Litigation & Dispute Resolution Update

This article was prepared by lawyers from the London office of Mayer, Brown, Rowe & Maw

HUMAN RIGHTS

The following two cases show the impact on civil litigation of the European Convention on Human Rights. In the first case the Court held that withdrawal of a legal aid certificate could be a breach of Article 6 ECHR (right to a fair trial) and in the other the Court held that the length of time proceedings had taken was also a breach of Article 6.

R v Legal Services Commission ex parte Alliss, QBD Administrative Court (Jackson J) 25 September 2002

This was an application for judicial review of a decision by the Legal Services Commission ("LSC") to withdraw the claimant's legal aid certificate on the grounds that the withdrawal of legal aid was a breach of the claimant's right to a fair trial (Article 6(1) of the European Convention on Human Rights); that the decision to discharge the legal aid certificate was both unreasonable and inconsistent with earlier decisions; and it was flawed due to procedural irregularities.

Background

There had been a long running dispute between the claimant's family and a neighbouring family which culminated in the claimant ("X") commencing civil proceedings against the neighbour ("Y") for unlawful killing. X and Y were legally aided and the Legal Aid Board (the predecessor of the LSC) granted Y legal aid to instruct counsel. Shortly before the trial in November 2001, the LSC invited X to show cause as to why his certificate should not be discharged. The Funding Review Committee decided that the certificate should remain in place. The trial was adjourned until November 2002. The LSC subsequently sought the advice of leading counsel in respect of the certificate remaining in place and ultimately decided to discharge it. X appealed but the appeal was dismissed. Y's legal aid certificate remained in place and it provided for representation by counsel.

Decision

X's application was allowed. The Court held inter alia that withdrawing the legal aid certificate when X stood at the door of the Court, so that he would have to act in person against adefendant represented by counsel in a case which involved complex issues of fact and law, amounted to a breach of X's right to a fair trial. This denied him effective access to court and breached Article 6 (1) of the European Convention on Human Rights.1

Lawtel, Butterworths

Somjee v United Kingdom (App No 42116/98) ECHR 15 October 2002

The applicant first issued proceedings in 1988 in the employment tribunal, alleging racial discrimination by the regional health authority. Further sets of proceedings, alleging victimisation and unfair dismissal, were launched in August 1989. Matters were not finally dealt with until May 1998. The applicant submitted that pursuant to Article 6(1) European Convention on Human Rights the length of the proceedings had exceeded a reasonable time and she sought satisfaction for non-pecuniary loss.

Decision

The Court ruled that the reasonableness of the length of proceedings is to be assessed in the light of the circumstances of each case but regard must be given to the criteria laid down in case law: (1) the complexity of the case; (2) the conduct of the parties; (3)what is at stake for the applicant. In this case, although the applicant was to blame for some of the delays in the proceedings, delays caused by the judicial authorities had significantly contributed to the overall length of the proceedings which exceeded a reasonable length. This violated Article 6(1) of the Convention. The applicant had suffered non-pecuniary loss and was awarded damages.

Judgment accessible on Butterworths

ARBITRATION

Electrosteel Castings Ltd v Scan-Trans Shipping and Chartering SDN BHD, Commercial Court (Gross J) 9 October 2002

Adducing evidence

In this case, there was an arbitration decision in favour of the claimant on preliminary points regarding jurisdiction and the entitlement of the claimant to bring the action. The defendant applied under s 67 Arbitration Act 1996 2 to set aside the decision. The parties agreed that an application under s 67 constituted a re-hearing rather than a review. The issue before the Court was whether the evidence on the re-hearing was confined to the evidence that had already been adduced before the arbitrator.

Decision

The Court held that there is no requirement that evidence on a re-hearing under s 67 of the Act be confined to the evidence previously adduced before the arbitrator. It was noted that evidence that is introduced late might be viewed with some scepticism and the Court has the power to address such matters when dealing with costs.

Judgment accessible on Butterworths

ADR

Stay of proceedings

Cable & Wireless plc v IBM United Kingdom Ltd, QBD Commercial Court, (Colman J) 11 October 2002

The claimant applied for summary judgment on the construction of a clause in an IT outsourcing contract. The defendant cross-applied to the Court for an order that the claim should be stayed pending the dispute being referred to ADR pursuant to provisions in the contract which it asserted required this. The Judge noted that the application for a stay raised "Öan issue of great importanceÖas to the effect, if any, which should be given by the courts to agreements to refer disputes to ADR."

