Introduction
The availability and affordability of civil litigation in England and Wales has been a source of concern for some time now. Over the past two decades, the judiciary has reviewed the civil procedure rules,Footnote 1 litigation costsFootnote 2 and court structure.Footnote 3 The Woolf reforms have brought about substantial changes in the procedural rules, with a view to improving access to justice, reducing the cost of litigation, and removing unnecessary complexity.Footnote 4 The Jackson reforms have revamped the costs rules, for the purpose of promoting access to justice at proportionate expense.Footnote 5 In 2016, Jackson LJ began to explore the feasibility of introducing fixed recoverable costs.Footnote 6 At the same time, Briggs LJ, as he then was, observed that ‘[t]he single, most pervasive and intractable weakness of our civil courts is that they simply do not provide reasonable access to justice for any but the most wealthy individuals’.Footnote 7 His Lordship proposed to establish the Online Court for low value claims to assist litigants to articulate their cases without lawyers, and settle their differences without a face-to-face trial so far as practicable.Footnote 8 The Online Court has become part of the £1 billion reform programme for the civil and criminal justice system under HM Courts and Tribunals Service (HMCTS).Footnote 9
The judicial initiatives to reform the civil justice system pursue a common theme: enabling access to justice through the court. As a result, a variety of practical measures have been implemented. Judges persuade the parties to avoid litigation and attempt an ADR process instead.Footnote 10 They give directions and set trial timetables to manage the progress of each case.Footnote 11 They manage the costs of litigation by requiring costs budgeting and imposing limits on recoverable costs.Footnote 12 They may even depart from the general rule on costs if a successful litigant unreasonably refused to engage in ADR.Footnote 13 Among these measures, ADR draws extreme scepticism from many academics. Some theorists argue that informal dispute resolution may render substandard outcomes compared with judgments.Footnote 14 Others contend that it may discriminate against the underprivileged,Footnote 15 and even undermine the rule of law.Footnote 16 Empirical and social psychological research has shown that disputants hold mixed views on the legitimacy of ADR, procedural fairness, and finality of outcomes.Footnote 17 Nevertheless, judicial enthusiasm for private settlements as alternatives to court adjudication shows no sign of weakening. Reported cases have revealed that the court encourages the use of pre-issue ADR in most cases, save where the nature of the dispute demands a decision or relief that only the court is in a position to provide.Footnote 18 The court also exercises its discretion to impose costs sanctions for unreasonable refusal to engage in alternative processes.Footnote 19
A dual system of justice has thus taken shape. One achieves substantive justice, applying the right law to the true facts with proportionate use of resources and within a reasonable time.Footnote 20 The other pursues individualised justice, producing pragmatic results that conform to the parties’ own sense of justice.Footnote 21 The search for different shades of justice within ADR has gained traction in existing literature.Footnote 22 But such discussions do not provide an answer to the problem of limited access to the courts. Furthermore, the judiciary and the government seem most keen on enhancing the degree of compulsion to use ADR in civil courts and the online court.Footnote 23 In fact, judges hardly exercise the active case management power in alternative processes further than encouraging their use. The perceived threat to the public function of civil justice to maintain the rule of law is not addressed head-on. Treating court adjudication and ADR as two independent limbs has at times undermined the object of reforms. What is insufficiently appreciated is the nature and ambit of the judicial role in alternative processes.
The aim of this paper is to examine the interaction between the court and ADR in the legal administration of civil justice. It addresses the following questions. What is the relationship between ADR and the concept of justice? How do we make sense of the anti-ADR views, in particular the serious threat to the rule of law? What role does, and should, the court play in alternative processes? It puts forward two hypotheses. First, ADR and justice are not mutually exclusive. ADR can achieve multiple justice goals in the civil justice system. Integrating ADR into the court system broadens the notion of justice and its access. Secondly, the court plays an important role in managing cases that go through ADR. In future, judges should play a more central role to ensure the use, quality and integrity of alternative processes, and not the peripheral role they play at present. This paper adopts a doctrinal analysis of the laws of England and Wales concerning ADR, and the academic literature in the reformed civil justice systems in major common law jurisdictions. In developing an analytical framework, the paper extends our understanding of the relationship between justice, ADR and the court from an internal perspective. It also points out the need to expand the case management responsibilities of judges, and their delegates in the Online Court, on ADR. The paper does not attempt a search for ideal forms of ADR or any evaluation of user experience of ADR.
