The Courts and Tribunals are closing their caseloads, and a great many parties are in a state of frozen uncertainty. In contract disputes there is huge controversy around “Force Majeure and the Coronavirus”. Does it apply? Are there any predictable or realistic remedies? In Employment cases, the use of government support in maintaining employment is an excellent initiative, but it opens up many questions and issues on redundancy, dismissal and (potentially) discrimination.
Given the financial urgency and legal uncertainty we all face, the opportunity to reach mutually agreed settlement through mediation is an attractive option. In normal times parties turn to their lawyers, who expensively exchange arguments and build positions before exploring negotiation. But in times of crisis, these techniques cannot deliver.
Parties are increasingly turning to independent experts in facilitating negotiation who can deliver settlement through mediation. Mediation will focus on the needs and interest in front of the parties, dispensing with the traditional debates over legal rights and wrongs
Historically, mediation was conducted with parties present in the same building, but increasingly the online options, e.g. to conduct telephone mediation, even for very serious issues, are successful and more affordable.
In addition, with the increasing use of video conferencing (Skype, Zoom Us etc) there are rapidly growing opportunities to mediate disputes online. This process is simple, interactive and allows for the parties and the mediator to work together in reaching a settlement. We work from the CMC’s official guidance re online mediation.
If you have a legal problem, whether it has moved to claim stage or is still building up, you consider involving an expert Mediator to facilitate your dispute. If you require more information or simply advice on how to proceed contact NDR.
Two months ago, Zoom was just a fad among techies: (let’s hold a meeting using Zoom, it’s easy? – no thanks, let’s meet up for coffee). Now it’s everywhere. Even Government ministers meet online now using Zoom, although too late to protect the Prime Minister from infection.
In response to mediation cancellations, many mediators are turning to Zoom Pro as a cheap, easy vehicle which replicates online the physical mediation process – joint sessions, private meetings, circulated documents or presentations, and draft agreements all feature.
But now that Zoom is suddenly everywhere from “COBRA” to online dinners and pub quizzes, from wine tastings to Board meetings, it is under intense scrutiny. How private is it? And how secure? In an excellent blogpost Rick Weller of Weller ADR advises that “we should not make the perfect the enemy of the good”. In other words, compared to Teams, Skype, etc Zoom is the best online solution for mediators and litigants practically available – http://mediationblog.kluwerarbitration.com/2020/04/06/is-zoom-good-enough-for-mediation/
On privacy, although Weller advises against using the Waiting Room, others disagree, and this a very useful tool to screen people who want to join your meeting and manage how/when they join. Setting a password, ensuring parties use the free Zoom app to access the meeting, and LOCKING the meeting once all your invitees have joined, should be enough to ensure your run of the mill commercial, family or workplace dispute is sufficiently private.
On security from hackers, it seems in theory that Zoom may have some work to do on their encryption, but they insist they are working on this urgently. In the meantime, Weller comments that not every mediation requires “Manhattan Project” level security. Although we cannot practice mediation in person, trials are still scheduled, and conflicts are still disrupting relationships. There is still a need to mediate settlements, and Zoom has proven to be a reliable and robust tool. Most mediators I have spoken to intend to go ahead with Zoom as their preferred online mediation.
6 WEEKS IN AND WHERE ARE WE?
In a previous article we looked at inability to progress the contract works and the potential to utilise the contract to establish and effect entitlements and liabilities. Some six weeks into the lockdown and with possibly three or four weeks to go, where are we now at?
The simple answer is exactly where we were when this started.
The general view is that the Coronavirus Act is not a change in law under the contract, not least as its principle purpose is not to change or affect contracts but is rather to give Authorities the power to prevent persons and parties from doing things which might spread the virus. So a contractor may incidentally fall foul of the Act when carrying out works, as it restricts and prescribes how he may carry out the works so changing the parameters of his scope or liabilities.
Frustration is a possible remedy, though it requires proof of an unforeseen event that has rendered contractual performance radically different, or that the commercial purpose of the contract is no longer achievable. It is also a very blunt instrument – if the contract is “frustrated”, it is in effect cancelled, both parties are simply released from further performance.
So we are back to Force Majeure, IF the contract contains it and IF the wording can be applied to this situation, which is not always going to be the case.
