Time to be reasonable in a dispute

Any business facing a commercial dispute should consider Alternative Dispute Resolution (ADR) or potentially face the consequences.  

Disputes may be resolved through one or more of the following ADR processes:

• Negotiation (between the two parties)
• Without prejudice correspondence and/or meeting
• Mediation (with an impartial third party mediator).

There are, of course, many variations of these approaches.  For instance, ADR can refer to any alternative to litigation that leads to a resolution of the dispute without the intervention of the court.

There have been a number of recent court cases where one of the parties has refused an offer to mediate, resulting in the court imposing a cost sanction on them at trial.  In each case it was the successful party which refused to mediate and ended up having their awards reduced by the court.

Ultimately, if a party does not wish to engage in ADR, that party must be prepared to justify the reasoning for taking that decision at a later point in time, in order that it may stand up to judicial scrutiny.  Should that decision/refusal be regarded as unreasonable, the costs consequences may be severe and could include costs awarded on the indemnity basis.

Substantially increased court fees also deter the issue of court proceedings; fees can now be as high as 5% of the claim value up to a maximum of £10,000.  Following some simple, but important, top tips set out above can save parties significant time and expense.

ADR can also enable disputes to be settled in a way that reduces damage to business relationships when compared to the formality and adversarial nature of court proceedings.  Sometimes parties can continue a trading relationship even after a dispute!

For more information on this, advice on any aspect of a business or commercial dispute, please contact a member of our commercial disputes team or call us on 0115 9 100 200.

Posted on March 28, 2017