ADR MCQs Flashcards
Which ONE of the following statements is CORRECT?
Both mediation and arbitration are adjudicative processes.
Arbitration is an adjudicative process and early neutral evaluation is a non-adjudicative process.
Both negotiation and expert (or neutral) determination are non-adjudicative processes.
Mediation is an adjudicative process and expert (or neutral) determination is a non-adjudicative process.
Arbitration is an adjudicative process and early neutral evaluation is a non-adjudicative process.
It is vital, at this early stage, that you understand that questions in the summative exam which are based on The Jackson ADR Handbook may be questions which require you to understand points of quite granular detail. As such, it is imperative that you get to grips with the syllabus reading from The Jackson ADR Handbook as early as possible. To help your understanding of some of the terms which are used in The Jackson ADR Handbook, we would encourage you to consider the Glossary. There, “adjudicative” ADR is defined as follows: “a form of alternative dispute resolution in which the parties agree to engage a third party to make a decision in relation to the dispute”; “non-adjudicative” ADR is, instead, defined as “a form of alternative dispute resolution in which the parties agree to engage a third party to make a decision in relation to the dispute”. Answer [D] is correct because arbitration is an adjudicative form of ADR (as to which, see the examinable reading from The Jackson ADR Handbook at 25.01) and early neutral evaluation is a non-adjudicative process (as to which, see the examinable reading from The Jackson ADR Handbook at 22.01 – 22.04).
Sean West is involved in a boundary dispute with his neighbours, Mr & Mrs Rawlinson. Sean West and Mr & Mrs Rawlinson are not currently on speaking terms. Sean is keen to issue proceedings in the County Court, but a friend has suggested he should first consider mediation. Sean seeks your advice on the differences between mediation and litigation.
Which ONE of the following is the WRONG advice to give?
The mediation process is capable of being convened, and concluded, much more quickly than the formal litigation process.
In a mediation, the mediator is able to relay information from Party A to Party B in circumstances where the mediator has not obtained Party A’s consent to do so. Accordingly, the mediator is better able to promote a settlement between the parties than a judge is.
If Sean attempts to mediate, he may avoid cost consequences being imposed by the court for his unreasonable failure to explore settlement, should proceedings be issued.
The parties have greater “ownership” over the mediation process than they do over the litigation process: a solution is not imposed upon the parties by a third party in mediation.
In a mediation, the mediator is able to relay information from Party A to Party B in circumstances where the mediator has not obtained Party A’s consent to do so. Accordingly, the mediator is better able to promote a settlement between the parties than a judge is.
This is the WRONG advice to give because meetings between the mediator and parties are entirely confidential: the mediator must obtain the permission of Party A in order to convey information to Party B before that information is so conveyed. The mediator is better able to promote a settlement between the parties than a judge but not for this reason. In order to cement your understanding of the advantages of mediation as a process (which advantages mean that the mediator is better able to promote a settlement between the parties than a judge is), please consider The Jackson ADR Handbook at 13.04 and 13.05. As to confidentiality in mediation, please consider paragraph 13.39 of The Jackson ADR Handbook.
Some months ago, Frida entered into a contract with Vernon. Frida now believes that Vernon has breached the contract. Instead of commencing proceedings straight away, however, Frida and Vernon have agreed to mediate their dispute, with a view to reaching a settlement. Frida and Vernon have chosen Caroline as the mediator.
The mediation is unsuccessful and proceedings are commenced.
Which ONE of the following statements is CORRECT?
Any notes of the mediation made or retained by Caroline will not generally be protected from disclosure in any subsequent proceedings.
Where Frida and Vernonwaive without prejudice privilege, Caroline cannot rely on without prejudice privilege so as to prevent disclosure of communications arising out of the mediation process.
Vernon’s invoices, made pursuant to the terms of the contract which were referred to at the mediation and which will be disclosed as part of the standard disclosure during the litigation, are protected by without prejudice privilege.
The concessions which Frida made during the course of the mediation are not protected by without prejudice privilege.
