Northern Ireland
In your jurisdiction, are there any formal ADR procedures available for resolving commercial disputes other than litigating (or arbitrating) to a final hearing?
Parties invariably informally negotiate to some degree at the outset of a dispute either as an alternative to, or at the same time as litigation or arbitration. However, there are also a number of more formal types of ADR which are common-place in Northern Ireland across all types of commercial disputes. The main types of ADR in Northern Ireland are mediation, adjudication, expert determination, early neutral evaluation and joint consultation.
Mediation is a voluntary, non-binding, private process in which a trained independent person (usually Kings Counsel or a retired judge) helps the parties to try to reach their own negotiated settlement. This is the most common method of ADR and has a high success rate.
Adjudication involves a neutral third party who makes a decision that is binding, pending any subsequent court or arbitral award.
Expert determination involves the appointment of an expert in the subject matter of the dispute to make a decision which the parties agree beforehand to accept as binding. It is usually adopted for specific technical issues. Although generally classified as a form of ADR, this is significantly different from the other methods, most importantly in that the outcome of the process is generally binding on the parties and non-appealable.
Early neutral evaluation is a non-binding preliminary assessment of fact, evidence or legal merits by one or more independent professionals, often retired judges.
Joint Consultation is the most common informal mechanism used in Northern Ireland. It is a without prejudice meeting between opposing legal representatives, usually with their respective clients present. This is a flexible process which usually involves the legal representatives progressing the negotiation and reporting back to their client for input. The outcome of the process will not be binding unless mutually agreed between the parties.
Does engaging in ADR have any effect on potential or existing litigation or arbitration?
Engaging in ADR does not itself stop time running for the purpose of limitation of actions nor does it impose an automatic stay on any proceedings or arbitration already commenced, although this can simultaneously be achieved by other means. The right to litigate or arbitrate is also not directly affected by engaging in ADR. Unless the parties have agreed they will try an ADR process before issuing proceedings, litigation or arbitration can be commenced or continued whilst ADR is pursued and will be available if no settlement is secured.
Is ADR compulsory and if so are there any consequences if a party fails to engage in ADR? If it is not compulsory are there any plans for this to change?
Whilst not compulsory, a failure to engage in ADR can result in the court applying cost penalties at the resolution of the dispute, even if successful when costs would normally follow, and a requirement to engage in a without prejudice meeting is set out in the Commercial Pre-action Protocol.
On March 15, 2021, the then Lord Chief Justice, Sire Declan Morgan, and the former Minister for Justice, Naomi Long, launched the Northern Ireland Courts and Tribunals Services Digital Modernization plan which seeks to bring a number of changes to the courts in Northern Ireland, with one of the key changes being an increased focus on the use of ADR. The Digital Modernization plan has a roadmap in place up to 2026 with plans to continue its implementation up to 2030. The Modernization Plan will utilize and develop ADR solutions available within NI, to provide a faster and more effective overall legal service.
The Industrial Tribunals and the Fair Employment Tribunal in Northern Ireland in April 2023 introduced Judicial mediation to the jurisdiction, which is a voluntary process facilitated by a specially trained Employment Judge, which might be indicative that similar strategies will follow in the commercial courts.
Can the parties agree, in advance of any potential dispute, to engage in ADR?
Yes. The parties can agree in advance that they will or may try one or more ADR methods to resolve any dispute that may arise and many commercial contracts will include dispute resolution clauses, involving one or more of these methods. This has the advantage of putting ADR automatically “on the agenda” in the event of a dispute and providing a mechanism for reaching a quick solution.
When does ADR generally take place?
ADR can take place any time from pre-issue to appeal but the optimum timing in any dispute will depend on the particular circumstances, including whether the issues in dispute are sufficiently clear.
Is ADR subject to without prejudice privilege and/or confidential? If not, is there any other means to protect confidential information?
Yes. ADR in Northern Ireland is generally confidential and will be protected by without prejudice privilege. Where the parties engage in mediation they will usually be obliged to sign a mediation agreement before the mediation commences, in which they agree to keep matters discussed confidential between the parties.
Does the output from ADR create precedents?
As ADR is private, it does not create a precedent and helps avoid adverse publicity associated with a court judgment. For this reason, it is unsuitable if you need a court decision allocating blame or require and an injunction. A settlement achieved through ADR is usually recorded in a written agreement which will be enforceable between the parties. It is generally not binding on third parties.
Who bears the costs of ADR?
Typically the parties share the cost of ADR, albeit it is open to the parties to agree different terms as part of the settlement terms.
Is your jurisdiction subject to any specific rules for cross border ADR?
Following the UK’s departure from the European Union, there is currently no dedicated reciprocal regime for mediations arising in respect of cross-border disputes between parties in the UK and those in EU member states. However, the Cross Border Mediation (EU Directive) Regulations 2011 and the Cross-Border Mediation Regulations (Northern Ireland) 2011 still apply (with modifications) to EU cross-border mediations which started before December 31, 2020.
In May 2023, the UK signed The United Nations Convention on the International Settlement Agreements Resulting from Mediation (Singapore Convention), but UK legislation will be required to bring it into force. When that happens it will make enforcement easier because, instead of first obtaining a judgment or award for breach of contract, the Singapore Convention will allow the enforcing party to go directly to a court in the country where enforcement is sought. That court will then enforce the settlement agreement, unless one of the limited grounds for refusing enforcement set out in the Singapore Convention applies. The Singapore Convention is modelled on the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards, and in effect will give mediation settlements the same currency and status as the New York Convention gives to arbitration awards.
Are there any particularly unusual features of ADR in your jurisdiction that you are aware are different to other jurisdictions?
There is no obligation for mediators in Northern Ireland to be legally qualified, albeit they usually are.
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