Before proceeding to the main discussion, the term ‘ADR’ requires clarification. There is no universally agreed definition of ADR. It includes a variety of processes and hybrid processes in aid of private settlements. This paper adopts the judiciary's usage of this term to refer to alternatives to litigation or court.Footnote 24 Distinguished from negotiations directly between the parties, ADR involves the appointment of a neutral third party to help bring a dispute to an end.Footnote 25 Mediation, arbitration, early neutral evaluation and ombudsmen are good examples.Footnote 26
I. The concept of justice and its relationship to ADR
Justice is central to a civilised society. It is a virtue in individuals and of societies, polities and their institutions.Footnote 27 It means something precious every single day. Cupit elaborates that it is:
a practical virtue concerned with how people should act. Those who avoid injustice in their dealings with others are esteemed, and are worthy of that esteem. A society which has just laws and a just division of benefits and burdens is superior to one which does not.Footnote 28
Justice, as a community asset, is multifaceted. It has political, cultural, historical, moral, social, economic, administrative as well as legal and other aspects.Footnote 29 Despite covering a wide spectrum of subject matters, it is a single organic system. It unifies different institutions, professions and procedure, which connect and interact with each other.Footnote 30
This paper concentrates on the legal aspect of justice. According to Jacob:
[t]he expression of civil justice has been increasingly used in place of civil procedure to describe the entire system of the administration of justice in civil matters. In this sense, the ambit of civil justice is wide and far-reaching and its bounds have not yet been fully chartered [sic]…Footnote 31
He traces the definition back to Brougham's celebrated speech on law reform, delivered in the House of Commons in 1828.Footnote 32 Brougham emphasised that the spirit of justice is to be found in its administration between man and man, and that the system of justice depends on the way in which it is dispensed.Footnote 33 Brougham's maxim could be connected to Justinian's Institutes, which formed part of the Corpus Iuris Civilis published in AD 533. Jacob refers to the opening sentence of the Institutes, which defines justice as ‘a set and constant purpose giving to every man his due’.Footnote 34 He argues that what is fundamental is not merely the measure of what is a man's due, but the procedure, the means and the process of enabling a man to be given his due.Footnote 35
There are some elementary characteristics without any of which civil justice would be a meaningless concept. Civil justice concerns the handling of disputes arising out of civil, as opposed to criminal, law.Footnote 36 It protects enforceable rights.Footnote 37 It predominantly involves formal adjudication by the court.Footnote 38 It is not simply a public service.Footnote 39 Lord Neuberger stresses that civil justice has:
an intrinsic value as a public good – through clarifying the law, providing a proper framework for economic activity, and securing the proper and lawful relationship between individuals, and between individuals and the state, preventing people resolving their disputes by force.Footnote 40
More importantly, Jacob points out that it gives life to the rule of law:
civil justice provides the effective safeguard against arbitrary, capricious or unprincipled invasion or denial of the legal rights of any person, and it takes on the character of a protective shield to prevent any person being deprived of or suffering any loss of his rights except by due process of law.Footnote 41
Nevertheless, we should be under no illusion that civil justice has been delivered efficiently and effectively. Complexity, cost and delay in civil litigation are centuries-old problems in England and Wales, dating back to part of the background to Magna Carta.Footnote 42 Problems with accessing justice have been so acute that since at least 1949 they have prompted a flurry of reforms. The first wave of the access movement dealt with the economic obstacle, improving access to information and representation among the impoverished.Footnote 43 The second wave targeted the organisational obstacle. It provided protection of the collective and diffuse interests of previously discriminated or weak persons, such as children, women, old people, racial or linguistic minorities, and those affected by a handicap.Footnote 44 The current wave works on the procedural obstacle.Footnote 45 The Woolf reforms have endeavoured to assure equal access to the courts through the commitment to proportionate justice.Footnote 46 The Jackson reforms have come to grips with access to the courts, legal advice and representation at proportionate cost.Footnote 47 Since March 2014, HMCTS has launched a £738 million reform programme to digitise the infrastructure and modernise the procedure of the civil courts by 2022.Footnote 48 One of the aims is to make the courts more accessible, particularly to litigants in person, people with disabilities, and those who are digitally challenged.Footnote 49
The recent reforms may offer a gleam of hope. Sorabji observes that successive reforms failed, as they addressed structural and procedural issues arisen within an established framework.Footnote 50 He argues that the Woolf and Jackson reforms are revolutionary, in that they challenge the underlying assumptions of the system and call for a culture change.Footnote 51 These reforms have limited the traditional pursuit of just enforcement of legal rights by proportionality.Footnote 52 This practical approach is encapsulated in the overriding objective of the Civil Procedure Rules. The overriding objective requires the court to deal with cases justly (which includes treating the parties on an equal footing and handling the case fairly)Footnote 53 and at proportionate cost.Footnote 54 Zuckerman clarifies that the modern civil legal process is driven by three imperatives: delivering decisions in accordance with true facts and the applicable law by means of proportionate use of public and litigants’ resources and within a reasonable time, alongside the common law requirements of fair process.Footnote 55
A notable feature in the Woolf and Jackson reforms is the promotion and use of ADR, treating litigation as a last resort. It goes further than a restatement that alternative processes are important and long-standing means to handle disputes in the civil justice system. By placing a statutory duty on the parties to make every effort to settle before the hearing,Footnote 56 it downplays the entitlement to give effect to substantive rights. The parties may be receptive to the possibility of claims, which aligns with the fact that enforcement is not usually necessary or desirable. Judicial statistics have shown that, for the four quarters ending on 30 September 2016, just over 145,000 out of 1.8 million issued claims of all types reached the allocation stage as being defended.Footnote 57 Only about 50,000 cases litigated to the finish.Footnote 58