Where Frida and Vernonwaive without prejudice privilege, Caroline cannot rely on without prejudice privilege so as to prevent disclosure of communications arising out of the mediation process.
Without prejudice privilege exists for the benefit of the parties and it can be waived by them. It is not a privilege of the mediator, so if the parties waive it, the mediator cannot rely on it to prevent non-disclosure of communications arising out of the meditation. Please see The Jackson ADR Handbook at 13.61.
Your client, Hard Copee Printing Ltd, supplies and services photocopiers. An issue has arisen in relation to a contract it has entered into with a customer. The customer is arguing that the version of the contract relied on by your client is not the version actually agreed and signed by the parties. In an attempt to try to settle the dispute and, pursuant to instructions, you attend a negotiation on behalf of your client.
Which ONE of the following statements is CORRECT?
You should always settle any negotiation on terms which you consider are in the best interests of your client, regardless of your instructions.
You should always settle the matter on the best terms possible, but if done without the consent of the client, the client will not be bound by any settlement reached.
You should always settle any negotiation on terms which reflect those you reasonably believe the court would award upon judgment.
You should always ensure that any settlement reached at the negotiation is within your authority and authorised by the client.
You should always ensure that any settlement reached at the negotiation is within your authority and authorised by the client.
This is the right answer because a lawyer negotiating on a client’s behalf should only reach a final agreement if authorised to do so by the client.
Any limit on the authority to settle should not be exceeded, so your client’s instructions cannot be ignored (even if you consider that the settlement would be in the best interests of the client or would be what you believe the court would award upon judgment).
If a lawyer negotiates a settlement without the client’s consent, the client will still be bound by that settlement, due to the actual or ostensible authority to act on behalf of your client, and the agreement could be enforced against the client. This leaves the lawyer in a very difficult position and the client could then bring a claim against the lawyer. Acting on the basis of sufficiently clear instructions and within your authority to settle is very important when using ADR. In this respect, and to aid your wider understanding, you ought to consider The Jackson ADR Handbook at 4.07 and 4.08.
When advising a client about ADR, which ONE of the following statements is CORRECT?
Generally, the usual rule that costs follow the event should not be departed from unless it is shown that the successful party acted unreasonably in refusing to agree to ADR.
ADR should be used as early as reasonably possible in a case and cannot be considered once track allocation has taken place.
Where the law in an area is complex, ADR cannot be used as complex facts can only be considered by a court.
Generally, silence in the face of an invitation to participate in ADR is reasonable if there is a good reason for the refusal to engage in ADR.
Generally, the usual rule that costs follow the event should not be departed from unless it is shown that the successful party acted unreasonably in refusing to agree to ADR.
This is the general rule that comes from the case of Halsey, which is one of the specific leading case authorities that you should be able to refer to by name.
The courts have stressed that it is not necessary to litigate simply because the law in an area is complex if this may lead to disproportionate costs.
The court has extended the Halsey principles and held that, as a general rule, silence in the face of an invitation to participate in ADR was itself unreasonable, regardless of whether there was a good reason for the refusal to engage in ADR.
The overriding objective will often support the use of ADR as early as is reasonably possible in a case, but there is a continuing duty on the parties to consider ADR throughout the litigation.
Please see The Jackson ADR Handbook at 11.07 – 11.09.
You act for Brilliant Limited (‘Brilliant’), which manufactures bulbs for use in specialist lighting products. Brilliant has received a claim form with particulars of claim attached from one of its customers, Crystal Clarity Ltd (‘Crystal’), which owns a chain of specialist lighting shops. Crystal alleges that the bulbs supplied by Brilliant did not meet performance requirements set out in the contract specification, causing Crystal’s sales to plummet. Brilliant tells you that the bulbs which they supplied complied exactly with the contractual specification.
The contract between Brilliant and Crystal contains the following clause: “all disputes arising out of or in connection with this contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators in accordance with the said Rules”.
Which ONE of the following statements is the CORRECT advice to give where Brilliant wishes the dispute to be determined at arbitration?
