Settlement Agreements and civil proceedings

Will recent changes to the attitude of the courts result in more use of alternative dispute resolution procedures like mediation or arbitration?

The Civil Procedure Rules set out the way civil court proceedings are to be conducted. These rules were reformed extensively in April 2013. One of the reforms was the introduction of new wording to the Rules which set out the extent to which the courts should excuse parties who have failed to comply with a rule or court order where a sanction (such as the non-recovery of costs) is imposed. This is known as relief from sanctions. Following this change the Court of Appeal laid down further guidance in the case of Mitchell v NGN Newspapers.

In Mitchell the Court stated that relief from sanctions would normally be granted if the non-compliance was trivial or insignificant. Examples of triviality given by the court were “where there has been a failure of form rather than substance; or where the party has narrowly missed the deadline imposed by the order, but has otherwise fully complied with its terms.” If the non-compliance was not trivial the party would have to show that it had good reason for it. A good reason was likely to arise from circumstances outside the control of the party in default. As a result of this decision relief from sanctions are being granted more sparingly than previously.

Following this decision there have been a number of decisions in which parties have suffered a disproportionate penalty for minor non-compliance with the CPR. For instance, parties have been denied both expert and factual evidence, denied the opportunity to recover costs or even denied the right to defend or bring a case altogether.

The decision has been described as punitive and formalistic even anachronistic. The new approach will affect the way in which the judiciary and justice is perceived both nationally and internationally. Further, through this reform costs will arguably increase yet the effectiveness of litigation not necessarily improved. This will impact upon whether parties in a dispute will want to rely on the court system. No person will want to litigate in a court where a case can be won or lost because of rigid procedural rules which do not reflect the reality of litigation.

Methods of alternative resolution may become more popular. For example, parties could use arbitration which has many of the benefits associated with formal court proceedings (for instance, it results in a decision which is binding on the parties) but allows for the parties to choose their own procedural rules. Other forms of dispute resolution (such as mediation) are non-binding and depend on the parties concluding a settlement agreement. They can however be extremely effective in bringing a dispute to an end.

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