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Online dispute resolution creates 'exciting' opportunity for change, says new report

The growth of digital access to the courts is the "most exciting" potential opportunity for changes to dispute resolution procedures in England and Wales, according to a new report.25 Oct 2017

The courts need to do more to promote the use of alternative dispute resolution (ADR), particularly at the early stages of legal proceedings, according to an interim report (98-page / 1.6MB PDF) by a Civil Justice Committee (CJC) working group set up to review the role played by and potential future role of ADR in the justice system.

The group does not intend to recommend compulsory ADR at this stage, although a minority of its members back compulsion either as a condition of access to the courts in the first place or as a condition of progress beyond a case management hearing. Instead, it intends to recommend that the courts "promote the use of ADR more actively at and around the allocation and directions stage".

The debate about whether or not to make ADR compulsory "may simply become obsolete", depending on the extent to which online dispute resolution (ODR) techniques are woven into the design of the court system, the group said.

"To some extent, with the online court and general digital access still under construction, our recommendations and views here are bound to be more speculative," the group said.

The online court derives from the CJC's earlier report on online dispute resolution for low value claims, published in 2015, and Lord Justice Briggs' 2016 civil courts structure review. It is currently in a pilot phase for certain cases up to the value of £10,000.  Reference to mediation and questions about ADR are important parts of the proposed online court process.

In the meantime, there should be a "presumption in most cases if parties have not been able to settle a case by the directions stage they should be required to bring forward proposals for engaging in some form of ADR", according to its report. Other ideas discussed include the imposition of sanctions pre-judgment for failure to engage in ADR, in contrast to the current approach whereby any real criticism of parties' use of ADR is left until after judgment.

Working group chair Bill Wood QC said that ADR had "failed to achieve the integral position in the civil justice system that was intended and expected for it". The work of the group was therefore "to stimulate a debate between all stakeholders as to the nature of the problem and the possible practical solutions".

The working group focused on four main types of ADR as part of its review: mediation; consumer conciliation and ombudsmen; judicial early neutral evaluation (ENE); and ODR. Of these, it described mediation as "the dominant method of ADR", albeit "still significantly under-used in the civil justice system". Consumer schemes, although "the most prolific form of ADR in terms of the sheer volume of disputes disposed of", operate outside of the court system; while judicial ENE was "increasingly gaining momentum", particularly in the county courts and for property and will disputes, according to the report.

ODR was considered by the group not as an alternative to other forms of ADR, but as "an avenue through which established ADR approaches can be delivered efficiently and effectively". It was for this reason that the digitisation of court processes was seen by the group as having the potential to more widely introduce ADR to the justice system. ODR offerings "hold huge potential advantages in terms of convenience and cost" as human ADR professionals such as mediators are typically only used if necessary and at a later stage once 'groundwork' has already been done.

The group also discussed the potential for ODR to go beyond the taking of familiar procedural steps online, through the use of concepts such as online "blind bidding", whereby parties submit sealed bids to a third party and if the bids come within an agreed percentage of each other a settlement is deemed to have been agreed.  The Scottish Civil Justice Council has also recently published proposals for the use of ODR techniques in Scottish Civil Procedure, including the possible introduction of blind bidding.

The group concluded that raising awareness of the benefits of ADR and its usefulness with the public would be "worth far more than any amount of compulsion or encouragement". However, it admitted that it had no "magic solutions" for how this could be done. Taking consumer conciliation and ombudsman services as an example, it noted that use of these services tended to be embedded into the relevant complaints-handling processes "often before there is any thought of or reference to legal advice or the possibility of litigation". These services also benefitted consumers by being free to access, instead funded by the relevant businesses.

In commercial disputes, early use of ADR was often encouraged or mandated through the use of ADR contract clauses. Parties and their lawyers also tended to consider mediation on their own initiative, particularly in higher value disputes. They did so "because they recognise the virtue of mediating early and they are comfortable with the process", according to the report. The working group said that this approach could be encouraged at all levels of civil justice, "provided an affordable and proportionate process can be made available".

Pinsent Masons, the law firm behind Out-Law.com, partnered with Queen Mary University of London last year to chart current market practices for resolving disputes in the technology, media and telecoms (TMT) sectors. Respondents to the four-month study (44-page / 4.5MB PDF) backed the use of ODR, with 63% saying that they expected more TMT disputes to be resolved online over the next decade. In the EU, the 2013 directive on ADR for consumer disputes and 2013 regulation on ODR for consumer disputes have pushed forward the use of ODR in the consumer context, particularly for cross-border matters, although the CJC's latest report questions the efficacy of these measures and invites discussion on their operation. ODR initiatives are also being progressed in many other jurisdictions, such as Canada.

"Our report corroborates what is being seen in the market, where there are already a number of trusted online dispute resolution services such as Resolver, and the service run by eBay," said dispute resolution expert David McIlwaine of Pinsent Masons. "It is therefore encouraging to see the theme of online dispute resolution being picked up once again by the CJC."

"It will be extremely interesting to see how the online court pilot develops and whether we will see some of the ideas trialled there being extended to higher value disputes, as the technologies available for use in online dispute resolution also grown in sophistication," he said.

The CJC is seeking written feedback on the report ahead of organising a seminar at which the proposals will be fully debated. A final report will then be prepared and submitted to the government for its consideration, it said.