolution - Circumstances where altemative dispute resolution may be appropriate — First inter partes summons for directions on interlocutory progress of action and subsequent hearings for directions - Practice to be adopted.

WALLER J made the following statement at the sitting of the court. On 10 December 1993 Cresswell J issued a practice statement ([1994] 1 All ER 34, [1994] 1 WLR 14) on the subject of alternative dispute resolution (ADR) indicating that the judges of the Commercial Court wished to encourage parties to consider the use of ADR. In consequence of that practice statement, amendments were made to the standard questions to be answered by the parties in preparation for the summons for directions and to the standard questions to be answered as part of the pre-trial check list. Additional questions were inserted in order to direct the attention of the parties and their legal advisers to ADR as a means of settling their disputes. By that practice direction, legal advisers were urged to ensure that parties were fully infomed as to the most cost effective means of resolving the particular dispute.

The judges of the Commercial Court in conjunction with the Commercial Court Committee have recently considered whether it is now desirable that any further steps should be taken to encourage the wider use of ADR as a means of settling disputes pending before the court. In the belief that, whereas the Commercial Court will remain an entirely appropriate forum for resolving most of the disputes vvhich are commenced before it, the settlement of actions by means of ADR (i) significantly helps to save litigants the ever-mounting cost of bringing their cases to trial; (ii) saves them the delay of litigation in reaching finality in their disputes; (iii) enables them to achieve settlement of their disputes while preserving their existing comrnercial relationships and market reputation; (iv) provides them with a wider range of settlement solutions than those offered by litigation; and (v) is likely to make a substantial contribution to the more efficient use of judicial resources, the judges will henceforth adopt the following practice on the hearing of the first inter partes summons at which directions for the interlocutory progress ofthe action are given or at subsequent interpartes hearings at which such directions are sought.

If it should appear to the judge that the action before him or any of the issues arising in it are particularly appropriate for an attempt at settlement by ADR techniques but that the parties have not previously attempted settlement by such means, he may invite the parties to take positive steps to set in motion ADR procedures. The judge may, if he considers it appropriate, adjoum the proceedings then before him for a specified period of time to encourage and enable the parties to take such steps. He may for this purpose extend the time for compliance by the parties or either of them with any requirement under the rules or previous interlocutory orders in the proceedings.

If, after discussion with those representing the parties, it appears to the judge that an early neutral evaluation is likely to assist in the resolution of the matters in dispute, he may offer to provide that evaluation himself or to arrange for another judge to do so. If that course is accepted by the parties, the judge may thereupon give directions as to such preparatory steps for that evaluation and the form which it is to take as he considers appropriate. The parties will in that event be required to arrange with the Commercial Court Listing Ofiice the time for the evaluation hearing, having regard to the availability of the judge concemed.

Where early neutral evaluation is provided by a judge, that judge will, unless the parties otherwise agree, take no further part in the proceedings either for the purpose of the hearing of summonses or as trial judge.

Except where an early neutral evaluation is to be provided by a judge, the parties will be responsible for agreeing upon a neutral for the purposes of ADR and will be responsible for his fees and expenses. As indicated in the practice statement on ADR made by Cresswell J on 10 December 1993, the Clerk to the Commercial Court keeps a list of individuals and bodies that offer mediation, conciliation and other ADR services. If, after ADR has been recommended to them by thejudge, the parties are unable to agree upon a neutral for ADR, they may by consent refer to the judge for assistance in reaching such agreement.

On the hearing ofany summons in the course of which the judge invites the parties to take steps to resolve their differences by ADR, he may on that occasion make such order as to the costs that the parties may incur by reason of their using or attempting to use ADR as may in all the circumstances seem appropriate.

Should the parties be unable to resolve their differences by ADR or otherwise vvithin the period of any such adjournment as may be ordered, they may restore the summons for directions or other summons for the purpose of reporting back to the judge what progress has been made by way of ADR (such report to cover only the process adopted and its outcome, not the substantive contact between the parties and their advisers) and whether further time is required for the purposcs of ADR and, where efforts towards settlement by means of ADR have proved fruitless, for the purpose of obtaining further interlocutory directions in the proceedings.

Parties to pending proceedings who consider that ADR might be an appropriate form of dispute resolution for those proceedings or who wish to discuss the applicability of ADR with a commercial judge will be strongly encouraged to bring on the sununons for directions at an earlier stage in the proceedings than would otherwise be justifiable. The fact that in such a case pleadings have not yet closed or that discovery has not yet been completed will not be regarded by the court as a reason for declining to consider the applicability of ADR in that case.

K Mydeen Esq Barrister. (back to contents)