Brilliant does not need to acknowledge the proceedings, but should immediately seek a stay of legal proceedings under section 9 of the Arbitration Act 1996.
Brilliant should ignore the particulars of claim and do nothing as the arbitration clause in the contract will override the legal proceedings.
Brilliant should file an acknowledgement of service and then seek a stay of legal proceedings pursuant to section 9 of the Arbitration Act 1996.
Brilliant should file a defence to the particulars of claim and then seek a stay of legal proceedings pursuant to section 9 of the Arbitration Act 1996.
Brilliant should file an acknowledgement of service and then seek a stay of legal proceedings pursuant to section 9 of the Arbitration Act 1996.
Brilliant must file the acknowledgement of service before then seeking a stay under section 9 of the Arbitration Act 1996, as required by section 9(3) of the Arbitration Act 1996 (see the examinable material in Section 2E of Volume 2 of the White Book).
The application for the stay cannot be made before acknowledging the legal proceedings or after any step taken in those proceedings.
Filing a defence would amount to a “step” (see the paragraphs of examinable commentary which follow section 9 of the Arbitration Act 1996 in Volume 2 of the White Book) and doing nothing is not appropriate because, all other things being equal, where Brilliant does nothing it will likely become a judgment debtor in due course;; section 9 allows parties to an arbitration agreement against whom legal proceedings are brought to apply, on notice, to the court to stay those proceedings.
You act for Sweetings Ltd, a company which agrees to enter into a contract for the supply of surveyor services by Sweetings Ltd to LiveToBuild Ltd for various building projects. Both parties wish to include a valid expert determination clause in the contract to resolve any disputes about all issues arising out the contract between them.
Which ONE of the following statements is the CORRECT advice to give Sweetings Ltd on expert determination?
Expert determination is not subject to the supervision of the court so the court has no discretion to stay court proceedings issued by a party who failed to use the contractually agreed expert determination clause in the contract to determine the dispute.
Expert determination is not subject to the supervision of the court, but the court may be involved if a dispute arises as to the jurisdiction of the expert, or one or both parties wish to challenge the determination.
Parties usually agree that the determination will be final and binding on them so the resulting award or order by the expert can be enforced in the same way as if it were a court decision.
Expert determination is an advisory evaluative process and the parties usually agree that the determination will guide their approach to any dispute, but it will not be final or binding on them.
Expert determination is not subject to the supervision of the court, but the court may be involved if a dispute arises as to the jurisdiction of the expert, or one or both parties wish to challenge the determination.
Unlike arbitration, expert determination is not subject to the supervision of the court. However, the court may be involved if a dispute arises as to the jurisdiction of the expert, or one or both parties wish to challenge the determination. A court order may also be necessary if there is a need to enforce the determination in the event of non-compliance by one party.
Expert determination is a determinative process, rather than a facilitative process (mediation) or an advisory evaluative process (early neutral evaluation). Where the parties use expert determination to resolve the dispute, they usually agree that the determination is final and binding on them, and typically this is recorded in the contract.
Expert determination is not subject to the supervision of the court, but the court does have discretion to stay court proceedings issued by a party who has failed to use the contractually agreed machinery in the contract to determine the dispute. The burden will be on the party seeking to litigate the dispute to show grounds why the claim should not be stayed so that the parties can invoke the contractually agreed method of ADR (expert determination).
Parties do usually agree that the determination will be final and binding on them, but a decision reached by expert or neutral determination cannot be enforced in the same way as if it were a court decision. A failure by one side to honour the decision amounts to a breach of contract and proceedings can be issued in relation to the breach.
Please see the relevant paragraphs of examinable commentary in Chapter 24 of The Jackson ADR Handbook.
Harry and Jack entered into a contract. The contract contained the following term:
“Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration. The seat of the arbitration shall be London. The arbitration shall be convened and conducted in accordance with the default provisions of the Arbitration Act 1996.”
Harry brought proceedings in the High Court against Jack in spite of the existence of the arbitration clause in the contract. Jack has now made an application for a stay of those legal proceedings in accordance with Section 9 of the Arbitration Act?
