ADR – Mediation and Arbitration
Recovering Costs When a Party Refuses to Engage in Alternative Dispute Resolution (ADR)
What is Alternative Dispute Resolution (ADR) – Mediation, Arbitration, Negotiation & Conciliation
ADR is a method of settling legal disputes in a manner which avoids going to Court. There are different types of ADR which can be used to resolve commercial disputes, as well as civil disputes and legal costs disputes, including mediation, arbitration, and conciliation.
The use of ADR is highly encouraged by the Court, and refusal to engage in such methods can result in costs consequences, as shown in the case of DSN V Blackpool Football Club LTD, when a party refused to engage in the ADR, mediation.
ADR – Arbitration
Arbitration is one of the more formal processes and is a legally binding method used to impose a solution to the dispute.
Arbitration in costs involves sending your Bill of Costs to an Arbitrator (usually a member of the Chartered Institute of Arbitrators) , along with any Points of Dispute and Points of Reply. Like a detailed assessment hearing, the arbitrator will then review the Bill and provide their decision on the Points raised. In our recent article, we discussed the use of arbitration as a form of ADR and the costs benefits which arise as a result of using this method as an alternative to Court proceedings, in legal costs cases.
ADR – Mediation
Mediation is very common ADR scheme used for resolving disputes face to face, however, it will not result in a legally binding agreement. Using the mediation process, parties will attempt to resolve their dispute using mediation services from a trained mediator, with the aim of achieving a mutually acceptable agreement between all parties to the claim. The use of the alternative dispute resolution, mediation, in costs disputes usually result in less costs being incurred, and cases being settled quicker than if they were to proceed to a detailed assessment hearing.
Refusal of a Party to Engage in ADR
ADR methods, such as leading mediation in costs disputes, are usually a cheaper alternative to Court proceedings, and matters usually resolve a lot more quickly which is why it is important that all parties agree to the use of ADR where possible.
If a party refuses to engage in ADR without good reason, the Court may view this refusal as unreasonable conduct, which could result in costs sanctions for the refusing party.
In the case of Thakkar v Patel  EWCA Civ 117 , Jackson LJ stated:
“to remain silent in the face of an offer to mediate is, absent exceptional circumstances, unreasonable conduct meriting a costs sanction, even in cases where mediation is unlikely to succeed.”
DSN v Blackpool FC Limited  EWHC 595 (QB)
In the more recent case of DSN v Blackpool FC Ltd, costs were awarded to the Claimant on the indemnity basis, due to the fact that the Defendant failed to engage in mediation, or any other form of ADR. The reason the Defendants refused to engage in ADR was because they believed they had a strong defence to the claim however, it was concluded in this case that this was not an adequate reason for refusing to engage in ADR. The Judge stated:
“No defence, however strong, by itself justifies a failure to engage in any kind of alternative dispute resolution.”
How Can ARC Costs Assist?
ARC Costs are a firm of experienced legal cost draftsmen, assisting law firms and litigants in person in the recovery and negotiation of legal costs. We can advise and assist in the process of alternative dispute resolution, such as arbitration and mediation.
We can assist in the negotiation of a bill of costs, irrespective of whether you are a receiving or paying party.
We can be contacted by email at email@example.com, or by telephone on 01204 397302. For more information on legal costs, please find out more about our speciality areas of expertise and our services on our legal costs page.
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