But where does Force Majeure lead us? In essence it simply creates excusable down time while the circumstance exists. It does not remove or alter any of the contract obligations or liabilities or responsibilities, so even when the ‘event’ subsides and work recommences all such remain in place.
But it is not always the case that after an eight week gap the restart will reflect the position when the interruption occurred.
Changes may need to be agreed to ensure an effective recommencement, a good ongoing relationship, and ultimate completion of the works. Each party will invariably take a stance on such changes, but do they want to butt it out head to head trying to apply a contract which is no longer fits the realities?
Negotiations will be difficult, with huge risks for both sides, and Mediation provides a primary platform through which to clearly, practically discuss and agree those changes without conflict
When conventional remedies fail….
There is currently turmoil in the construction industry, as current contracts and subcontract terms provide little or no remedy for the effects of the coronavirus pandemic. Bitter disputes are developing across the industry as parties cannot provide the services or satisfy the obligations the contract imposes.
The coronavirus pandemic is unprecedented and as such few contracts will provide for the consequences of its effect.
Possible contractual remedies may be found in clauses for Prevention/Delay Events, or sometimes Force Majeure (where such exist), but these are express contract provisions and may not work to provide a remedy or resolve the specific dispute. Commentators have already suggested conventional doctrines such as Illegality and Frustration may not be applicable. Even if they were, the result would be that the contract comes to an end forthwith, resulting in the inevitable disputes and arguments that will arise from such event. Certainly both sides will have losses, and the Project will not be completed.
Parliament is not helping, and by refusing to give the construction industry prohibited status, has exacerbated problems for struggling contractors. Given the lack of realistic contractual remedies to resolve these disputes, we need to think alternatively.
Mediation could offer the perfect tool for the resolution of many of these issues. The parties remain in complete control, but can achieve a resolution flexibly and with pragmatism, as best suits their purpose.
Under a Mediation, the parties can come together without prior constraint or indeed commitment, in a safe space to negotiate with help, where they can informally discuss, explore and consider the entire issue before them, hopefully resolving it on a ‘best for the project’ point of view and outcome. The main attribute of such achievement is to enable, wherever possible, the parties to continue the project completion.
If you require any further information contact NDR.
An early point of debate was whether this is a local problem to North East England or is it country wide. The consensus was it is country wide.
Mediation has been present in England for over 25 years therefore it should be recognised as a useful tool for advisors to use. Could it be that advisors do not understand mediation as well as they should in that it is a tool that can be used at any stage and not simply left until the court orders its use. If this is the case should mediators take on the task to run short seminars to talk over when to start mediations?
A point made unofficially by the judiciary recently is many cases are being run by the litigants in person. This slows down the process and the individual is not trained in the benefits of mediation so it is refused by them until the courts order it to be tried.
Increases in costs of practices together with increasing work load has meant many cases are being handled by ‘paralegals’ on a day to day basis. Is it the case that the paralegals do not have a wide understanding of mediation with the result when an opportunity occurs they fail to recognise it allowing the case to continue onwards to court.
Disputes generally occur well before the lawyers are instructed. Is the education of surveyors, accountants and HR personnel into the various methods of dispute resolution inadequate. If these advisors were trained in resolving disputes by mediation would they give it a go before aiming for litigation. Similarly in corporate disputes do middle management try to hide a problem they have created, allowing it to escalate before the CEO sends out to the lawyers. If the CEO recognised the benefits and cost savings of mediation would they start by an early attempt before instructing the lawyers?
Many questions and very few answers.
The discussion revolved about whether there was a conflict of interest where the mediator or his firm had
A point of agreement was the mediator’s role is none judgemental therefore conflicts of interest should not be a major issue. The only time they felt a conflict could occur is if the mediator or their firm currently acted for one of the parties.
An anecdotal point was of a surveyor well regarded in his field, was accepted as a mediator in a dispute where he was acting for both parties but on other issues. Presumably they felt any conflict was evened out.
The group was quite unanimous on this point. The mediator asks the other party if they object in the extra person can attend. If they do object, then the extra person is not included in any joint discussions but can attend the separate caucuses.