Background

The parties entered into an agreement ("the Agreement"). A dispute arose and proceedings were commenced by C&W for a declaration as to the meaning of a provision of the Agreement. The claimant applied for summary judgment in relation to that provision and the defendant cross-applied for a stay of the proceedings on the basis of clause 41.2 of the Agreement ("the ADR clause") which provided that "If the matter is not resolved through negotiation, the Parties shall attempt in good faith to resolve the dispute or claim through an Alternative Dispute Resolution (ADR) procedure as recommended to the Parties by the Centre for Dispute Resolution. However, an ADR procedure which is being followed shall not prevent any Party or Local Party from issuing proceedings." The parties did not succeed in resolving the dispute through negotiation. IBM wanted the Court to stay the proceedings while the parties complied with the ADR clause. Counsel for C&W submitted that (1) the clause was unenforceable because it lacked certainty. It imposed an agreement to negotiate which, based upon earlier authorities (Steyn J in Paul Smith Ltd v H&S International Holdings Inc, Courtney & Fairbarn Ltd v Tolaini Brothers (Hotels) Ltd3 ), is not enforceable in English law; (2) the last sentence of the clause contemplated the issue of proceedings therefore it could not have been the mutual intention that the reference to ADR should have binding effect.

Mutual intention

The Judge found that when the parties negotiated the agreement it was the mutual intention that litigation was to be a last resort in the event that negotiation and ADR were unproductive. That was not qualified in any way by the last sentence of the ADR clause. The "mere issue of proceedings" was not inconsistent with the simultaneous conduct of an ADR procedure or with a mutual intention to have the issue finally decided by the courts only in the event that ADR was unsuccessful.

Agreement to negotiate

The Judge had to determine whether the reference to ADR was nothing more than an agreement to negotiate and, as such, incapable of enforcement in English Law. He found that:

(1) The wording of the ADR clause was more than an agreement to attempt in good faith to negotiate a settlement. The clause went so far as to identify the use of the CEDR ADR procedure. In Courtney & Fairbairn Ltd it was held that "an agreement to negotiate cannot be enforced in English Law becauseÖit is too uncertain to have any binding force". There is also lack of certainty in an agreement to strive to settle a dispute amicably.4 Had the wording in the ADR clause provided that the parties "attempt in good faith to resolve the claim" it would have been unenforceable. In fact, it prescribed the means for attempting to find a resolution which provided sufficient certainty for a court to ascertain whether they had been complied with.

(2) CPR rule 1.4 provides that "(1) The court must further the overriding objective by actively managing cases" which includes encouraging parties to use ADR where appropriate. ADR is now "Öa firmly established, significant and growing facet of English procedure" and for the courts to decline to enforce contractual references to ADR on the grounds of uncertainty would be contrary to public policy. It was held that there was a sufficiently defined mutual obligation on the parties to initiate a mediation, select a mediator and present the mediator with its case.

Colman J added that contractual references to ADR which did not include provision for an identifiable procedure would not necessarily fail to be enforceable by reason of uncertainty. Where there is an unqualified reference to ADR, a "sufficiently certain and definable minimum duty of participation should not be hard to find." As regards enforcing the obligation, Colman J held that the reference to ADR was analogous to an agreement to arbitrate and that, as such, it was capable of being enforced by a stay of the proceedings or by injunction absent any pending proceedings.5 The remedy is discretionary in nature and the Court must consider relevant factors when exercising its discretion. In this case the appropriate course was for the hearing of the claim for declaratory relief to be adjourned until after the parties referred all outstanding disputes to ADR.

Judgment accessible on Butterworths

SETTLEMENT AGREEMENTS

Effect on agreement of refusal of draft Tomlin order

Thakrar v Ciro Citterio Menswear plc (in administration) & Others, ChD (Sir Andrew Morritt V-C) 1 October 2002

This was an application by the claimant ("T") for a declaration that the defendant company ("the...