A more serious impact is, however, the integration of ADR into the court system. The Woolf and Jackson reforms fall short of making ADR compulsory or as a preliminary to commencing legal proceedings. The court forewarns the parties that they may be penalised with costs if there is an unreasonable refusal to engage in pre-trial ADR.Footnote 59 When discharging the duty to actively manage cases, judges encourage and facilitate the parties to settle out of court using an alternative process.Footnote 60 They may undertake an early neutral evaluation of the strength of the respective parties’ arguments and the available evidence in aid of settlement.Footnote 61
Under the HMCTS reform programme, ADR will take a giant leap into the formal justice system. The Online Court will embed a limited range of ADR processes sequentially into the pre-trial process.Footnote 62 As Sir Terence Etherton MR explains:
The first of its three stages … will, however, go wider than that [of the Pre-Action Protocols]. It will assist individuals to find the right sources of legal advice and help in order to enable them to consider whether they have a viable legal dispute, or whether a more appropriate means of complaint or redress is available, such as a relevant Ombudsman scheme. Assuming there is a viable dispute it will, and this will be carried out via a broadly automated online process, enable claimants to identify the nature of their claim and submit relevant documents, such as the claim form, online. It will equally help them to particularise their claims. This will be done through the use of standardised online processes …
The second stage … is not, however, wholly automated. It will require case officers, court administrators exercising judicial functions under the supervision of the judiciary and independently of government, to assist parties to manage their claim and to facilitate settlement. This is a significant departure from the court's existing role as it will require a court officer actively to engage the parties in mediation and conciliation processes. Case Officers will promote the best resolution method for each case: mediation, online ADR, early neutral evaluation (that is, an evaluation of the legal strength of the claim, probably carried out by a District Judge) or proceeding straight to a full trial …
The third stage will see the claim adjudicated by a judge. The process will not necessarily take place in a traditional courtroom. It may be carried out online by video-link, by telephone or on the papers. It will result in a judgment. And this may then be subject to appeal and then, if appropriate, enforcement.Footnote 63
The immediate focus of the Online Court will be all money claims up to £25,000 including unspecified claims, with the exception of claims for possession of homes, personal injury claims, professional negligence claims, intellectual property claims, claims for damages only for breach by landlords of repairing obligations.Footnote 64 The new court's model can, in time, be adopted for higher value claims.Footnote 65
Bringing ADR into the court system demands open-mindedness about the idea of justice. The fixation on enforcing substantive rights may cause uneasiness about ADR’s approach to justice. Fiss argues that ADR does not enforce civil rights.Footnote 66 It simply secures peace between the parties at considerably less expense to society.Footnote 67 Similarly, Genn asserts that mediation does not contribute to substantive justice.Footnote 68 It assists the parties to find a responsive and individual solution, which does no worse harm than non-resolution of their dispute.Footnote 69 But civil justice is not synonymous with court adjudication. Alternative processes can handle civil disputes, not necessarily by deciding on the merits, but in the form of prevention and resolution.
The Online Court itself is a good example. At stage one, case officers will draw the parties’ attention to general information about availability and suitability of alternatives to litigation. They will facilitate discussions on whether there is a case for court adjudication, or whether the use of other means of redress may be more effective. In so doing, the Online Court will reduce the transformation of conflicts into claims.Footnote 70 It would decrease the likelihood of sectoral disputes, if effective feedback loops are created with relevant regulators for taking appropriate preventive measures.Footnote 71 Sorabji suggests that civil justice will be secured by enabling more members of society to live within the proper bounds of substantively just law properly applied.Footnote 72 Moreover, case officers will actively channel appropripate disputes to ADR providers at both stage one and two, except for their own provision of simple telephone mediation and judicial early neutral evaluation.Footnote 73 Settlements will increase access to the courts for others by conserving public and private resources. They will also enhance the parties’ access to justice in a broader sense.
Psychological research on social justice have shown that ADR participants may develop their own subjective sense of justice based on procedural fairness. Tyler identifies four primary values that contribute to the parties’ perceived fairness in procedure, irrespective of the outcome of a case.Footnote 74 Opportunities for participation is the first key factor. Participation involves presenting the parties’ suggestions about what should be done in the resolution of their conflicts. Neutrality is the second key factor. The parties care about the impartiality, independence, honesty and objectivity of the neutral third party who conducts the procedure. Trustworthiness is the third key factor. The parties assess whether the neutral is benevolent and caring; is concerned about their situation and needs; considers their arguments; tries to do what is right for them; and tries to be fair. Treatment with dignity and respect is the last key factor. The parties yearn for respect for their rights and their status within society, as well as their dignity as a people and as members of society, to be acknowledged by others.
The recent rise of ADR to handle disputes between consumers and traders has also expanded the dimensions of justice. The European Directive on consumer ADRFootnote 75 encourages the establishment and use of approved ADR entities that meet a minimum set of quality standards. Some of these standards are influenced by the common law requirements of a fair trial, such as the right to an independent and impartial tribunal, the right to be heard, the right of access to evidence, the right to representation and the right to access to court.Footnote 76 Article 6 requires that the neutrals in charge of ADR, who possess the necessary expertise, are independent and impartial. Article 9(1)(a) affords the parties with a reasonable opportunity to express their views, and receive and comment on the evidence put forward by the other parties and experts. Article 9(1)(b) assures that the parties can represent themselves. They may obtain independent advice, seek legal representation, or enlist assistance from a third party at any stage of the ADR process. Articles 10(1) and 12 ensure that consumers’ right to bring an action before the court is not denied by an agreement to ADR that was concluded before the dispute has materialised, or by an outcome of ADR that is not binding. Other quality standards reveal criteria of effectiveness that can attain practical justice. They are: user-friendliness,Footnote 77 accessibility,Footnote 78 no or minimal cost,Footnote 79 and speedFootnote 80 of ADR. In addition, exchange of best practice and technical expertise between ADR entitiesFootnote 81 can achieve systemic improvements, which will forestall disputes that may arise on a sectoral basis.
