Sometimes court cases acquire a significance well beyond the determination of the dispute between the parties to them. Recently, a claim by a homeowner against a local authority has become a case with wide significance regarding dispute resolution processes, at least south of the border. What significance might it have for resolving commercial disputes in Scotland?

The central issue in the case – Churchill v Merthyr Tydfil County Borough Council – was whether the court could order the parties to engage in an alternative (non-court-based) dispute resolution process (ADR). The Court of Appeal determined that the courts in England and Wales do have the power to do that. Whether or not a court should do so would depend on the circumstances, but it should only do so if it “does not impair the very essence of the claimant’s right to proceed to a judicial hearing, and is proportionate to achieving the legitimate aim of settling the dispute fairly, quickly and at reasonable cost”.

Court rules and practice directions in England and Wales already nudged parties towards ADR. Most significantly (until now), the court can sanction a party when determining whether to award costs, if they have unreasonably refused to engage in an ADR process. It is now clear from Churchill that courts in England and Wales can compel such engagement.

What might this mean for commercial dispute resolution in Scotland? At present, there is less nudging towards ADR here than south of the border. The rules for commercial actions in the Sheriff Courts contain a provision enabling the Sheriff to make any order which they think “will result in the speedy resolution of the action (including the use of alternative dispute resolution)”. In commercial actions in the Court of Session, the rules give the judge a similarly wide discretion. While those rules do not explicitly refer to ADR, the practice note for commercial actions notes that the rules give the judge the power “to order parties to hold a joint meeting with a view to exploring whether the dispute is capable of extra-judicial settlement or, alternatively, whether the issues requiring judicial determination can be restricted”. In addition, the practice note provides that “parties should consider and discuss whether resorting to alternative dispute resolution might be appropriate”.

Daniel Bain is a Partner, Balfour+Manson

However, the courts in Scotland do not generally order parties to engage in ADR or sanction parties for unreasonably refusing to do so. Given the benefits of ADR, particularly mediation as an alternative to adversarial court proceedings, there is clearly a case to be made for changes that will facilitate its greater use. Perhaps bolder use could be made of the rules for commercial actions referred to above. Changes could be made to the rules to make clear that ADR can be compelled. Some would advocate going further than that – in these pages last week, John Sturrock KC suggested we should be seeking to remove a significant number of disputes from the courts altogether.

In any event, solicitors have a crucial role to play in promoting the benefits of ADR – both dispute resolution solicitors when advising clients on the options for resolving their disputes, and transactional solicitors when advising on and negotiating dispute resolution provisions of contracts. Whether any particular form of ADR is suitable for any particular dispute will depend on the circumstances of the dispute. However, if Churchill denotes a trend towards greater use of ADR, and if that trend makes its way north of the border, that can only be of benefit to businesses and individuals seeking to resolve disputes.

Daniel Bain is a Partner, Balfour+Manson

The many benefits of mediation should be more widely shared - Daniel Bain

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