City Disputes Panel struggles to stay alive

WHEN the City Disputes Panel was set up in April 1994, City law firms and a number of major banks were falling over themselves to be associated with the new dispute resolution service for the financial services industry.

At the outset, all looked good. The panel's raison d'etre of offering a practical alternative to the courts in all financial matters anticipated the Woolf report and its call for alternative dispute resolution as a way of unclogging the courts.

And it has been able to boast a distinguished panel of arbitrators, mediators and conciliators led by the outspoken retired Law Lord, Lord Ackner.

Despite all this, however, the panel is being forced to look to sponsors – most recently The States of Jersey – to help it out of its self-acknowledged financial difficulties.

The panel's last public accounts, for 1995, reported a loss of £70,000.

And in that year the income from the panel's sponsors (expressed as grants received) – £52,500 – almost equalled the amount of money the panel collected through fees – £68,720.

The chair's statement reported that the panel had completed 17 cases involving sums of around £1.5bn.

“This level of activity has improved the difficult financial situation suffered by the company during its start-up phase. However, a steady and growing stream of activity will be necessary if the Commercial Disputes Panel is to reduce its reliance on the generosity of grant aid,” he said.

But many City law firms and institutions are simply not using the panel. Of four corporate member City law firms contacted by The Lawyer, none could confirm they had used the panel.

This year, it appears that the panel has completed three new cases only. The Centre for Dispute Resolution (CEDR), the commercial dispute resolution body launched in 1990, takes on eight to ten cases each month.

A partner of one member firm said: “Their arbitration service, which uses a panel of three, with retired Law Lords playing the judicial role, is complex, expensive and counter-productive. There has been no take-up of that at all. Their main problem is their lack of training in conciliation skills.”

A director of a City bank added: “The panel is not into training. It's no good getting the great and the good to mediate. If you want a judge, go to court.”

CEDR, which claims to be the lead mediation training body in the UK, confirms that the panel has never submitted anyone to its training courses – although individuals may have attended without mentioning their involvement with the panel.

As the partner of another City firm commented: “Like apple pie and grandmothers, everyone's in favour of the City Disputes Panel. Its great advantage is that it uses people with enormous expertise in their field. But too many judges aren't good mediators.

There are so many mediation and arbitration services bodies now available – there is the Chartered Institute of Arbitrators, CEDR, plus a number of private companies like Endispute.”

The panel's chief executive, Richard Freeman, was unavailable for comment.