It follows that weaving ADR into the court system will promote access to justice in a number of ways. By settling some disputes without hearings, ADR reduces the waiting time and costs for trial for other court users. It also frees up judicial resources for allocation to other cases. Apart from enabling access to the courts, alternative processes can deliver preventive, subjective, procedural and practical justice. The nature of justice achieved through ADR may be different than those traditionally pursued in the court. The commitment to proportionality calls for recognition of a broader notion of justice. As Lord Neuberger says, ‘[j]ustice in the wider sense is done, even if substantive justice in the individual case is denied or … abridged to a certain degree’.Footnote 82 But, as will be seen below, the dual systems of court adjudication and ADR raise complications concerning the rule of law.
II. ADR's challenges to the rule of law
ADR is both a friend and a foe to court adjudication. It avoids hearings but generates no precedents. It brings disputes to an end, resulting in outcomes that do not necessarily reflect the substantive legal merits of each case. However, ADR’s contribution to the public function of civil justice to maintain the rule of law is far from straightforward. Some academics have pointed out that state-sponsored informal procedures disadvantage the powerless, the poor and the otherwise underprivileged in both process and outcome.Footnote 83 Others have argued that diverting cases away from the court curbs the development of the substantive law.Footnote 84 In spite of serious criticisms, the judiciary and the government have continued to engage in a concerted effort to promote alternatives to litigation. They do not address the rule of law issues raised, leaving lurking doubts about the soundness of the anti-ADR sentiment.
ADR advocates tend to adopt a non-instrumental approach, cherry-picking ‘values that are inherent in the procedure itself, regardless of the procedure's effect on the substantive quality of the decision’.Footnote 85 In the Interim Report of Access to Justice, Lord Woolf highlighted four intrinsic values of alternative processes, as follows:
ADR is usually cheaper than litigation, and often produces quicker results. In some cases the parties will want to avoid the publicity associated with court proceedings. It may also be more beneficial for them, especially if they are involved in a continuing personal or business relationship, to choose a form of dispute resolution that will enable them to work out a mutually acceptable solution rather than submit to a legally correct adjudication which at least one party would inevitably find disappointing.Footnote 86
ADR is efficient in reaching a settlement agreement with lesser expenditure of costs, time, and judiciary and litigants’ resources.Footnote 87 It carries a low risk of arbitrary intrusions into personal privacy.Footnote 88 It enables the parties to choose a process according to the particular circumstances of the case.Footnote 89 It provides a peaceful means to bring a dispute to an end.Footnote 90 These features make ADR good processes, whether or not they help secure good outcomes.Footnote 91 Similarly, Jackson LJ in his Review of Civil Litigation Costs took a non-instrumental view, focusing on cost and resource efficiency and participatory governance of the parties.Footnote 92
Rationing public funding in civil cases has been a driving force for the government's pro-ADR policies for some time now. This is largely due to escalating costs of criminal legal aid within a single justice budget,Footnote 93 which was subject to reduction by 34% between 2010 and 2016.Footnote 94 In the White Paper entitled Modernising Justice, the government indicated its desire to expand the range of options available for dispute resolution, and to consider the contribution that ADR could make to the civil justice system.Footnote 95 As a result, the Access to Justice Act 1999 was implemented. It established the Legal Services Commission to provide legal aid for civil and criminal matters in place of the existing schemes.Footnote 96 It also authorised the Commission to prepare a code for funding civil cases.Footnote 97 The Funding Code provided that an application may be refused if there are complaint systems, ombudsman schemes or alternative processes which should be tried before litigation is pursued.Footnote 98 It relied on some of the non-instrumental values mentioned in Lord Woolf’s interim report, namely, timeliness, personal privacy and process peacefulness:
(a) First, ADR works quickly. The parties can get together soon after the dispute occurs, before positions harden and discussion becomes more difficult. This means that solutions are not only more likely, but that they can be put in place relatively fast.
(b) ADR is usually confidential and without prejudice. Parties can say what is really on their minds without fear that their words will be used against them later if the process doesn't lead to settlement and the case goes on to litigation. Because ADR is not about establishing blame, parties find it easier to discuss matters openly and to entertain creative solutions.