The group felt that it is important to set the ground rules for the mediation at the start, by ensuring the party not the lawyer is the one who the mediator deals with. In addition the lawyer is told at the start and if need be reminded throughout the process, their role is to help and guide their client and they should spend their energies this way rather that attempting to dictate how the mediator should handle the hearing.
It is essential that the mediator ensures at the outset that those representing the parties have full authority to settle at whatever level is required. If however, one of the parties fails to disclose that they do have a limit of authority then this situation could occur. The meeting agreed the deal is not done until it is a signed written contract therefore the mediator either leads the parties back to the table and/or assists the errant party to gain the necessary authority to conclude the deal as the previously agreement.
The scenario posed was
‘During the course of a mediation where one party was pursuing the other for non-payment of monies and the other was resisting on the basis of excessive charging, it becomes apparent to the mediator that the contract between the parties included a payment by cash to avoid incurring value added tax’. What should the mediator do?
The scenario generated a very fulsome debate on how the dispute had progressed this far, that is to the mediation, without it being dealt with by the parties’ solicitors. Was it the lawyer’s suspicion of the parties’ avoidance of vat by that was the driver towards a confidential mediation instead of litigation?
The assembled mediators were all in agreement with what should happen in that it falls under the Proceeds of Crime Act 2002. As soon as the mediator is satisfied that non-payment of vat was the intention of one or both of the parties, then the mediator should terminate the mediation and report the matter to HMRC.
There was some debate over the confidentiality of the proceedings and what is said in the mediation stays in the mediation but it was agreed the Proceeds of Crime Act 2002 superseded the mediations confidentiality in this instance.
It was also agreed that failure to report the matter to the HMRC could place the mediator on a criminal charge.
An interesting side debate was whether the mediator should return part of the fee to the parties for the non-completed mediation, pay it over to HMRC as being a potential proceed from a crime or simply walk away with the fee providing any vat on the fee had been accounted for. The consensus was for the latter course of action.
Northern Dispute Resolution welcomes the establishment of an All Parliamentary Group with the Civil Mediation Council and others to ‘change the climate and culture of dispute resolution in the UK’.
A recent Ministry of Justice survey of 2.5% to 3% of all claims lodged at court last year reported that 82% were first time litigants who would have preferred to settle their dispute outside of court. However, the data shows that although applicants attended mediation and assessment meetings in 18% of cases, 41% per cent had not (with no information about the remaining 41% provided).
Given that mediation has been around for more than 20 years, the time in which NDR has been established, and a lot of effort has been made to encourage litigants and the legal profession to use mediation, it is a poor showing when around 70% of mediation cases are settled successfully.
The All Parliamentary Group are tasked with an ambitious programme of meetings designed to promote awareness of effective dispute resolution processes, which includes mediation and how they might be integrated more comprehensively into the system of dispute resolution in the UK to ensure it is meeting current and future needs. This includes seeking to influence government policy across all sectors and departments. It will work to ensure that the public is better informed about the value and effectiveness of mediation.
The need is to make available better information to potential litigants at an early stage about the choices available to them for resolving disputes without the need to proceed to trial. Over the last 20 years NDR has aimed to bridge the information gap between practitioners, potential litigants and their professionals. This is All Party Parliamentary Group will play a key role in influencing access to mediation for a greater number of potential litigants in a wide range of cases.
Mediation has been proven to reduce the time it takes to settle disputes between litigants. It has also significantly reduced the costs that litigants face when having the case determined at court and these costs have recently been substantially increased by court fees going up, for example the court fee alone for a £200,000 claim has increased from £1,550 to £10,000. This puts the cost of making a claim out of reach for many small businesses and creates a ‘David and Goliath’ type of circumstance when dealing with larger corporations.
When done well mediation also results in the reinforcement of relationships which are at significant risk of breaking down when litigating.
Finally, mediation reduces the stress of preparing for and attending court, allowing the litigants to get on with the rest of their lives once the case has been successfully settled.
