New research by EY has revealed that commercial parties have increasingly opted for Alternative Dispute Resolution (ADR) over litigation during the pandemic to assist in resolving disputes. The research suggests that companies may have taken on board official guidance from the Cabinet Office, which called upon corporates to “act fairly in the national interest in performing and enforcing contracts” and avoid litigation where possible.
63% of the FTSE350 companies surveyed by YouGov for EY said they had adopted a more conciliatory approach to disputes with their counterparties since the pandemic began, and 44% said they are more likely to use ADR methods after the pandemic.
This is interesting, not least because of all the disruption faced by businesses as a result of the pandemic, but also due to how well the Courts have adapted to a new reality of Covid-restrictions. There have inevitably been delays but the Courts have embraced new protocols and procedures to ensure business as (close as possible to) usual with the introduction of virtual hearings and social distancing in court rooms. However, EY’s research shows that more commercial parties are choosing to negotiate rather than litigate.
Alternative Dispute Resolution, such as arbitration, mediation or expert determination, has always been encouraged by the Courts as an alternative to litigation, but it is becoming increasingly popular with commercial litigants. In Northern Ireland, ADR is not obligatory, but the Courts do expect parties to explore alternatives unless there was good reason not to. The “Commercial Hub”, set up in 2019 to deal with complex commercial disputes swiftly and efficiently, specifically encourages the use of ADR. Any unreasonable refusal to consider ADR may result in the imposition of a costs sanction by the Judge. The Hub will also provide, when it is able to do so, judges for Early Neutral Evaluation.
Here at Mills Selig, we have really seen the benefits for clients in engaging early and negotiating where possible. Mediations are almost always successful in bringing about some form of resolution and we see many clients adopting the dispute resolution procedures set out in commercial agreements. A year on from the start of the pandemic, EY now predict a surge in litigation. Indeed, two thirds of the lawyers surveyed anticipate a rise in legal claims. That may well turn out to be the case, but ADR will always be a useful tool for commercial parties who find themselves caught up in a dispute.You can access the full results of the survey and EY’s insight and commentary here: https://www.ey.com/en_uk/assurance/how-covid-19-impacts-the-claims-and-disputes-landscape
Editorial prepared by: Rebecca Logan, Solicitor, Mills Selig
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