(c) ADR is generally better for participants and their future relationship with one another than the confrontation of adjudication. Used early enough in the dispute process, it can help to heal fractured relationships, and avoid the difficulties that a drawn-out dispute can render.Footnote 99
The use of ADR is more important now than ever, after the Legal Aid, Sentencing and Punishment of Offenders Act 2012 has come into force. The legislation has replaced the Legal Services Commission, a non-departmental public body, with the Legal Aid Agency, an executive agency.Footnote 100 More controversially, it has introduced substantial scope cuts to civil legal aid.Footnote 101 As a result, the Civil Legal Aid (Merits Criteria) Regulation 2013 provide that exhaustion of all reasonable alternatives to bringing proceedings is a standard criterion for eligibility for higher family help, legal representation in general civil claims, and legal representation in public law claims.Footnote 102 In a recent vision statement entitled Transforming Our Justice System, the Lord Chancellor, together with the Lord Chief Justice and the Senior President of Tribunals, has reiterated ADR’s non-instrumental values of timeliness and cost efficiency:
Our reforms will promote the full range of methods of settling disputes more swiftly, at less cost and with greater choice. This is likely to include a number of options: a dispassionate evaluation of the dispute, followed by negotiation, conciliation, mediation or a tailored hearing to resolve the issues on which the parties remain in dispute. These options are designed to minimise combative hearings and help parties settle their disputes with the minimum of stress and acrimony, whether they are members of the public or multi-national corporations. Depending on the complexity of a case – and the needs of all involved – it might be online, paper-based or face-to-face.Footnote 103
Whilst ADR may possess certain intrinsic values, there is no excuse for turning a blind eye to the substantive quality of its outcomes. Fiss criticises the instrumental valuesFootnote 104 of alternative processes, claiming that settlements are a poor substitute for judgments.Footnote 105 His first premise is that ADR accepts inequalities of wealth as an integral and legitimate component of the process.Footnote 106 When disputants are unequally matched, the poorer party could be disadvantaged in settlement negotiations. That party may settle without amassing and analysing the information needed to make an informed decision.Footnote 107 It may have to settle as a way of accelerating payment or averting costs.Footnote 108 The court, however, strives to treat the parties on an equal footing, saving expense in litigation and dealing with a case that takes account of the financial position of each party.Footnote 109 Equality of arms requires judges to provide an equal and reasonable opportunity for the parties to present their case, learn their opponent's case and respond to it, under conditions which do not substantially advantage or disadvantage either side.Footnote 110
Secondly, there are insufficient safeguards for ensuring authoritative consent for a settlement when a group or organisation is involved.Footnote 111 Some procedures provide a substantive standard for approving a settlement and do not even consider the issue of consent.Footnote 112 Other policing mechanisms entrust the approval of a settlement to a judge, who focuses on the settlement's approximation to judgment rather than consent.Footnote 113 By contrast, the authority of judgments arises from applying the right law to the true facts, not the statements or actions of the putative representatives.Footnote 114
Thirdly, settlements are not as efficacious as judgments. At the time of carrying out the obligations of a settlement, unforeseen difficulties or changes of circumstance may arise. But the parties cannot ask the court to modify the settlement, making it more effective or less stringent.Footnote 115 They also cannot ask for enforcement.Footnote 116 Unless incorporated as consent judgments or orders, settlements lack a foundation for continuing judicial involvement.Footnote 117
Lastly, ADR does not reach correct decisions on the merits. It only secures peace between the parties at markedly less expense to society.Footnote 118 Genn puts the dichotomy between private bargains and substantive justice in stronger terms:
Mediation does not contribute to access to the courts because it is specifically non-court-based. It does not contribute to substantive justice because mediation requires the parties to relinquish ideas of legal rights during mediation and focus, instead, on problem-solving… The outcome of mediation, therefore, is not about just settlement it is just about settlement.Footnote 119
Arguments for and against ADR on grounds of process values can continue indefinitely, with participants asserting competing views in separate halls. Of far greater concern to those pressing for change in litigation culture should be ADR’s threat to the maintenance of the rule of law in the civil justice system. Alternative processes may exacerbate political, economic and social inequality beyond the context of settlement negotiations. Abel, Auerbach and Hofrichter warn of disadvantaging the powerless, the poor and the otherwise underprivileged, when a state sponsors informal procedures as substitutes for formal adjudication.Footnote 120 The movement from formalism to informalism reflects a shift in power from the less privileged to the more.Footnote 121 Informal processes inhibit social change, by concealing disagreement about social and political values in the interests of peace and cooperation.Footnote 122 They neutralise conflicts and curb their transformation into serious challenges to the domination of the state and capital.Footnote 123 Through informal institutions, the state extends its control by reviewing behaviour that presently escape its scope, and by handling new types of disputes that touch on new areas of life.Footnote 124 It can intrude into private life by requiring openness to emotion and personal problems.Footnote 125
ADR may also lead to the loss of an adequate opportunity to declare, develop, uphold and apply the law.Footnote 126 Settlements will deprive the court of the occasion, and perhaps even the ability, to interpret and enforce civil rights.Footnote 127 Fewer precedents in the common law will adversely affect the behaviour of citizens in daily interactions. Genn explains that:
The erosion of principle will not affect all areas of law equally. In this respect private law, and particularly commercial law, are especially vulnerable… Thin law can lead to uncertainty and risk aversion in the commercial world, so that economic possibilities are not optimized. Moreover, where there is uncertainty, there is fertile ground for disputes to escalate.Footnote 128
A further concern about the rule of law is the loss of a credible framework underpinning settlements.Footnote 129 Treating civil justice as a private goodFootnote 130 trivialises its intrinsic public value.Footnote 131 Lord Neuberger says that ‘the consumerization of civil justice … is a denial of justice as it is a denial of one part of the framework on which the service sector depends’.Footnote 132 Even if private entities could provide ADR services more efficiently, the shifting of responsibilities from public officials has normative consequences.Footnote 133 It lacks ‘a dash of legality’.Footnote 134 Gardner puts it this way:
The work of judges contributes to the law and to keeping the law in good legal order, ie in conformity with the rule of law. It thereby contributes to serving the law's primary function … Whereas the doing of justice between the parties can be conceptualised … as a service mainly to those parties, the providing of guidance by bringing their care under a rule cannot readily be so conceptualised. It is mainly a public good.Footnote 135
The risk of undermining the rule of law draws attention to the relationship between court adjudication and ADR. Lord Neuberger rightly points out that formal adjudication by the court administering equity and law lies at the heart of the civil justice system.Footnote 136 ADR, as beneficial as it may be, can only be a supplement and complement to the civil courts.Footnote 137 Therefore, the role of the court in ADR can no longer be ignored, particularly in light of the HMCTS reform programme. As Sir Jack Jacob says:
the growth of alternative methods of dispute resolution other than by adjudication by courts and tribunals … must all ultimately yield to the overriding supervisory jurisdiction of Courts of Law … to ensure that there has been due compliance with the relevant rule of law which must remain paramount.Footnote 138
III. The role of the court in ADR
ADR is not a recent invention in the legal landscape. Disputants do not go to trial to seek enforcement of their legal rights in the vast majority of cases. Even after the Woolf reforms, statistics from the Ministry of Justice have revealed that less than 4% of claims filed in civil courts proceeded to hearing or trial between January 2000 and September 2016.Footnote 139 The ‘naming, blaming and claiming’ analytical paradigm, developed by Felstiner, Abel and Sarat,Footnote 140 could be useful to explain such cultural behaviour. It argues that most everyday experiences are not perceived as injurious, and most perceptions do not ripen into grievances.Footnote 141 As a result, only a small fraction of grievances mature into disputes and the majority are dealt with by negotiations between the parties.Footnote 142 Irrespective of any personal or institutional considerations, out-of-court settlement is always part of the civil justice system.
