Traditional litigation is not always the best means of resolving disputes, especially where financial matters are in issue. Members of Francis Taylor Building have extensive experience of dealing with land and asset valuation and other disputes which can readily be handled by alternative dispute resolution (ADR) methods, especially arbitration.
ADR encompasses a range of dispute resolution processes which are an alternative to litigation and which involve the use of a third party to either determine or to assist the settlement of a dispute. ADR includes arbitration, neutral evaluation, expert determination and mediation.
The Government’s dispute resolution commitment requires government departments and agencies to be proactive in the management of disputes and to use effective, proportionate and appropriate forms of dispute resolution to avoid high legal costs. The Local Government Association has announced its intention to seek the same approach to apply to local authorities. Where one party to a dispute is a public authority, consideration ought to be given to resolving disputes by means other than traditional litigation in court or tribunals.
The Upper Tribunal Lands Chamber Rules provide for the Tribunal to suggest and facilitate the use of ADR in cases before it. This is backed-up by a requirement when dealing with costs to consider whether a party has unreasonably refused to consider ADR, even when the refusing party is otherwise successful.
Disputes suitable for ADR
A dispute to be resolved by alternative dispute resolution (ADR) could be anything the parties wished, from a particular point or set of points of law or valuation principle, through to an entire dispute including quantum. Often it is most appropriate for a legal expert to determine a particular issue or issues which will may dispose of the dispute or a part of it.
The practice areas where ADR would be appropriate include:
- compensation for compulsory purchase and injurious affection
- statutory compensation for controls on land use
- land valuation disputes
- rating disputes
- property and other asset valuation disputes
- planning disputes including s106 contributions and enforcement
- leasehold enfranchisement
Claims to statutory compensation arise in many different areas and would include cases relating to: planning discontinuance and revocation orders, stop notices and TPOs; the exercise of powers under the Highways Act 1980, by utilities and telecommunications companies and by the Environment Agency; and, mining subsidence.
Examples of the kinds of disputes which are well suited to ADR include:
- preliminary issues of law
- issues of valuation principle
- advance payment disputes (a fast-track arbitration could be undertaken)
- questions as to what interest in land a claimant had
- reconstructing the ‘no-scheme world’
Arbitration is a form of binding, private litigation, where the parties confer the power to determine a dispute on a legal expert. The advantages of arbitration include
- arbitration is faster and more flexible than court or tribunal based litigation;
- parties are able to choose who will act as the arbitrator, rather than having the tribunal presented to them;
- arbitration is conducted in private, so that decisions are not in the public domain and remain confidential;
- the parties have control over how the arbitration is to be conducted and can agree in advance how the process will work;
- as the process is flexible and focussed on the particular dispute, arbitration can often be cheaper than court or tribunal based litigation;
- decisions are legally binding and enforceable in court.
Arbitration would be particularly well-suited to disputes on compensation for compulsory purchase and injurious affection and in particular the determination of key issues in dispute such as an issue of law or of valuation principle. Further information on the kinds of disputes which would be suitable for arbitration is given above.
An arbitrator’s jurisdiction comes from an agreement between the parties.
An arbitrator’s decision is binding on the parties and can be enforced just like a court judgment.
The conduct of arbitrations is governed by the Arbitration Act 1996. The 1996 Act supports the conduct of the arbitration, providing for limited supervision by the courts, appeals on points of law, and enforcement of awards. An arbitrator is under a duty to act fairly and impartially, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent. If the parties wish, an arbitrator is able to take the initiative in ascertaining the facts and the law.
Usually there is a sole arbitrator, but it is possible to have a panel of arbitrators. It is also possible for the arbitrator to have assistance from an assessor, usually an expert in a particular discipline, such as valuation.
Arbitrations can be conducted on a documents only basis. Hearings can be held, ranging from short hearings to make oral submissions on points of law through to full hearings akin to litigation. Parties are able to agree how their dispute should be dealt with and how formal or informal the process should be.
Once an arbitration agreement is in place, the dispute would be submitted to arbitration by a reference from the parties. The dispute could be anything the parties wished to have determined, from a particular point or set of points of law or principle, through to an entire dispute including quantum.
Where land is acquired by agreement (including under threat of compulsory purchase), but where the purchase price cannot be agreed, the agreement could provide for the price to be determined by arbitration.
An arbitration can be conducted in accordance with a published set of procedural rules. Using published rules provides more certainty about how the arbitration is going to be conducted. Alternatively, parties might prefer to have the process tailored to their particular case, by way of case specific directions from the arbitrator, setting out how the case is to be handled.
The method of resolving disputes through a process broadly known as ‘mediation' is increasingly being used as a way of avoid traditional court or tribunal-based litigation, with all of the cost and delay that such a process entails. FTB supports the development of this trend and is able to offer a number of trained mediators, who are also experienced and highly regarded practitioners in their own right.
