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K21.4. Mandatory ADR
| 637. | Where ADR processes are enlisted to function as part of the civil justice system, different approaches have been adopted as to whether or to what extent the parties should be compelled by the court to resort to ADR |
| 638. | It is of course not being suggested that the parties should ever be ordered to resort to ADR in lieu of having their case decided as proceedings in court. Such an approach would not only be unacceptable since the courts must in principle be open to all, it would most likely fall foul of Article 35 of the Basic Law which confers on Hong Kong residents, among other things, the right of access to the courts. Accordingly, even in its most stringent form, a requirement that the parties must attempt ADR is a requirement that they make such an attempt before being allowed (if ADR should fail) to proceed in court. |
| 639. | Several degrees of compulsion or encouragement to use ADR can be discerned in schemes adopted in various jurisdictions. ADR may be :- |
| * | made mandatory by a statutory or court rule for all cases in a defined class; | |
| * | made mandatory by an order issued at the court's discretion in cases thought likely to benefit; | |
| * | made mandatory by one party electing for ADR; | |
| * | made a condition of getting legal aid in certain types of cases; | |
| * | voluntary but encouraged by the court, with unreasonable refusal or lack of cooperation running the risk of a costs sanction; or | |
| * | entirely voluntary, with the court limiting its role to encouragement and the provision of information and facilities. |
| Consideration of some existing schemes by way of illustration may be helpful. | |
| (a) | ADR made mandatory by rule |
| 640. | A good example of this model of ADR can be found in the Ontario Mandatory Mediation Program. This came into effect in Toronto and Ottawa/Carleton on 4 January 1999, pursuant to Rule 24.1 of the Rules of Civil Procedure. (Note 564) It applies to all case managed civil, non-family actions unless the court exempts a party by order. As the Rule itself states, it is :- |
| "...... a pilot project for mandatory mediation in case managed actions, in order to reduce cost and delay in litigation and facilitate the early and fair resolution of disputes." (Note 565) | ||
| 641. | The scheme is designed to work as follows :- |
| 641.1 | It is initiated upon filing of the first defence. The parties are then given 30 days to select a mediator by agreement. Failing agreement, one is selected by the Local Mediation Coordinator who administers the scheme. |
| 641.2 | The mediation itself (which has the status of without prejudice discussions (Note 566)) must generally take place within 90 days from the filing of the first defence. |
| 641.3 | The mediator's fees are set by the government and are paid by the parties. The set fees of C$600 (where two parties are involved) to C$825 (where 5 or more parties are involved) cover one hour of preparation time and a mediation session of up to three hours. If the mediation takes longer, it can continue with the parties' consent at an agreed rate. The mediator may also charge for his expenses. |
| 641.4 | Before the mediation session, each of the parties must provide a statement to the mediator identifying the factual and legal issues and setting out his position in relation to the dispute, with any relevant documents attached. The mediator also has the pleadings. (Note 567) |
| 641.5 | The parties and their lawyers (if represented) must attend armed with any necessary authority to settle (if agreement can be reached). If they do not attend, the mediator files a certificate of non-compliance and the case is referred back to the court which then exercises its case management powers as appropriate. The court :- |
| "...... may convene a case conference ...... and may, |
| (a) | establish a timetable for the action; | ||
| (b) | strike out any document filed by a party; | ||
| (c) | dismiss the action, if the non-complying party is a plaintiff, or strike out the statement of defence, if that party is a defendant; | ||
| (d) | order a party to pay costs; | ||
| (e) | make any other order that is just." | ||
| 641.6 | If, on the other hand, the mediation is successful, the resultant agreement is drawn up and failure to perform it is enforceable by a motion for judgment in the terms of the agreement, subject to the judge having a discretion instead to continue the proceedings as if there had been no agreement. (Note 568) |
| 642. | After 23 months of the Program's operation, an independent evaluation was published on 12 March 2001. The "overall finding" as stated in the Executive Summary was as follows :- |
| "In light of its demonstrated positive impact on the pace, costs and outcomes of litigation, Rule 24.1 must be generally regarded as a successful addition to the case management and dispute resolution mechanisms available through the Ontario Superior Court of Justice in both Toronto and Ottawa. More specifically, the evaluation provides strong evidence that: |
| * | Mandatory mediation under the Rule has resulted in significant reductions in the time taken to dispose of cases. | ||
| * | Mandatory mediation has resulted in decreased costs to the litigants. | ||
| * | Mandatory mediation has resulted in a high proportion of cases (roughly 40% overall) being completely settled earlier in the litigation process - with other benefits being noted in many of the other cases that do not completely settle. | ||