Apart from court proceedings, certain forms of ADR are capable of achieving substantive and procedural justice. Arbitration is a good example. In domestic and international arbitration, an arbitral tribunal decides a dispute within its jurisdiction according to the applicable law, contract terms and trade usages.Footnote 143 It makes a reasoned award to dispose of all outstanding issues of the dispute.Footnote 144 Although there are no fixed rules as to how the tribunal makes a decision, it becomes better informed of the issues in the course of the proceedings. The rules of procedure are subject to agreement of the parties, failing which the tribunal may conduct the arbitration in such a manner as it considers appropriate.Footnote 145 Arbitration rules may contain few mandatory procedural provisions, such as holding hearings for the presentation of evidence by witnesses or oral argument if requested by any party, exchanging a statement of claim and defence, and allowing the parties to interrogate tribunal-appointed experts at a hearing and present their own expert witnesses on points at issue.Footnote 146 More importantly, the tribunal has a legal duty to act judicially. This duty comprises treating the parties on an equal footing and giving them the right to be heard.Footnote 147 A failure to do so could result in an arbitral award being set aside by the court or remitted for reconsideration.Footnote 148
Challenging an award on grounds of procedural irregularity exemplifies the dependence of arbitration on court oversight for its legitimacy. The court safeguards a state's policy on non-arbitrable disputes, including criminal cases, insolvency matters, or where arbitration may be in breach of a party's statutory rights.Footnote 149 It recognises the validity of arbitration agreements, referring the parties to the process or staying legal proceedings.Footnote 150 It assists in establishing an arbitral tribunal where the appointment procedure agreed upon by the parties does not work out.Footnote 151 It has the final say on the jurisdiction of the tribunal.Footnote 152 During the course of an arbitration, the court may intervene to ensure effectiveness of the process, such as taking evidence or granting an interim measure to maintain the status quo, prevent harm or prejudice to the process, preserve assets or preserve evidence.Footnote 153 At the end of an arbitration, the court may recognise and enforce an award, set it aside, remit it to the tribunal for reconsideration,Footnote 154 or consider an appeal on point of law.Footnote 155 Clearly, the proper functioning of arbitration builds on the court system.
The carefully and clearly defined functions of the court in arbitration stand in contrast to the judicial role in mediation. The English law does not have an act specific to mediation, the form of ADR that has been substantially promoted since the Woolf reforms. It has emerged in international practice that mediation parties retain full control of the outcome.Footnote 156 Mediators have no authority to impose on the parties a solution to the dispute.Footnote 157 They assist the parties in negotiating an amicable settlement based on mutual needs and interests.Footnote 158 In the dominant Getting-to-Yes-influenced principled negotiation,Footnote 159 mediators facilitate the parties to communicate and understand underlying concerns. They move the parties away from rights and positions, and brainstorm with them for creative options to expand the pie. Eventually they help the parties reach a settlement on the basis of mutually agreed objective criteria. Although mediation is not intended to achieve justice on the merits, mediators must comply with the minimum requirement of due process, which is to treat the parties fairly and on an equal footing.Footnote 160 However, unlike arbitration, there is no uniform law on the subject matters that are legally capable of being mediated; recognition of mediation agreement; grounds for judicial intervention; consequences of procedural irregularity; and enforcement of mediated settlement agreements.
Despite placing the ADR initiative at the heart of the Woolf reforms, the role of the court in alternative processes has been insufficiently understood. Judges, who have become active case managers, are required to find ways to enhance the efficiency and effectiveness of civil litigation in light of the overriding objective of the reformed civil justice system. They have broken the traditional divide between court adjudication and private settlement. They have intervened into various issues of ADR, including voluntariness, jurisdiction, timing and costs. The supervisory role of the court to pre-trial ADR has become increasingly obvious. However, a cursory examination of the state of play is enough to make one realise that the judicial role has developed in a somewhat piecemeal fashion.
