Engage in ADR...in the national interest

It may feel premature to talk about “post-pandemic” but already the thoughts of both the Government and the judiciary have turned to managing the fallout from the pandemic in the context of commercial disputes. 

The British Institute of International and Comparative Law (BIICL) has published two “concept notes” calling for “breathing space” in commercial contract disputes arising from the pandemic. The objective behind these notes is to minimise the risk of a deluge of disputes and to increase the prospect of constructive outcomes. Two principal tenets of the best policy approach advocated by the BIICL are:

• To support negotiated solutions to make viable contracts blighted by the pandemic work.
• Where negotiation fails, to encourage parties to undertake mediation or other alternative dispute resolution methods.

Meanwhile, the Cabinet Office and Infrastructure and Projects Authority have published non-statutory guidance on responsible contractual behaviour in the performance and enforcement of contracts impacted by the COVID-19 emergency. The guidance emphasises the importance of contract parties acting in a spirit of co-operation and aiming to achieve practical, just and equitable contract outcomes to support the response to the pandemic and to protect jobs and the economy. Responsible and fair behaviour is strongly encouraged in relation to requesting, and responding to, requests for mediation or other alternative or fast-track dispute resolution.

It will be interesting to see what response this elicits from the courts. Over recent years - and in the very recent judgments of BXB v Watch Tower and Bible Tract Society of Pennsylvannia & Ors [2020] EWHC 656 (QB) and Wales (t/a Selective Investment Services) v CBRE Managed Services Ltd and another [2020] EWHC 1050 (Comm) - the courts have shown themselves willing to impose costs sanctions on parties acting unreasonably when it comes to alternative dispute resolution (ADR). 

While the rule makers have stopped short of compelling the use of ADR, the Civil Procedure Rules enshrine the courts’ expectation on parties, from the pre-action stage through proceedings and to costs assessment. And when it comes to court-managed ADR processes such as early neutral evaluation, the Court of Appeal's judgment last year in Lomax v Lomax [2019] EWCA Civ 1467 demonstrates that the courts may be willing to impose ADR on parties, even absent one or other party's consent.

The message – and the expectation – is clear: efforts should be made to avoid disputes where at all possible and, failing that, contract parties should seek to resolve their disputes via mediation or other ADR means. This, it is hoped, will avoid a deluge of disputes that could flood the courts and the “plethora of disputes” that the Government fears may be destructive to the effective operation of markets. 

Suffice it to say, now more than ever, much hope is pinned on such behaviour.