"The principal aim should be to achieve a cost effective solution that not only meets clients’ needs and interests, but also allows clients to move forward."
"One technique that will be familiar to everyone is negotiation, a technique commonly adopted with a view to achieving the early settlement of disputes."
"As this area develops and awareness of ADR is promoted, it is expected that there may be further changes to the Court Rules encouraging the parties to consider ADR in much the same way as they do in the UK."

Dispute resolution in Jersey

23 Jul 2012

In many cases, Alternative Dispute Resolution ("ADR") might offer a more cost effective, time efficient solution to dealing with a dispute than traditional litigation. This briefing gives an overview of the approach to ADR in Jersey.

On 8 June 2004, a small but fundamental change to the Royal Court Rules 2004, as amended (the "Court Rules") occurred with the introduction of a new rule enabling the Royal Court to stay litigation in order to encourage the parties to mediate with a view to achieving a settlement.

Mediation is but one means of dispute resolution, albeit ever since the introduction in the UK of the Civil Procedure Rules 1999 (the "CPR"), the method promoted by the UK courts as the alternative to litigation. Mediation can be used in almost any type of dispute, be it local, international, large or small.

Clients should be confident that their lawyer has all of the necessary dispute resolution techniques at his or her fingertips, and be able to suggest not only appropriate methods of resolution, but also creative solutions. The principal aim should be to achieve a cost effective solution that not only meets clients’ needs and interests, but also allows clients to move forward.

ADR in the UK
Since the Jersey legal system, including the Court Rules, reflects many principles of the UK legal system, it is helpful to look briefly at the approach adopted there.

Guidance as to how the UK courts approach ADR was given in the leading Court of Appeal case of Halsey v Milton Keynes General NHS Trust [2004] EWCA, Civ 576 which established, inter alia, that legal advisers should, in all cases, consider with their clients whether, at the outset, a particular dispute is suitable for ADR. Whilst the parties to litigation cannot be compelled by the court to enter into ADR they must, at the very least, consider it. An unreasonable refusal to enter into ADR may lead to future adverse costs sanctions for the refusing party.  Only if the refusing party is ultimately successful, will the court be likely to characterise that party's earlier conduct as reasonable. A party's decision not to try ADR will therefore involve making a careful assessment of its chances of succeeding at trial and concluding that these are better than not. This assessment is likely to involve detailed and complex legal considerations and should be done in conjunction with the client's legal advisers.

Since 6 April 2006, the CPR have included a requirement for all parties to consider ADR prior to commencing litigation. In this regard, the CPR empower the courts to call for evidence of the efforts that the parties have made to resolve their dispute and so avoid litigation, and to impose costs sanctions on parties who fail to behave in a manner consistent with these objectives. Equally, there is a duty, both on the court and on the parties, to consider ADR as part of the ongoing case management process.

ADR in Jersey
A greater emphasis on dispute resolution is something to be embraced rather than viewed with suspicion. Parties have been resolving disputes in a host of different ways for millennia.  In recent years, the emphasis has been on litigation. However, traditional litigation has certain features often perceived as detrimental such as cost, delay and adverse publicity. It can also lead, at a very early stage, to a polarisation of views. Consequently, consideration should be given, early on in a dispute, to alternative techniques, and an assessment made as to whether a different approach might achieve a preferable solution.

The term ADR covers a wide variety of dispute resolution techniques. One technique that will be familiar to everyone is negotiation, a technique commonly adopted with a view to achieving the early settlement of disputes. It simply involves the parties speaking to one another, sometimes through their legal representatives, with a view to reaching a solution. Other, more formal, ADR processes are described in brief, in the following paragraphs:

  • Adjudication: Adjudication is a statutory procedure used in construction disputes and involves presenting the dispute to an adjudicator for determination. The procedure can vary from the flexible to the very formal, depending on what the parties wish for, and can normally conclude within a couple of months. The adjudicator's decision is binding, subject to any rights of appeal.
  • Arbitration: In arbitration, an independent and impartial third party, usually with expertise in the matters in dispute, will determine the dispute.  Historically, it was a method used for commercial and building disputes, but nowadays it can be used for most types of dispute. Again, the procedure varies from the formal to the informal, depending upon what the parties wish for.  Arbitral awards are final and legally binding, and can be enforced both on the Island and elsewhere.
  • Complaints procedure: A third party (not necessarily an independent person) determines the merits of a dispute. This is a very flexible and informal procedure, although there is a need to consider the independence of the person making the determination. That person's decision is likely to be non-binding and, as such, may or may not conclude the dispute between the parties.
  • Conciliation: Conciliation is a procedure very similar to mediation. It was previously used mainly for employment disputes but can be used in any case. It involves the intervention of a specially trained individual in a dispute in order to assist the parties to resolve it.
  • Mediation: A neutral third party acts, usually with relevant experience, as a mediator. The mediator has no decision making power, is non-judgmental and will assist the parties to reach a mutually acceptable and binding solution.
  • Early neutral evaluation: Early neutral evaluation involves a neutral third party giving a non-binding evaluation at an early stage in a dispute. This is done to enable the parties to consider the merits of their case in the light of an indication of what might happen at trial. The aim is to assist the parties to see the merit of and achieve an early out of court settlement.
  • Evaluative mediation: This is very similar to mediation save, significantly, in the event that no agreement is reached, the mediator is expressly authorised by the parties either to opine on the merits (like a neutral evaluator) or, to impose his views and determine the matter (like an arbitrator). The parties can agree whether this is in relation to one or more distinct issues or to the dispute in its entirety.
  • Mini-trial: A mini-trial involves presentations being made to a panel comprising senior personnel from the disputing parties. The panel members will have authority to settle the dispute and may work with a neutral third party who will assist them to explore the issues and to facilitate a settlement. This process may also be referred to as an "Executive Tribunal". It is not that frequently used but is well suited to the resolution of construction disputes.
  • Other bodies: Various external bodies can assist in resolving disputes, for example: Ombudsmen, Advisory, Conciliation and Arbitration Service ("ACAS"), Jersey Advisory and Conciliation Service ("JACS"), trade unions, trade associations, neighbourhood and religious associations. These can all provide facilities to assist parties within their respective communities to reach solutions to disputes.
  • Private enquiries: These can be useful for internal corporate matters. They involve a third party coming into the company, hearing evidence or investigating the issue, and then deciding upon or recommending a course of action.

Considerations before embarking on ADR
Before embarking upon a process of ADR, the following questions may assist the parties to identify some of the differences between them, design and agree upon a suitable process, and determine what might or might not be achieved:

  • Commercial impact: How will this affect the participants’ businesses, not only now but also in the future? 
  • Confidentiality: Will anything that is said or disclosed in the process be disclosed outside the process or to others?
  • Control: Who is responsible for the outcome? Is a third party going to impose a solution or outcome on the participants, or are they able to decide whether to accept a solution or outcome?
  • Cost: How much will the process cost? How much could the process cost if the participant is unsuccessful? Is the anticipated cost of ADR disproportionate when compared with the cost of preparing for trial?
  • Depth of consideration: How much consideration of the issues will there be? Has sufficient disclosure been given to facilitate the effective use of ADR?
  • Future relationships: Do the participants want to continue doing business with (or indeed, living next door to) the other party to the dispute?
  • Outcome: What can be achieved by the process? Can creative solutions be used?
  • Procedure: Is it formal or informal? Do participants need to be represented?
  • Speed: How long is the process going to take?
  • "Win/win" or "win/lose": Could both parties achieve a solution (or, compromise) that they are happy with or could one party walk away with everything?
  • Without prejudice: Could anything that is said during the process be used against a participant in the future?

Developments in Jersey
The use of ADR is still very much a developing area in Jersey.  It has long been established in the UK and other jurisdictions such as the United States. In time, it will no doubt establish itself fully in Jersey's legal system. 

The work being done by JACS, established in April 2001 and funded by the States, has been said by some to be "an encouraging precedent for mediation in Jersey". JACS is primarily involved in the field of employment.  Its role is mainly advisory but it also conducts mediations and arbitrations.

It is clear that Jersey wants to and is taking steps to promote the use of ADR.  In March 2002, the Bailiff introduced a pilot project at the Petty Debt Court to assess whether disputes could be resolved more quickly. This was successful and mediation provisions were subsequently incorporated into the Petty Debts Court Rules 2004. This was swiftly followed, on 8 June 2004, by the introduction of the provision enabling the Royal Court to stay pending litigation for ADR to promote early settlement if possible.

As this area develops and awareness of ADR is promoted, it is expected that there may be further changes to the Court Rules encouraging the parties to consider ADR in much the same way as they do in the UK. 

A party's willingness to use ADR will depend, in part, on that party's willingness to try alternatives to litigation. The willingness to try ADR may be influenced by the stage reached in proceedings and whether or not the proposed ADR is premature or even too late. However, the continued promotion of the ADR techniques available, an awareness of the advantages of ADR and, perhaps more importantly, of the potential disadvantages of litigation (including the potential for adverse costs orders against those who are seen to have used it without considering the alternatives), will, it is anticipated, see an increased use of ADR.