The judicial strategy to reduce caseloads in civil courts is to encourage and facilitate the parties to engage in pre-trial ADR. Even if the parties decide to litigate their differences, they are expected to practically consider ADR before issuing a claim at court.Footnote 161 In the pre-action protocols, for 13 types of cases, and the Practice Direction – Pre-Action Conduct, for all other claims, the judiciary sets out the steps to be taken by the parties before commencing proceedings. Among other things, these guidelines postpone court adjudication, treating litigation as a last resort.Footnote 162 They urge the parties to consider the possibility of reaching settlements through negotiation or ADR prior to proceedings.Footnote 163
Where a defence to a civil claim is filed, the parties’ responsibility to settle does not end. If the parties are truly unwilling to embark on ADR, judges cannot compel them to do so.Footnote 164 The most that they can do is to encourage the use of such procedures.Footnote 165 Judges may exercise the active case management power to stay proceedings for ADR to take place.Footnote 166 It is a matter of discretion to determine whether to grant a stay and, if so, for how long. The only certainty is that the time allowed for ADR ought not postpone the trial date, as judgments should be delivered within a reasonable time.Footnote 167 In the recent first instance decision of CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd,Footnote 168 Coulson J declined to order a window of four months for ADR prior to disclosure. The judge insisted on a sensible timetable for trial, which would allow the parties to take part in ADR along the way and lead up to a prompt trial date.Footnote 169
Recent cases have revealed that judges become more proactive and vigorous in exercising their case management power as the circumstances require. In addition to facilitating the appointment of neutrals, they may direct the parties to take all reasonable steps to resolve the dispute before preparing for a trial.Footnote 170 They may ask the parties to explain what steps towards ADR have been taken, why such steps have failed, and why some other form of ADR has not been used.Footnote 171 They may also compel the parties to agree to submit some issues to the jurisdiction of ADR, even if certain matters remain the subject matter of litigation.Footnote 172
Perhaps the strongest form of encouragement comes with financial consequences. In exercising its discretion as to costs, the court will take into account the conduct of the parties before and during the proceedings.Footnote 173 In particular, it will pay attention to the extent to which the parties complied with the Practice Direction – Pre-Action Conduct or any relevant pre-action protocols.Footnote 174 A body of case law has been developed to determine whether the court should depart from the general rule on costs, and impose costs sanctions on successful parties for unreasonable refusal to engage in ADR.Footnote 175 In Halsey, the Court of Appeal identified seven non-exhaustive considerations that may be relevant for unreasonable refusal.Footnote 176 The factors are: the nature of the dispute; the merits of the case; other settlement methods attempted; the costs of ADR; delay in setting up and attending ADR; the likelihood of a successful ADR; and the impact of case management directions.Footnote 177 This is no perfect list, resulting in infinite extensions of the Halsey guidelines in subsequent decisions. I have argued elsewhere that additional factors include the timing of, terms of, and response to a proposal to engage in ADR.Footnote 178
In the reformed civil justice system, the use of ADR is not based solely on the parties’ free choice. The Practice Direction on Pre-Action Conduct, pre-action protocols, case management directions and costs sanctions will affect their voluntariness to participate in ADR to a certain degree. The private interest of just enforcement of civil rights is balanced against the public interest of equal access to justice and securing the rule of law. Consequently, the Civil Justice Council ADR Working Group has initiated a debate to improve the degree of compulsion.Footnote 179 Central to its interim report on ADR and Civil Justice is the idea that the court should take a more interventionist stance when the parties make decisions about ADR.Footnote 180 The report contains some bold recommendations, such as requiring the parties to address ADR properly when completing the directions questionnaire and in the period prior to the case and costs management conference; imposing interim costs sanctions on unreasonable refusal; and compelling the parties to take part in ADR on an ad hoc basis.Footnote 181
An even thornier issue is that judges do not appear to proactively facilitate the effective disposal of disputes. It is up to the parties to determine two crucial factors that may affect the success of ADR: the most appropriate procedure and the best time to attempt such a procedure. This task may be handled according to the best practice in the ADR industry. However, the court takes a broad-brush approach to the subject matters that fall within the jurisdiction of ADR. In Halsey, the Court of Appeal said that ‘[m]ost cases are not by their very nature unsuitable for ADR’.Footnote 182 It provided few examples of exceptions: where the future relations of the parties or those participating in a particular trade or market are at stake; there are allegations of fraud or other commercially disreputable conduct against a party; a binding precedent would be useful for a point of law that arises from time to time; or injunctive or other relief is essential to protect the position of a party.Footnote 183 Whether the subject matter of a dispute renders it ‘intrinsically unsuitable’Footnote 184 for ADR remains vague in the ordinary contextual sense.Footnote 185 The term does not provide sufficiently specific information to answer the question of reasonableness of an ADR refusal. Such vagueness is necessary to regulate widely varying conduct with a general standard.Footnote 186 It is, indeed, desirable to defer to the court to make determinately correct and holistic judgments, having regard to all the circumstances of the case.Footnote 187 Hence, a series of Court of Appeal decisions that ruled in favour ofFootnote 188 or againstFootnote 189 case suitability for ADR has not stripped Halsey’s broad-brush approach of much practical significance. The risk of threatening the rule of law may materialise, if the culture change to always engage in alternative processesFootnote 190 takes root eventually.
