New lease of life for ADR
23 June 1998
Anthony Salata reports on a number of new ways of resolving property disputes. Anthony Salata is a partner with surveyors Jordon Salata Graham and chairs RICS's dispute resolution group. Dispute resolution in the property field is changing and chartered surveyors are at the forefront of that change. One of the first areas of change is arbitration. It is widely used in resolving valuation, rent review and construction disputes.
During 1991 the Royal Institute of Chartered Surveyors (RICS) received a record 15,700 applications for the appointment of an arbitrator or independent expert. The figure for 1997 was 5,719, with indications that the 1998 figures are on the rise again.
With office rental values in Central London and the Home Counties surging forward over the past year, both landlords and tenants have to reassess the rental values of their portfolios and plan strategies for referring the disputes that commonly arise from rent negotiations.
The Arbitration Act 1996 was the most important change in arbitration law of the last few decades. The Act has returned the arbitration process to the disputing parties, but has also increased the power available to the arbitrator if parties do not take advantage of the opportunities for agreeing the template of their own procedure.
It is perhaps too early to say how the professions will take advantage of the new opportunities but it is likely that in the long run change is inevitable.
Whatever the outcome, the Act should encourage arbitrators to produce faster, cheaper arbitration. Since arbitrators are encouraged to adopt an inquisitorial approach, it is also likely that awards will be produced which will be seen to be fairer.
The most important priority for disputing parties is to use well-qualified and experienced surveyors as expert witnesses and for pursuing rent reviews. Recent comments suggest that following the property recession of the early and mid-1990s, there are fewer experienced rent review surveyors available.
The newest application of the arbitration process is PACT. A joint RICS/Law Society initiative, it permits landlords as tenants to refer applications for a new lease under the Landlord & Tenant Act 1954 to either a lawyer or a surveyor arbitrator. It is intended to produce a faster, fairer, cheaper service than traditional court applications.
In the world of building and construction, adjudication is becoming popular. Although relatively new, it is thought that adjudication may become widely used. It offers the particular advantage of expedition since it provides a resolution to disputes while a building contract continues. It can mitigate the danger of delays and reduce the possibility of major disputes at the end of a contract.
I distinguish alternative dispute resolution (ADR) from arbitration because, above all, it is a process that does not depend on a judgment or an award being handed down and imposed upon the parties.
In the field of ADR, negotiation is also becoming popular for resolving disputes. The procedure works best when both parties want to reach a conclusion speedily, and especially when both parties acknowledge that the alternative of litigation is unacceptable. But this ideal situation is not always the norm, so negotiators left to their own devices will sometimes fail.
Mediation is another option. It works through a meeting between the parties and their professional advisers, where the mediator will invite each side to make a brief presentation.
This is not an opportunity for examination or cross-examination. Following the presentation, the mediator will meet with the parties separately. These caucus meetings are private, confidential and without prejudice, and they allow the mediator to focus each party on their positions, strengths and weaknesses. By moving between the parties' separate meetings, the mediator communicates, offers and counter-offers, until an agreement is reached.
The mediator then records the agreement as a binding contract which is signed by all the parties, having ensured that the parties present have the authority to sign and bind themselves.
The mediation process is particularly suited to property disputes because they often involve parties that have a long-standing relationship, such as landlords and tenants or neighbours with a common land boundary.
I have mediated property disputes that involve valuation disputes, alleged negligence of surveyors, alleged negligence of lawyers, boundary disputes, service charge disputes, disputes arising out of town planning work, property management and fee disputes.
If you know a mediator, you can approach them and ask about their experience in particular areas. It is important to ensure that they are properly trained and accredited. Alternatively you can apply to the RICS which maintains a panel.
ADR in the form of mediation is likely to grow over the next few years as will adjudication in the field of construction.
Arbitration is likely to remain unchallenged, although following the new legislation it may make a larger contribution over a wider area. I recently arbitrated a town planning application. This is perhaps an indication that ADR can be used more creatively to deal with disputes which have been previously left to the courts.