Train plotters

The rail industry is reforming its dispute resolution regime. David Rewcastle argues that this can only be a good thing

Last month saw the publication of a consultation paper by the rail regulator on the reform of the rail industry dispute resolution arrangements. The proposed reforms are a response to concerns within the industry that, under the current regime, disputes are often referred to bodies whose members do not have sufficient specialist knowledge, whether technical or legal.

The proposals in the consultation paper cover two main areas, namely: the creation of a railway industry mediation and arbitration service (Rimas); and procedural and constitutional changes to improve the efficiency and quality of the service provided by the access dispute resolution committee (ADRC).

Rimas
Rimas originates from a previous round of industry consultation, during which the Association of Train Operating Companies (ATOC) and other stakeholders highlighted the significant cost savings, the improved specialist knowledge and greater consistency that could be achieved through the creation of a single industry-wide panel for the resolution of certain kinds of contractual dispute.

As a result, Rimas has been put forward by the regulator as a ‘one-stop shop’ for all of the industry’s dispute resolution needs. The regulator’s vision is of a single private sector body, comprising a membership with the collective knowledge and experience to resolve disputes across a range of topics and provide a full suite of dispute resolution services, including arbitration, mediation and expert determination.

Having set out his vision for Rimas, the regulator puts the onus for setting up, financing and managing this resource firmly on the industry itself. The consultation paper does, however, contain a number of suggestions on these topics and invites views on these.
Broadly, the regulator proposes that Rimas should be a private sector body “owned” by those industry parties that will be making use of its services. The costs of the Rimas adjudicator would be recovered from the parties referring the dispute (with an appropriate surcharge to cover Rimas’s own administrative costs) and could be calculated either by reference to a standard hourly rate or on a sliding scale linked to the financial value of the matter in dispute. In either case, funding would have to be enough to attract candidates to provide a sufficiently varied skills base.

The decision of whether or not to use Rimas will be a matter for the parties in dispute in each case, except where there is an obligation in the relevant contract to refer disputes to Rimas in all, or specific, circumstances. Although the regulator does not refer specifically to the use of Rimas within model form documentation other than the access contracts (track, station and depot), his view is that Rimas could become “the mode of choice for the mediation and resolution of disputes between railway interests”.

As part of the consultation, the regulator has invited the rail industry to nominate candidates for membership of Rimas. The importance of this should not be underestimated, because the success of the Rimas concept requires independent and high-calibre members with good experience.

Changes to the ADRC

The ADRC is a body of members elected by Network Rail and by passenger and non-passenger train operator groups. Its purpose is to determine specific categories of dispute referred under the network code and access contracts. The constitution of, and procedures governing, the ADRC are defined in the access dispute resolution rules (ADRR).

The second part of the regulator’s consultation paper contains proposals to amend the ADRR, with a view to promoting “more rapid and higher-quality resolution of disputes” by the ADRC. The proposed reforms are designed to address the following issues:

Impartiality
The regulator’s proposal is that the resolution of individual disputes should be remitted to tribunals of three members, consisting of an independent chairman and two elected members of the ADRC. The ADRC members would be appointees of the same class (ie Network Rail or the appropriate operator class) as the two parties to the dispute. In this way, the regulator hopes to counteract any suggestion of bias within the decision-making body.

Expediency and fairness
Currently, the ADRR require decisions of the six-person ADRC tribunal to be unanimous and, in the absence of agreement, the chairman’s view will prevail over the others. In contrast, under the new three-man panel proposed by the regulator, the decisions would be decided by a majority. The hope is that this would be cheaper, would speed up the process and would remove the inconsistency of the current regime (which requires unanimity on the one hand, but on the other gives the chairman unilateral decision-making powers).

Resolution of legal issues
ADRC tribunals have on several occasions, and most notably in the recent case of Network Rail Infrastructure v Eurostar (UK) Limited (2003), been found to have either misinterpreted the law, acted outside its jurisdiction or failed to apply the correct legal tests. The regulator is concerned with the effect that such criticisms may have on the credibility of the ADRC and the confidence of the industry in its decisions.

The ADRR permit the chairman of an ADRC tribunal to seek legal advice, although in practice this right is rarely exercised and there is no obligation on the ADRC to do so. The regulator, therefore, proposes a constitutional change requiring “permanent and mandatory legal guidance” to be given to the ADRC and its tribunals, either by requiring that the chairman of any tribunal be legally qualified or through the appointment of a “counsel to the committee”, who would attend tribunals and advise on any legal issues arising.

Certainty and transparency
The Eurostar case was also critical of the ADRC’s failure to disclose the reasoning behind its determinations. The consultation paper therefore proposes that ADRC tribunals be required to give clear reasons for the decisions which it makes, including the reasons for any dissenting views. It is also proposed that, where a matter is referred from an ADRC tribunal to a higher body – be it the Office of the Rail Regulator (ORR) or the courts – the decision of that body will bind future ADRC tribunals.

By creating a body of case law in this way, the regulator’s view is that there would be a reduction in the ADRC’s caseload, because disputes on similar issues could be determined by reference to precedent, without recourse to the ADRC. The body of case law would also increase certainty in the industry, especially if, as is proposed by the regulator, information on cases heard by the ADRC (other than commercially sensitive information) is published.

Assuming that the right members can be attracted to Rimas, there can be little doubt that the industry would benefit from having at its disposal a dedicated dispute resolution service, with both expertise specific to the contractual issues in dispute and an overview of the wider contractual regime and of other industry issues that may have a bearing on the dispute or hold the key to its resolution.

As for the regulator’s proposals on the ADRC, these seem to offer the prospect of a more streamlined dispute resolution procedure. There is also a welcome emphasis on the need to develop a body of case law and precedent which can be relied upon by the industry and practitioners.

David Rewcastle is a partner in Dickinson Dees’ transport department. Assistant Robin Steel also contributed to this article