Time for ADR to play its part

The latest publication of the Financial Law Panel (FLP), Alternative Dispute Resolution in Commerce and Finance, was sent to the panel's subscribers and other interested parties last week.

It contains a brief guide to the types and sources of ADR available to people handling most types of business disputes.

An increasing amount of attention is being paid to ADR methods, and varying degrees of official recognition have recently underlined its potential.

In particular, a new pre-trial check list, in place since the beginning of the year for all cases in the Queen's Bench or Chancery Divisions, requires parties to answer questions about whether ADR has been discussed, whether it would help and whether using ADR has been explored with the other parties in the dispute. Lord Woolf's Access to Justice review included a recommendation that courts should encourage any alternative to the resolution of disputes though the formal civil process.

The FLP pamphlet sets out all the rudiments of the subject, and will be a useful source of easy reference for any lawyer (or judge) practising – or likely to practice – in the High Court.

The panel's purpose is to identify and resolve areas of legal uncertainty affecting the wholesale financial markets and one of the objectives underlying this is to help the UK, and London in particular, to retain its pre-eminence as an international financial centre.

Achieving satisfactory resolution to legal disputes in as efficient a way as possible is an essential part of this and the recent court direction on the pre-trial check list may be viewed as evidence of the fact that ADR has now been accepted as having an important role to play.

The pamphlet is aimed at those dealing with disputes arising in the spheres of commerce and finance. Most organisations offering ADR services are aimed primarily at non-commercial disputes and they are not dealt with in the pamphlet. But ADR still has a role to play when large companies or banks are involved in the dispute.

There was a general perception that ADR methods, especially mediation, were not being used by larger companies or in the bigger ticket dispute.

So, at the beginning of the year, the panel's secretariat took soundings among participants in the financial markets to find out whether they were fully informed about the possibilities that ADR offers. This showed a high level of knowledge and sophistication about ADR, although a number of those who might be called upon to resolve disputes did not know chapter and verse about all that ADR can offer.

The panel recognises that the operation of the financial markets will give rise to disputes for which ADR is often inappropriate.

Three factors can contribute to this. First, the amounts at stake are often too great for those involved to do anything other than rely on a strict interpretation of the underlying legal position.

Second, complex and difficult points of law are commonplace in the financial markets and their existence can affect the view people take of the best way to resolve a dispute.

Third, people who have an overall view of methods employed by ADR feel that the main thing it offers is bought-in negotiating skills, which they already have.

Some cases will still have to go through the formal court process. But both the realities of litigation and the recognition given to ADR mean that though it will not always be appropriate, it can never be ignored.

Copies of the pamphlet are available from the secretariat, at 125 Wood Street, London EC2V 7AQ