Mediation itself should be distinguished from arbitration or other forms of adjudication. It is essentially a long-established method of negotiating where two (or more) parties, who have ceased to be able to resolve their own differences, are assisted in so doing by a mediator who has received training in the various techniques and practices required to achieve a resolution.
Fundamental elements of a modern mediation will include:
- Voluntary course of action - sought by the parties themselves
- Costs of the mediation established from the outset
- Facilitation of negotiations by a qualified neutral mediator(s)
- Series of informal discussions taking place in open forum and in private with mediator(s)
- All discussions confidential within the mediation, unless/until agreed otherwise
- No binding settlement unless explicitly agreed and executed by the parties
- Settlement agreement sets out all terms upon which conclusion reached
The protocol for Preliminary Case Management (High Court, Queen's Bench Division) which deals with the majority of high-level commercial disputes in England & Wales, provides that
‘Parties are encouraged to use ADR (such as, but not confined to, mediation and conciliation) to try to resolve their disputes or particular issues. Legal representatives should consider with their clients and the other parties the possibility of attempting to resolve the dispute or particular issues by ADR and they should ensure that their clients are fully informed as to the most cost effective means of resolving their dispute.
The protocol summarises the benefits of ADR, as follows:
The settlement of disputes by ADR can:
(1) significantly reduce parties' costs,
(2) save parties the delay of litigation in resolving their disputes,
(3) assist parties to preserve their existing commercial relationships while resolving their disputes, and
(4) provide a wider range of remedies than those available through litigation.'
An important feature of ADR (save for a very limited pilot scheme currently being trialled in the Central London County Court) is that it is invariably sought out by the parties themselves, rather than being imposed by a third party. As the leading guide to civil procedure states (White Book (2003) para 1.4.11).
"The hallmark of ADR procedures, and perhaps the key to their effectiveness in individual cases, is that they are processes voluntarily entered into by the parties in dispute with outcomes, if the parties so wish, which are non-binding. Consequently the court cannot direct that such methods be used but may merely encourage and facilitate."
Securing the (not inconsiderable) benefits of: reduced expense, speed, control by each party, the maintenance of business relationships, confidentiality of discussions and flexibility in solutions is fundamental to the process.
FTB has a Mediation Group and dedicated mediation facilities on site. FTB mediators cover a wide range of work, including:
- Planning eg s106 obligations, enforcement
- Compulsory Purchase & Compensation eg compensation/valuation disputes
- Gambling Disputes
- Administrative Law
- Contract Law
- Landlord & Tenant
- Local Government
Neutral evaluation is a private process but produces a non-binding written opinion on the issues referred for consideration, rather than a binding decision in arbitration. An independent, authoritative view is given on the matters referred for evaluation – which should reflect the ultimate judgment of the court or tribunal which would have to determine the dispute.
Neutral evaluation has been employed in the Commercial Court for many years. It can be used on all the same sort of disputes as arbitration, as explained above, and at any stage of a dispute.
Neutral evaluation is especially useful where there is a particular point of principle between the parties – whether a legal principle or one of valuation for example – which might help resolve the dispute one way or the other, or at the least move the parties closer together so that a negotiated resolution is possible.
Neutral evaluation can be used to overcome misconceptions about the strength of the parties’ cases, and move the parties closer to settlement, by providing an independent assessment of the relative merits of the competing cases on some or all the issues in dispute.
Neutral evaluation can be in relation to a particular question, or set of questions, or in relation to the case as a whole. It is especially useful to have an evaluation of the case where it turns on a key point of legal or other principle, particular pieces of evidence, or the interpretation of documents, which can make or break the case.
Neutral evaluation is usually done on a documents only basis and is often much faster than arbitration. It can be conducted based on the pleadings and expert reports and witness statements, depending on the nature of the issue.
Expert determination is a private process, involving an independent legal expert with inquisitorial powers who gives a binding decision on a dispute or a particular question referred for determination. It is particularly suited to technical disputes such as those relating to land valuation. It is, for example, frequently used in rent reviews.
Like arbitration, expert determination can deal with some or all of the issues in a dispute or the entire case. An expert can be more active in deciding the issues than is usually the case even with an arbitration. The expert will use his experience and expertise to deal with the case. The powers of the expert and the procedure to be used depend on what the parties agree.
An expert determination is usually done on a documents only basis and is often much faster than arbitration. It can be conducted based on the pleadings and expert reports and witness statements, depending on the nature of the issue. A hearing can be held where appropriate.
An expert determination is binding because of the agreement reached by the parties to confer jurisdiction on the expert. It is possible to provide that the determination is final and binding and thereby avoid the possibility of appeal. The parties decide whether or not the expert gives reasons for his decision.