The changing face of property dispute resolution

Alternative Dispute Resolution (ADR) provides parties with the option to resolve a dispute; often before they become embroiled in the process of litigation. Since 1998, construction adjudication has demonstrated the vast potential and success that can be achieved through the use of ADR methods.

Until recently, property litigators dined on a diet of rent reviews and disputes about service charges and repairing covenants. Many of these were resolved by Expert Determination (ED), and the remainder were litigated. Today the diet is more varied. Contested disputes are more complex and often involve legal issues. The parties to ED often rely on their own expert evidence and frequently demand an oral hearing. Previously an ED was invariably a "documents only" exercise and the expert determined the procedure.

Costly litigation

Additionally, the funding of civil justice is a soft target in a time of austerity and the prospect of slow, costly and uncertain litigation is an unappealing alternative.

Dispute resolvers will debate the merits of litigation and ADR for a long time but it is the parties involved that ultimately determine whether a particular procedure flourishes or is consigned to the rarely read textbook on a library shelf.

What the parties to property and construction disputes want is an independent, fair tribunal to provide a timely decision that is reasoned, credible, binding and at a cost that is proportionate to the circumstances of the dispute.

There is, without a doubt, a perception that access to justice is not what it once was (and not only for those who previously relied on legal aid). This disenchantment offers the ADR community a challenge and a unique opportunity to highlight the range and flexibility of the available alternatives to litigation. Importantly for property disputes, two of the leading nominating bodies are rising to the challenge.

The Royal Institution of Chartered Surveyors (RICS) has streamlined its appointment service and, with the Law Society, has introduced the Professional Arbitration on Court Terms or "PACT" for lease renewal disputes. Parties can now benefit from the appointment of a surveyor or solicitor to act as either an arbitrator or independent expert.

Arbitrator v expert

However, the distinction between an arbitrator and an independent expert continues to attract discussion. The recent decisions in Barclays Bank PLC v Nylon Capital LLP [2011] EWCA Civ 826 and Wilky Property v LSI [2011 EWHC 2226 (ch), illustrate the need for clarity when drafting dispute resolution clauses and highlight the perennial problem that the nature of a future dispute is unknown when the clause is drafted. The distinctions can be important.

ED is less formal than arbitration and will often be the right choice for disputes with discrete technical or valuation issues, but arbitration has the distinct advantage of being supported by the Arbitration Act 1996 and an established body of jurisprudence. It also has some practical advantages including the power to secure the attendance of a witness, the right to ask the court to set aside an award for procedural irregularity and, unless excluded by agreement, to challenge an award on a question of law. An arbitral award can be enforced against assets outside England and Wales using the New York Convention but an expert's decision may encounter serious enforcement difficulties in some foreign jurisdictions.

DAS-Property service

The problem of being unable to second guess the nature of the dispute, which may arise under a lease, has led some to conclude it may be better to wait and to select the method of dispute resolution when a dispute arises. The Chartered Institute of Arbitrators (CIArb) had this in mind when it established the Dispute Appointment service - Property initiative. The DAS-Property service offers the choice of arbitration, mediation and expert determination, and provides considerable flexibility for the parties and the appointed resolver to frame a procedure that is exactly "fit for purpose".

Appointments are made by the CIArb president often within seven days of application. An application to nominate can be made where CIArb is named as the nominating body in the contract (lease etc.) or where the parties agree to apply. The resolver is selected from a property panel of experienced practitioners.

The DAS-Property service is designed to meet the demands of a wide range of disputes including landlord and tenant disputes, easements and rights of light, professional disputes, property ownership and interference. The property panel members are independent and impartial and the service is underpinned by the CIArb commitment, through continuing education programmes and professional regulation, to maintain the global standards associated with its qualifications.

Charles Brown is deputy president of CIArb

www.charles-brown.co.uk