The Online Court may provide a valuable way of solving these issues. We have seen that stage one and two will present the most forceful form of encouragement and facilitation of ADR, which incorporate alternative processes as a ‘culturally normal part of the civil court process’.Footnote 191 Case officers will discuss, recommend, and actively engage the parties in the most appropriate means of ADR for each case.Footnote 192 Although such recommendations are not binding on the parties, they may be perceived as a necessary condition for judicial determination in stage three. This is because case officers possess legal qualifications and experience and are under active judicial supervision.Footnote 193 Furthermore, the use of information technology may weave ADR into the fabric of the court system, rendering the question of compulsoriness obsolete.Footnote 194 More important still, case officers will be placed in the position to safeguard the rule of law. They may follow the pro-ADR sentiment in Halsey to drive cases away from the court indiscriminately. Yet their quasi-judicial background and interventionist role may provide a catalyst for change. There is an adequate opportunity to develop a principled approach to their case management responsibilities for resolution. Such responsibilities can include determining ‘what cases should be facilitated into court and how they should be facilitated’;Footnote 195 encouraging and facilitating the use of ADR for ‘cases where it will be of genuine advantage to the parties’;Footnote 196 giving greater weight to the justness of settlements;Footnote 197 and promoting systemic improvements in ADR.Footnote 198
Another important aspect of judicial intervention on pre-trial ADR is the provision of recoverable costs for engaging in alternative processes. Generally, the parties share the fees of the neutral conducting the process and other incidental expenses incurred on an equal basis, irrespective of the outcome of the case. The Court of Appeal in Halsey pointed out that it would be proper for a party to refuse to participate in such a process, if the costs involved are disproportionate to the sums at stake in litigation.Footnote 199 The determination of proportionate ADR costs could be a matter of common sense. It appears to be clearer when, in January 2016, Jackson LJ called for an extension of the existing fixed recoverable costs regime, from personal injury claims up to £25,000 and intellectual property claims in the Enterprise Court up to £5,000, to a blanket coverage for all fast track cases and the ‘lower reaches’ of the multi-track up to £250,000.Footnote 200 His Lordship introduced a grid of rates, minus disbursements and VAT: £18,750 for claims up to £50,000; £30,000 for claims up to £100,000; £47,500 for claims up to £175,000; and £70,250 for claims up to £250,000.Footnote 201 The fixed recoverable costs for ADR will be £1,400, £2,250, £3,750, £5,500 respectively,Footnote 202 ranging from 7.4% to 7.8% of the value of claim.
The position is less certain where the ADR costs are not exceptionally high in relation to the amount at stake, but out of proportion as to the financial position of a party. It is arguably a relevant factor, as the principle of proportionality is multifaceted.Footnote 203 Nevertheless, it may cease to be material if the less resourceful obtains third party litigation funding to finance the ADR. In a recent first instance decision, Essar Oilfields Services Ltd v Norscot Rig Management PVT Ltd,Footnote 204 the court upheld an arbitral award that granted the successful party's expenses of litigation funding as its ‘other costs’ under section 59(1)(c) of the Arbitration Act 1996. Judge Waksman QC reasoned that:
as a matter of language, context and logic … ‘other costs’ can include the costs of obtaining litigation funding. The expression should not be confined by some legal straightjacket imposed by reason of what a court might or might not be permitted to order.Footnote 205
Conclusion
Although ADR has always existed in our civil justice system, its integration into the court system breaks new ground. Apart from arbitration that is akin to court adjudication, alternative processes may achieve preventive, subjective, procedural and practical justice by resolving civil disputes. That enables access to non-substantive justice. Abridged justice for some also provides greater accessibility of the courts for all. Yet it is not enough that the Woolf reforms, Jackson reforms, Briggs’ reviews and HMCTS reform programme have devoted effort and resources in promoting ADR as a culturally normal part of the contemporary legal administration of civil justice. As we have seen, the anti-ADR sentiment will continue to build up based on a different approach to process values. Judicial statistics have shown that disputants do not seem to be persuaded. Downplaying court adjudication for alternative processes poses a real risk of threatening the maintenance of the rule of law.
Neglect of the hierarchical relationship between court adjudication and ADR, and the supervisory role of the court in ADR, are the main weaknesses in the current reforms. The judicial role in ADR has been developed in a piecemeal manner. At present, judges adopt an indiscriminate approach to encourage the parties to attempt alternative processes primarily out of court, backed by deterrent costs sanctions at the end of the trial. Their facilitation of the use of such processes is limited. The proposed recoverable costs of ADR in proportion to the value of the claims is yet another measure for enabling access to the courts. Nothing has been done to improve the standards of non-substantive justice, ensure the channelling of sufficient and relevant cases into the courts for developing the law, and safeguard the framework of just enforcement of civil rights that underpins settlements.
Stages one and two of the Online Court provide a useful starting model for addressing these concerns. There is a need to work out principles for filtering cases in and out of the courts, the professional duties of case officers as gatekeepers of the rule of law, as well as justness in settlements and systemic improvements of alternative processes. The argument advocated here is that, under the rule of law, the court should play a more central role to support ADR to enable access to justice, by monitoring the use, quality and integrity of alternative processes. ADR plays a supplementary and complementary role through the resolution of disputes, because it exists within the framework of law and its outcome relies on judicial enforcement proceedings ultimately.Footnote 206