Which ONE of the following statements is correct as to the effect of Section 9 of the Arbitration Act 1996?
The standard of proof which is required to be met regarding the jurisdictional thresholds provided for by Section 9 of the Arbitration Act 1996 is: beyond reasonable doubt.
Section 9 of the Arbitration Act provides for a single jurisdictional threshold which is to be decided by the court before a stay may be granted, viz whether the issue in the proceedings is a matter which under the arbitration agreement is to be referred to arbitration.
It rests on the defendant, and so here Jack, to show that the dispute ought not to be referred to arbitration.
Section 9 of the Arbitration Act 1996 provides for two jurisdictional thresholds which are to be decided by the court before a stay could be granted: first, whether there is a concluded arbitration agreement; and secondly whether the issue in the proceedings is a matter which under the arbitration agreement is to be referred to arbitration.
Section 9 of the Arbitration Act 1996 provides for two jurisdictional thresholds which are to be decided by the court before a stay could be granted: first, whether there is a concluded arbitration agreement; and secondly whether the issue in the proceedings is a matter which under the arbitration agreement is to be referred to arbitration.
This is the correct answer by virtue of what is set out in the first sub-paragraph of 2E-112 of Volume 2 of the White Book.
X and Y entered into a contract. In that contract, they included the following clause:
“In the event of a dispute arising out of this contract, the parties hereby agree that such dispute shall be determined by arbitration.”
In the teeth of the arbitration clause, X brought proceedings against Y in the High Court. Y has come to you for advice and is minded to make an application for security for costs against X in accordance with the relevant provisions of the Civil Procedure Rules. During the course of the conference, Y asks you what the consequence of making an application for security for costs would be on Y’s prospects of obtaining, under Section 9 of the Arbitration Act 1996, a stay of the legal proceedings which X has brought,
In these circumstances, which ONE of the following statements is the CORRECT advice to give to Y?
Y’s making an application for security for costs will have absolutely no impact on Y’s prospects of obtaining a stay under Section 9 of the Arbitration Act 1996.
If Y makes an application for security for costs, Y may not thereafter make an application for a stay of proceedings under Section 9 of the Arbitration Act.
Where Y makes an application for security for costs, the legal proceedings will automatically be stayed under Section 9 of the Arbitration Act 1996.
Where Y wishes to obtain a stay of the legal proceedings under Section 9 of the Arbitration Act 1996, Y must make an application for security for costs. If Y does not make that application, Y cannot obtain a stay.
If Y makes an application for security for costs, Y may not thereafter make an application for a stay of proceedings under Section 9 of the Arbitration Act.
In the first instance, Section 9(3) of the Arbitration Act 1996 provides: “An application [for a stay] may not be made by a person before taking the appropriate procedural step (if any) to acknowledge the legal proceedings against him or after he has taken any step in those proceedings to answer the substantive claim”. Hence, if, after taking the appropriate procedural step to acknowledge the proceedings, Y made an application for security for costs, this would amount to Y’s taking a “step in [the legal] proceedings to answer the substantive claim: see the examinable commentary in the first sub-paragraph at 2E-111 of Volume 2 of the White Book. Where Y takes such procedural step, Y cannot, after doing so, make an application for a stay.
Black & White Ink Ltd (‘Black & White’) and Pens United Plc (‘Pens’) entered into a written contract which contains a clause referring “any and all disputes to arbitration under the Arbitration Act 1996”. The agreement between Black & White and Pens provides for a three-member arbitration panel, including a chairman. It does not say how the chairman is to be appointed.
A dispute has arisen between the parties. Black & White has supplied Pens with resin that does not comply with the contractual specification. The resultant problems mean that Pens has now lost a contract with one of its own customers.
Please assume that, within the stipulated time, Pens and Black & White have both appointed their arbitrator in line with the agreement.
In these circumstances, which ONE of the following is the BEST ADVICE to give on the usual next step?
The two arbitrators should together appoint a third member forthwith who will act as the chairman.
