ADR: Alternative or preferred form of dispute resolution?

This year has seen the introduction of increased court fees, with litigants now having to pay up to 600 per cent more to issue court proceedings. As the increases have only recently taken effect, the impact on individuals and smaller businesses litigating in England and Wales remains
to be seen. Early indications, however, suggest that some litigants are already losing their appetite to litigate, with some simply lacking the desire or means to pay substantial fees upfront, even when they do have a strong claim.

So, what alternatives do litigants seeking justice and avoiding the courts have?

Mediation has become more and more popular as a way of settling a dispute, giving parties the opportunity for their day in court without the considerable costs of preparing for and attending a trial. It is likely to be used even more as a pre-action in an attempt to avoid the new court fees. The new practice direction on Pre-Action Conduct and Protocols, introduced in April this year, provides that parties who remain silent in response to
an invitation to participate in alternative dispute resolution (ADR) may be penalised with costs sanctions. This threat, coupled with the desire to
avoid court fees, are both
key motivating factors in encouraging parties to
engage in mediation at
the pre-action stage.

Another attraction of mediation is that the parties remain in control; a settlement will only be reached if the parties agree, who negotiate
in an environment where
they are able to consider their position privately with the mediator and then, if they choose to, compromise the dispute. It also enables more imaginative outcomes than
a trial, with the potential for settling multiple disputes.

There is also hope for individuals wishing to pursue low value claims as they too may be able to use ADR as an alternative to the increased fees. From next month, the European Directive on Alternative Dispute Resolution comes into force in the UK, which requires businesses to make available ADR for all domestic and cross-border consumer disputes. Each member state will be required to designate competent authorities to maintain and monitor a list of ADR providers who must offer their services at no or minimal cost to consumers. Businesses will have to address disputes within 90 days of referral. Certainly for consumers put off by the thought of having to pay upfront legal and court fees, this may offer an easier, cheaper, and more efficient way of resolving contractual disputes.

Issuing and litigating through the courts has become an expensive business. Individuals and SMEs contemplating proceedings will be required
to undertake an early and careful costs-benefit analysis before deciding whether or not to proceed towards formal court litigation. Law firms
are going to need new and cost-effective ways of assisting clients, with ADR likely to play an increasingly important role in this process. For consumers, the directive offers fresh hope and a potential route to access to justice for those no longer able to afford redress through the courts. SJ

Georgina Squire is head of dispute resolution at Rosling King