| * | In general, litigants and lawyers have expressed considerable satisfaction with the mediation process under Rule 24.1. | ||
| * | Although there were at times variations from one type of case to another, these positive findings applied generally to all case types - and to cases in both Ottawa and Toronto." |
| 643. | In consequence, it was recommended that the Rule be extended beyond the initial pilot period and also extended to other civil cases. It was therefore plainly a successful experiment although, given the shortness of the periods allowed for the mediator's preparation and the initial mediation session itself, it seems designed for relatively simple disputes. Readers are consulted as to whether a scheme along the same lines should be adopted in Hong Kong: Proposal 63. |
| (b) | ADR made mandatory by a court order |
| 644. | As noted previously, parties often feel inhibited about taking the first step towards settling a case for fear of this being construed as a sign of weakness by the other side. Where the court compels the parties to explore settlement, this connotation is removed. Accordingly, in many jurisdictions, the court has a power to require the parties to resort to ADR where it considers this a worthwhile course. (Note 569) In the United States where ADR was pioneered in the 1970s and 1980s, for instance, federal courts are authorised to compel ADR by statute. Brown and Marriott describe the legislative arrangements as follows :- |
| "The Civil Justice Reform Act of 1990 required district courts to develop, with the help of an advisory group of local lawyers, scholars and other citizens, a district-specific plan to reduce costs and delay in civil litigation. ADR was one of six case management processes recommended by the statute which led to greater use of ADR in the federal district courts. The most recent legislative step was taken on October 30, 1998 when President Clinton signed the Alternative Disputes Resolution Act of 1998. | ||
| This Act requires each federal district court to authorise the use of ADR in all civil cases and to establish its own ADR programme. The Act also requires the district courts to establish procedures for making neutrals available, to adopt local rules regarding confidentiality, compensation, and conflict of interest and to appoint a judge or staff person to administer the programme. The courts must also adopt rules requiring litigants to consider ADR and they are given authority to compel parties to use mediation and early neutral evaluation. The courts are also given authority to exempt cases or categories of cases from using ADR." (Note 570) | ||
| 645. | Readers are consulted as to whether a rule should be adopted conferring a discretionary power on the judge to require parties to resort to a stated mode or modes of ADR, staying the proceedings in the meantime: Proposal 64. |
| (c) | ADR made mandatory by one party electing for ADR |
| 646. | An illustration of such an ADR model can be found in British Columbia in Canada. It originates in a scheme established by regulation (Note 571) in April 1998 for motor vehicle personal injury cases in the Supreme Court. This was a scheme which allowed any party involved in a motor vehicle action to compel all of the other parties to participate in a mediation session by serving a "Notice to Mediate" on them. |
| 647. | Although one would have thought that such a scheme might be a recipe for enabling a recalcitrant party to force delays, an independent evaluation of the scheme's operation between April 1998 and February 1999 produced very favourable findings, summarised by the British Columbia Mediator Roster Society (Note 572) as follows :- |
| "* | The two main objectives of users of the Notice to Mediate are to speed up the negotiation/settlement process and get the parties talking. 72% of users of the Notice rated their achievement of these objectives at '4' or '5' on a 5-point scale (5 being completely satisfied). | |
| * | In 71% of cases mediated under the Notice all issues were resolved, and in an additional 4% some issues were resolved. This does not include the cases that were resolved after a Notice was delivered, but prior to the mediation session - estimated by the Insurance Corporation of British Columbia to be a further 10%. | |
| * | Even in cases where all issues were not resolved, 64% of lawyers felt that there were positive outcomes from the process. | |
| * | 88% of respondents felt that the Notice to Mediate process could usefully be expanded to include other types of civil, non-family matters." |
| 648. | This success led to the scheme being extended to residential construction actions (Note 573)as from May 1999. As described by the Mediator Roster Society (Note 574) :- |
| "This regulation enables any party involved in a residential construction action in the Supreme Court to compel all other parties to participate in a pre-mediation organizational conference and a mediation session. ..... The Notice to Mediate process can be used in connection with any Supreme Court action involving residential construction, which is broadly defined as "construction, renovation or repair of a building, or a portion of a building, that is intended for residential occupancy". | ||
| 649. | The scheme was further expanded as from February 2001 to cover a wide range of matters by enactment of the Notice to Mediate (General) Regulation. (Note 575) Where a party serves a notice and another party fails to comply, the case is brought before the court which :- |