The two arbitrators should together appoint a third member and the parties will then vote on who should be the chairman at any time before the hearing.
The arbitrators and parties each have a vote on the third arbitrator, and in the event of a tie, the court may appoint a third arbitrator and decide who will be the chairman.
The parties should agree between themselves on the third arbitrator and the chairman within three months.
The two arbitrators should together appoint a third member forthwith who will act as the chairman.
The parties are free to agree on the procedure for appointing the arbitrator or arbitrators, including the procedure for appointing any chairman or umpire. Where the parties agree to a three-member tribunal, the usual position is that each party appoints one arbitrator, and these two arbitrators then appoint a third member who acts as the chairman. Please see the relevant paragraphs of examinable commentary on Commencement of Arbitrations in Chapter 25 of The Jackson ADR Handbook.
Question 1
A client purchases a software package to assist in the ordering and distribution of stock for
their manufacturing process. The system does not comply with the client’s requirements and
they instruct their solicitors to issue proceedings for breach of contract.
What is the best advice the solicitor can give their client concerning alternative dispute
resolution (ADR)?
A There is no need for the client to engage in ADR unless they choose to do so.
B The client may decide not to engage in ADR but should be prepared to justify this
decision to a judge.
C If the client fails to engage in ADR, the court will impose costs sanctions.
D The only options of ADR that are available to the client are mediation and arbitration.
E In ADR, a third party selected by the claimant will assist the parties to resolve their
disputes.
Answer
Option B is correct. Although the client may choose whether to engage in ADR, there are
consequences if they do not and so the advice in option A is incomplete. Option C is wrong
as the courts have discretion as to whether to impose sanctions; whilst D is wrong as there
are other forms of ADR available to the client, although this chapter has concentrated on
mediation and arbitration. Option E is wrong as the third party is independent and should
be agreed between the parties, rather than being selected by the claimant
Question 2
A client runs a business providing educational software to colleges of further education
to improve their assessment processes. However, complaints have been received from
one college that the assessments are not being correctly recorded and the principal has
indicated that they will not be renewing the contract. It becomes apparent to the client
there may be errors in the system. The client has a number of other colleges that are
considering using the system.
Which of the following statements describes the client’s best option for resolving the
matter and why?
A Mediation because it is a cheaper and faster option than litigation.
B Mediation because it takes place in private and will ensure that other colleges do not
become aware of the dispute.
C Mediation because it is more likely that the parties will preserve their business
relationship.
D Arbitration because the decision is binding on both parties.
E Arbitration because an expert on information technology can determine the dispute.
Option B is correct as the client has a number of other colleges that are considering using
the system and it is unlikely they will do so if they become aware of the problems with the
software. Although speed and cost are advantages of mediation over litigation, they are
not the most important issues here, so option A is not the best answer. Option C is wrong
because the college are not looking to renew the contract, so maintaining the business
relationship is immaterial in this instance. The statement in D is correct but the binding
nature of any decision is both an advantage and a disadvantage. Option E is also not the
best answer for the reasons already stated, although it is an advantage of arbitration as a
means of resolving the dispute.
Question 3
A company is owed a significant amount of money by a partnership in relation to an
alleged failure to comply with a contract to supply goods. The partners are adamant they
do not owe the money, arguing that the company is in breach of contract of an implied
term as to quality. Negotiations to resolve the matter have failed, as has mediation, and the
company has not received the outstanding monies.
What advice should the solicitor give to the company before issuing proceedings?
A As it has not been possible to resolve the dispute, there is no alternative but to resort to
litigation and issue proceedings.
B Civil litigation is governed by the Civil Process Rules, which dictate the procedure that
must be adopted when pursuing a claim through the courts.
C The only advantage of litigation is that a final decision will be made by the judge but
the disadvantage is the increased cost.
D Once a judgment has been given, the parties must write to the High Court for
permission to enforce the judgment.
E Once a claim has entered the litigation process, it must follow all five stages up to and
beyond the trial.
