What is ADR?

Tony Guise takes a closer look at a question has remained unanswered for decades.

While alternative dispute resolution (ADR) was optional, it did not matter what the process involved. When ADR becomes a required step in proceedings, whether pre-action or post-issue, these questions become central to understanding what amounts to compliant ADR so as to avoid incurring sanctions.

England and Wales (E&W) answers those questions in different ways. We begin by looking at the definition of ADR in the Glossary to the Civil Procedure Rules, 1998 as amended (CPR) where ADR is defined as a “Collective description of methods of resolving disputes otherwise than through the normal trial process.”

This definition raises more questions than it answers. For example, is the feature of a neutral, independent of the parties, important or can it include a process managed by one of the parties? For example, a complaints process provided by a party, such as a local authority. Is the duration of the “methods” important or irrelevant?

The 18 Pre-Action Protocols (PAPs) reveal contrasting approaches.

Seven of the PAPs define ADR to include a complaints process and ad hoc negotiations. Six PAPs distinguish a complaints process and ad hoc negotiations from ADR processes which are listed as arbitration, early neutral evaluation (ENE) and mediation. Two make no mention of ADR at all (mortgage possession claims and possessions claims by social landlords) which briefly allude to the role of pre-issue contacts between the parties. Three are pre-action ADR managed online: personal injury, employer’s liability and public liability claims processed through the Claims Portal platform and low value road traffic accident claims processed by the Official Injury Claim platform.

The last three are interesting in that they afford a glimpse of the future of the digitised pre-action stage. Though the PAP governing the reformed pre-action phase is likely to condescend less to particulars and instead ascend to high-level guidelines, with most of the rules being embedded in the code of the pre-action platform.

In November 2021, the Civil Justice Council launched the Interim Report of the PAP Review Working Group (the IR). The final report is awaited but this was a serious attempt to address the question of what ADR is, how long should it last and what incentives and sanctions should encourage good behaviours and discourage bad actions.

Much of this is built around the duty of good faith in the pre-action phase. In para 3.21 of the IR, the working group says that a dispute resolution process includes:

• A meeting to discuss the dispute and how it may be resolved;
• Mediation;
• ENE;
• Any applicable ombudsman scheme; and,
• Any trade ADR scheme.

This thereby treats a meeting to resolve a dispute as a means of dispute resolution.

In para 3.22, the working group refers to “formal ADR”, of which examples given include mediation and ENE. These processes feature a neutral independent of the parties – leaving the reader to conclude that “informal ADR” does not involve an independent neutral. Yet the IR does not expressly define ADR, which strikes me as a missed opportunity.

It was the absence of an independent neutral that lay behind the design of DisputesEfiling’s (DEF’s) Pre-Action module in October 2016. The idea is that ad hoc negotiation conducted by email, video or telephone would be supported by the DEF Pre-Action document collaboration module.

The government has introduced a statutory definition of ADR. This may be found in The Digital Markets, Competition and Consumers Bill (the Bill, at clause 284(2)) provides:

““ADR” means any method of securing or facilitating an out-of-court resolution of a consumer contract dispute that is carried out by an independent third party acting in relation to both parties to the dispute.”

The Bill has survived a lengthy committee stage and is heading for its report stage in the Commons, on a date to be set. This is, I believe, the first time ADR has been defined in any statute in England and Wales. Note, however, that this definition is restricted to “consumer contract disputes”. Nevertheless, that phrase does bring an awful lot of disputes within the draft statutory definition.

On 8 and 9 November 2023 the Court of Appeal will hear the case of Churchill v Merthyr Tydfil CBC, which asks all the questions raised in this article. Let us hope the Court of Appeal provides answers.

Tony Guise is the director of DisputesEfiling.com.