| "...... may do any one or more of the following unless the participant in respect of whom the Allegation of Default is filed satisfies the court that the default did not occur or that there is a reasonable excuse for the default : |
| (a) | adjourn the application and order, on any terms the court considers appropriate, that |
| (i) | a scheduled pre-mediation conference occur, or | |||
| (ii) | a mediation session occur; |
| (b) | adjourn the application and order that a participant attend one or both of a scheduled pre-mediation conference and a mediation session; | ||
| (c) | adjourn the application and order that a participant provide to the mediator and other participants a Statement of Facts and Issues; | ||
| (d) | stay the action until the participant in respect of whom the allegation is filed attends one or both of a scheduled pre-mediation conference and a mediation session; | ||
| (e) | dismiss the action or strike out the statement of defence and grant judgment; | ||
| (f) | make any order it considers appropriate with respect to costs ......" (Note 576) |
| 650. | A mediation under this scheme is defined to be concluded when all issues are resolved, or the mediator terminates the mediation. (Note 577) |
| 651. | Readers are consulted as to whether a scheme should be introduced to enable one party to litigation to compel all the other parties to resort to mediation or some other form of ADR, staying the proceedings in the meantime: Proposal 65. |
| (d) | ADR a condition of granting legal aid |
| 652. | In some cases, applications are made for legal aid where ADR is or can be made available as an alternative to litigation. In considering the application for legal aid, the Director of Legal Aid has an opportunity to see whether the dispute might benefit from such ADR. If the case looks susceptible to ADR, savings of public funds might be achieved by giving the Director power to require the case to go to say, mediation, and to provide legal aid funding for that purpose. The power could be a power to limit legal aid in the first place to the mediation or a power to make participation in mediation a condition of any subsequent legal aid funding of the proceedings. |
| 653. | Family disputes are one such area, both sides often being given legal aid. In England and Wales, family mediation is often a condition of legal aid. The Lord Chancellor's Department explained the position as follows :- |
| "Part III of the Family Law Act 1996 allows for the provision of publicly funded mediation in family proceedings. Over 250 mediation services have concluded contracts with the Legal Aid Board and further contracts will be granted to ensure nationwide coverage by autumn 2000. Section 29 of the Act, which requires those seeking legal aid for representation in family proceedings to attend a meeting with a mediator to consider whether mediation might be suitable in their case, has now been implemented in over 60% of the country and is intended to be in force across England and Wales in 2000." (Note 578) | ||
| 654. | This is obviously a limited option since it only arises where the parties can both be directed to ADR. It would however be of greater significance if used in conjunction with either a mandatory ADR scheme or a discretionary power given to the court to require the parties to attempt ADR. Readers are consulted as to the desirability of legislation giving the Director of Legal Aid power to make resort to ADR a condition of granting legal aid in appropriate types of cases: Proposal 66. |
| (e) | ADR voluntary but unreasonable refusal posing risk of costs sanction |
| 655. | This model probably represents the position in England and Wales. As noted above, CPR 1.4(e) enjoins the court to encourage and facilitate the parties in the use of ADR if it considers the process appropriate. Additionally, CPR 26.4 allows the court, either on application or of its own motion, to stay proceedings for a limited time to give the parties a chance to attempt ADR. The proceedings resume their course if, at the end of that period (usually one month), the parties do not inform the court that the case has settled. |
| 656. | The Lord Chancellor's Department points out in its ADR Discussion Paper that :- |
| "In his final report on Access to Justice published in 1996, Lord Woolf recommended that 'where a party has refused unreasonably a proposal by the court that ADR should be attempted, or has acted unco-operatively in the course of ADR, the court should be able to take that into account in deciding what order to make as to costs'." (Note 579) | ||
| 657. | However, the Department suggests :- |
| "This has not been directly incorporated into the new rules on costs. However, Part 44 sets out what the court will take into account when exercising its discretion as to costs. 44.3(4) states that the court must have regard to all the circumstances including the conduct of the parties, which is later expanded to include questions of reasonableness of pursuing an issue and the manner in which a party has conducted his case." (Note 580) | ||
| 658. | On the other hand, Brown and Marriott take the view that the CPR clearly provide for sanctions along the lines envisaged by Lord Woolf :- |
| "Lord Woolf's views on sanctions find expression in Rule 44.5 where in assessing whether costs were proportionately and reasonably incurred, the court must now have regarded to the conduct of all the parties including in particular [CPR 44.5(3)(a)(ii)] 'the efforts made, if any, before and during the proceedings in order to try to resolve the dispute." (Note 581) | ||