Professional advisors, such as solicitors and in the case of my profession, chartered surveyors who advise clients on claims and litigation should heed well the benefit of mediation. The economic recession has created a recipe for claims. Clients who litigate wish to end the dispute quickly, efficiently and on a value for money basis. By not using mediation or even not recommending mediation brings into question whether the client has been adequately advised. Having a satisfied client who has saved costs in litigation and achieved a settlement that they have agreed to is far more rewarding than having a decision imposed on them by the court at a greater cost. After all even solicitors and surveyors need repeat business and benefit from clients who both hold them in esteem and are prepared to recommend their successful representation to others.
How many say “It wont happen to me” or do not realise that differences of opinion can escalate into disputes that cause delay, stress, loss of money and broken relationships? Each of us strive to avoid contention and litigation, but there are times when help is needed to find a resolution.
Rather than jump into litigation, why not seek support from a mediator to facilitate resolution to the dispute? A mediator will help each party to a dispute to search for a solution to resolve matters. This means that each party will decide what is right or acceptable to them and that any agreement meets their needs. This is different to a decision by any court or tribunal, which will decide on the facts and the law. This is very restrictive and means there is a winner and a loser i.e. the decision is imposed on the parties, despite their needs.
Disputes cost a lot, not only in money, but also in the hidden costs in stress, lack of focus on important other business matters, breakdown of relationships with important customers, or in the case of internal differences, between important team members.
The experienced mediator will work with the parties, is not restricted by legal precedent, but can explore other avenues to meet the needs of the party – such as future work and improved relationships.
Mediation is a way of quick, value for money resolution – why not give it a try?
I suppose compared to building the Olympic Park or Wembley Stadium it wasn’t a big job, it wasn’t even a middle sized job but at £40k it was certainly major works to the house owner and probably the builder too.
It all started off ok. The builder and his team started when they said they would and pulled the house apart ready for the alterations and improvements. The first few weeks passed full of hope for the client and the builder. The first interim payment was invoiced and paid on time and, squinting through one eye, the job was starting to take shape, except it was probably at this point when it started to go wrong.
The client noticed there were fewer operatives on site each day and then there were some days when nobody turned up at all. When challenged the builder complained about being held back by long delivery times for some of the materials the client had specified after the job started, the special windows, the radiators and so on. But the client felt there were plenty of other jobs the builder could be doing. And so it went on. The planned completion date came and went and the only thing that was consistent was the builder’s monthly interim invoice.
It all came to a head when the builder submitted an interim invoice that took the total above the original quotation of £40k but the works were nowhere near finished. The client didn’t pay, the builder walked off site and the vultures gathered in the trees at the entrance gates.
This is the point where both sides feel very aggrieved and they’ll see the other side ‘in hell’ before they pay up or finish off the works. They rush off to their respective lawyers and look for them to resolve the problem. Unfortunately this is also the point where both sides costs escalate at a rate they didn’t think was possible and they’re still nowhere near solving the problem. It’s a bit like playing poker they keep adding more money to the pot thinking that they will win so what they have put into the pot is returned to them. But it doesn’t because even if they do win, they won’t recover all they paid in. At best it may be 70%.
It doesn’t have to be like this. The one thing I can guarantee is neither side really wants to go to court and be cross examined by a barrister, they just want the dispute sorted out fairly and economically. The other thing I can guarantee is neither side fully understands the other side’s case until they have to face up to it. On that basis the sooner the client and the builder get together in the same room, talk it through and negotiate a settlement, the sooner this problem will be resolved and the lower the costs will be. This negotiation of a settlement by the parties with the help of an independent intermediary, is known as an ‘Alternative Dispute Resolution’ process, often referred to in legal circles as ADR. You might have heard it referred to as ‘Mediation’. Mediation isn’t one side showing a weakness, on the contrary they are showing confidence in their ability to keep control of the dispute and get it resolved on terms acceptable to them.
Strangely the courts are keen to push parties to ADR processes rather than waiting for them to come into court and have a slanging match before a Judge. This is not some Osborne inspired cost cutting exercise to reduce the courts workload but a genuine attempt to get problems sorted out quickly and cheaply, leaving the courts to deal with issues of law rather than commercial problems.
When the parties are at the forefront of resolving the dispute, you can guarantee it only gets sorted when both are happy, otherwise it doesn’t get sorted. Our client and builder did resolve their problem and both were happy or at least happier than they had been previously! Best of all they could get on with their normal lives and stop being pawns in the courts process.