Answer
Option A sets out the best advice as litigation is the only means of resolving the dispute
in the absence of agreement. Option B is wrong as the procedure is governed by the Civil
Procedure Rules and not the Civil Process Rules. Option C is not the best advice as there
are other advantages to litigation over ADR including the availability of full disclosure of
documents. Option D is wrong as the successful party does not have to write to the High Court
for permission to enforce the judgment – this is the procedure required to enforce a decision
in arbitration. Option E is wrong as most claims are settled well before a trial.
During a visit to her uncle, a woman is badly bitten by his dog. Her finger is severed in the incident and she requires surgery to reattach her finger. She is advised by her doctor that it will not be possible to gauge whether the surgery has been successful for six months and a further operation may be needed. She will also require physiotherapy.
The woman gives careful thought to claiming compensation from her uncle. She concludes that she will pursue a claim.
The uncle wishes to avoid the costs and delay of court proceedings and would prefer that the claim is resolved now through alternative dispute resolution (ADR). The uncle puts forward a close friend who is suitably qualified to conduct a mediation. The uncle says that his friend has excellent qualifications and that they will not find anyone able to exercise better judgement. The woman is uncomfortable about the proposed appointment and is worried that she will not secure full compensation if she does not issue formal court proceedings. The woman decides that mediation is not appropriate and she would like to instruct a solicitor to issue proceedings.
Which of the following statements best explains why the woman should decline to participate in ADR as proposed by the uncle?
A. The mediator will not be truly independent because he is a friend of the uncle and has been selected by him.
B. The woman will have to be unrepresented in mediation and will not therefore have the benefit of legal expertise in presenting her case.
C. The mediator has the authority to impose a settlement on the woman and she is concerned she will not receive full compensation.
D. The woman will be required to meet her own costs of mediation whereas she can recover all her costs if she is successful in court proceedings.
E. The costs of mediation are likely to be disproportionately high compared to the cost of resolving her claim through the court.
A - The mediator will not be truly independent because he is a friend of the uncle and has been selected by him.
Your client is London Properties Limited (‘LPL’).
LPL is a landlord in a dispute with its tenant (a well-known retail chain of shops) regarding which party is responsible for certain outstanding repairs on a site under the terms of a commercial lease. The site in question is a listed building, which further complicates the technical issues between the parties.
The tenant has signed leases on many other sites owned by LPL over the last 15 years. LPL have usually found the tenant to be unrealistic and deeply entrenched in any initial negotiations regarding responsibility for repairs. Your client says that the same is true in this dispute. In the past, the tenant has later adopted a more realistic stance after receiving opinions from independent and neutral building surveyors (this has occurred on at least 8 occasions) on rental disputes, and senior counsel on issues relating to repairing covenants.
Your client wishes to avoid litigation on this technical dispute, as it does not wish for other potential tenants to be aware of this dispute with this tenant. This is particularly because the rental market is relatively depressed and LPL do not want to have to incentive potential new tenants by reducing rental levels any further.
Your client is keen to resolve the dispute within the next two months before its end of year accounts are due.
In these circumstances, which ONE of the following is the best advice to provide to your client?
Attempt negotiation
Attempt Mediation
Attempt Early Neutral Evaluation
Issue proceedings
Attempt Early Neutral Evaluation
This is both CORRECT and the BEST ADVICE. On these facts, attempting Early Neutral Evaluation (ENE) could be highly effective in light of your instructions.
ENE may assist because this tenant is unrealistic and deeply entrenched in the position it has adopted. ENE may cause the tenant to later adopt greater realism (see The Jackson ADR Handbook at 22.06 and 22.7).
Also, ENE is a private & confidential process (see Jackson at paragraph 22.05) which is important to your client. ENE could also be arranged quickly which is again important to your client.
Finally, in the past, the tenant has been more realistic after receiving, and reflecting on, the opinions of neutral building surveyors (this has occurred on at least 8 occasions) on rental disputes, and senior counsel on issues relating to repair covenants. This independent opinion is not something which negotiation or mediation will offer.