| 659. | Moreover, in its review of the first two years of the CPR's operation, the Lord Chancellor's Department reports an increased use of ADR which it attributes to the introduction of the CPR, presumably because of the potential sanctions for unreasonable refusal :- |
| "There has been a rise in the number of cases in which Alternative Dispute Resolution is used, suggesting that since the introduction of the Civil Procedure Rules, parties are more likely to try alternative means of settling claims." (Note 582) | ||
| 660. | It is therefore likely to be the case that under the CPR, an unreasonable refusal of ADR or uncooperativeness during the ADR process may be visited by a costs sanction. In any event, a model adopting this form of compulsion or encouragement of reasonableness towards ADR merits consideration for possible adoption. If adopted, the costs sanctions should be expressly set out. Readers are consulted as to this option: Proposal 67. |
| 661. | One may note before leaving this discussion that if express costs sanctions are adopted, there will be room for argument as to what, in principle, ought to constitute unreasonable conduct in the context. |
| 661.1 | In some of the responses to the Lord Chancellor's Department's Discussion Paper on ADR, for example, it was thought that "there should be a distinction between acting in a way that negates the process (such as attending mediation without anyone who has the necessary authority) and 'tough negotiation'." It was also suggested that "unreasonable behaviour should be more than mere delay and could include failure to agree a mediator or provide adequate information during the mediation". |
| 661.2 | While it is clearly desirable that litigants should be encouraged to adopt a reasonable attitude towards assisted settlement of the dispute, compulsory measures to that end must in principle stop short of undermining a person's right ultimately to have his position in a dispute vindicated by the judicial process. |
| (f) | Voluntary ADR |
| 662. | This is a model involving no element of compulsion. Litigants are given information about the availability and possible benefits of ADR and encouraged to attempt it as a means of avoiding costly and more stressful litigation. This was effectively the pre-CPR position in the UK where litigants were encouraged to use ADR schemes set up as adjuncts to the proceedings in the Central London County Court, the Commercial Court (Note 583) and the Court of Appeal. |
| 663. | It has however been noted that such purely voluntary schemes tend to be marked by a very low take-up rate. In relation to the Central London County Court scheme in which mediation takes place only where both parties agree, the Lord Chancellor's Department had this to say :- |
| "This scheme has been evaluated by Professor Hazel Genn of University College, London. During the period of her study, mediation was offered in 4,500 cases, but only 160 mediations took place. She found that 62% of mediated cases reached a settlement at the mediation appointment and that mediation achieved earlier settlement." (Note 584) | ||
| 664. | Similarly, in relation to the Court of Appeal scheme, during the 6 month period :- |
| "...... from November 1998 to March 1999, parties in 250 cases were sent information about the scheme and, of these, both sides agreed to mediate in 12 cases." (Note 585) | ||
| 665. | The Lord Chancellor's Department commented :- |
| "...... Although forms of ADR appear to meet many of the principles for effective civil justice, the proportion of people with legal problems who choose to divert towards them has remained very low, even when there are convenient, and free, schemes available." (Note 586) |
Notes
| 564 | Added by regulation 194 of the Revised Regulations of Ontario, 1990. <back> |
| 565 | Rule 24.1.01. <back> |
| 566 | Rule 24.1.14. <back> |
| 567 | Rule 24.1.10. <back> |
| 568 | Rule 24.1.15(5). <back> |
| 569 | See generally the survey of court-annexed ADR schemes in Canada (B&M §5-047), Australia (B&M §5-062) and New Zealand (B&M §5-072). <back> |
| 570 | B&M §5-007-§5-008. <back> |
| 571 | The Notice To Mediate Regulation (BC Reg 127/98) under the Insurance (Motor Vehicle) Act. Available at <http://www.ag.gov.bc.ca/dro/regulations. htm>. <back> |
| 572 | <http://www.mediator-roster.bc.ca> <back> |
| 573 | By enactment of the Notice to Mediate (Residential Construction) Regulation (BC Reg 152/99) under the Homeowner Protection Act. <back> |
| 574 | <http://www.mediator-roster.bc.ca> <back> |
| 575 | BC Reg 4/2001, enacted under the Law and Equity Act. <back> |
| 576 | Reg 34(1). <back> |
| 577 | Reg 38. <back> |
| 578 | LDC-DP §1.10. <back> |
| 579 | LDC-DP §7.26. <back> |
| 580 | LDC-DP §7.27 <back> |
| 581 | B&M§3-035. <back> |
| 582 | EF §4.10. "Since the introduction of the Civil Procedure Rules, CEDR has recorded a 141% increase in the number of commercial mediations ...... Over 130 ADR orders were made in the Commercial Court between 26 April 1999 and June 2000 compared to 43 in the preceding 12 months" (§§4.12 and 4.13). <back> |
| 583 | The scheme was established by a Practice Statement in 1993 ([1994] 1 WLR 14), by which judges could encourage the use of ADR. A further Practice Statement in 1996 ([1996] 1 WLR 1024), allowed the judge to stay the case to permit the parties to attempt ADR. It also enabled the judge to offer an early neutral evaluation if he thought it would assist settlement. See LDC-DP Annex B. <back> |
| 584 | LDC-DP p 4. <back> |
| 585 | LDC-DP Annex B. <back> |
| 586 | 23 LDC-DP §1.12 . <back> |
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