Assessing the adjudication pilot

This article provides a summary of the outcome of a review and evaluation of the Professional Negligence Adjudication Scheme (the scheme) pilot, which concluded in November 2017 and was subsequently approved by the Civil Procedure Rule Committee in 2018. Paragraph 6(i) of the protocol now states that the letter of claim should, inter alia, include: ‘An indication of whether the claimant wishes to refer the dispute to adjudication. If they do, they should propose three adjudicators or seek a nomination from the nominating body. If they do not wish to refer the dispute to adjudication, they should give reasons.’

1. The working party

At the direction of the then master of the rolls, Lord Dyson, a working party was set up in 2015 which included representatives from the Ministry of Justice, the Professional Negligence Lawyers Association, Professional Negligence Bar Association and the Association of British Insurers. I was appointed as the independent reviewer to consider and evaluate the scheme and make any necessary recommendations. The pilot was relaunched in May 2016 under the supervision of Mrs Justice Carr and Mr Justice Fraser and ran for about 20 months.

2. Rationale behind the scheme

The scheme is a novel alternative dispute resolution (ADR) procedure for professional negligence disputes which is entirely voluntary. It is an idea based upon the statutory adjudication scheme which enables parties to a construction dispute to obtain a swift interim decision on disputes. The intention behind the scheme is to enable parties to a professional negligence dispute to obtain a quick adjudication of their dispute, at relatively minimal cost, which will be binding upon the parties, unless one or both of them wish to take the matter to a court or an arbitration hearing.

3. Scheme documents, structure and main features

The scheme documents comprise the Scheme Rules; Guidance Notes; and the Standard Terms of Instruction for Adjudicator.

The essential features of the scheme are as follows:

• The parties must agree in writing that a dispute will be referred to adjudication and be bound by the scheme rules. Although participation in the scheme is entirely voluntary, once committed the parties are required to see the process through.
• Once the parties have agreed to participate, an adjudicator will be selected by the chair of the PNBA from a panel of barristers who specialise in professional negligence disputes. However, the parties are at liberty to bypass the appointing body altogether if they jointly agree on an adjudicator and that person has agreed to act.
• The adjudicator will ask for evidence and written submissions from the parties.
• Within 56 days of their appointment the adjudicator will provide a reasoned written decision which will be legally binding upon the parties unless and until altered by a court or arbitral tribunal (unless the parties have opted for finality).
• The parties will be jointly liable for the adjudicator’s costs, which will be within a set limit. The Guidance Notes provide a helpful table by way of guidance on the likely costs that may be incurred.
• Although the process of adjudication is intended to be confidential, the adjudicator’s decision will not be confidential unless the parties agree otherwise. The Guidance Notes explain that the rationale for this is that many claimants and defendants ascribe value to the notion of public evaluation or declaration and therefore the decision does not remain confidential once rendered. It should, however, be noted that the parties are at liberty to opt for confidentiality from the outset.

Not every professional negligence dispute will be suitable for the scheme. For example, disputes which genuinely require complex expert evidence to enable a decision to be made on issues of breach of duty or causation may not be suitable and for these reasons the scheme is not suitable for medical negligence disputes.

4. Summary of feedback

Written feedback was obtained from claimant solicitors, defendant solicitors, insurers and adjudicators. This was followed by detailed telephone interviews. At the time of writing the report in November 2017, a total of 45 proposals had been made to the scheme. Of those, 33 were made by defendants and 12 had been made by claimants. There were a total of six accepted proposals and five completed adjudications. Following the confirmation of the review and evaluation report, a total of seven cases successfully went through the pilot.

Feedback from scheme cases

The claimant solicitors spoke positively of the structure of the scheme, the clarity of the documents, the effectiveness of the timeframes and the decision which was rendered. It was noted that the scheme allowed deadlocks on issues such as quantum and causation to be broken, and provided a means of settling an otherwise lengthy and costly dispute. The defendant solicitors also spoke positively of their experience with the scheme. Because trial was the only alternative, which would have cost far more in legal fees, the defendant solicitors felt the scheme provided the parties with a quick and cost-effective means of resolving their differences. It also helped the parties to avoid having to incur substantial costs in carrying out extensive disclosure and preparing witness statements. The defendant solicitors stated that the scheme had provided the parties with the flexibility to agree to limit the issues to be decided by the adjudicator.

Adjudicator feedback

The adjudicators provided feedback of their own experiences as well as obtaining feedback from the parties on cases which had successfully been through the scheme. The adjudicators indicated that the appointment procedure was clear and effective, and that the timeframes were realistic and met the policy objectives of the adjudication process (which was to provide the parties with a quick decision). The adjudicators observed that the scheme proved successful in providing parties with a clear answer to the disputed issues. In all of the cases proceeding through the scheme, the parties opted for a binding decision rather than a temporarily binding decision.

Insurer market feedback

Interviews with insurers indicated that although they preferred mediation over litigation, they considered that the scheme was a useful alternative to mediation in certain cases. It was also stated that insurers were actively encouraging defendant solicitors to consider and make proposals to the scheme. 

5. Recommendations and amendments

I made a number of recommendations. The two most important concerned the following:

(i) ADR compulsion

Some claimant solicitors indicated that there should be an element of compelling the parties to engage, because some parties simply ignored an invitation to engage with the scheme. Clearly, ignoring an invitation to ADR, whether mediation, the scheme or any other form of settlement procedure, may attract adverse cost consequences for the defaulting party (PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288 and Thakkar v Patel [2017] EWCA Civ 117).

Although litigating parties in England and Wales cannot be compelled to engage with ADR (Halsey v Milton Keynes NHS Trust [2004] EWCA Civ 576) they can be encouraged to engage with ADR and therefore the scheme. My recommendation, therefore, was to amend the Guidance Notes so that the extent of the parties’ ADR obligations within the civil justice system is made clearer. In particular, I recommended that the Guidance Notes be amended to make clear that: (i) there is a judicial expectation that the parties will constructively consider ADR; (ii) parties cannot simply ignore a proposal to refer the matter to adjudication, which will be considered as unreasonable conduct by the courts; and (iii) the courts may penalise parties for unreasonably refusing ADR. This recommendation is currently being worked on.

(ii) Adjudicator conflicts of interest

There was concern from some respondents regarding the potential for conflicts of interest arising between the panel adjudicators and their ‘day job’ in accepting instructions from panel firms specialising in high-quantity defendant professional negligence work from the same insurers. Here my recommendations to revisit and amend the existing provisions in the scheme to strengthen the provisions concerning disclosure by adjudicators of conflicts issues is currently being worked on.

Conclusion

As the results of the pilot indicate, the scheme provides disputing parties with a quick and effective adjudication of their dispute without the need to incur the potentially vast expense of seeking redress from the courts. The scheme’s flexible nature allows it to be adapted to the nature of particular disputes and can be used to break any deadlocks on difficult legal issues which would otherwise cause the parties to issue proceedings. The scheme has been and will continue to be a success, as more solicitors and insurers recommend it in the resolution of professional negligence disputes.

Masood Ahmed is an associate professor at the University of Leicester and a member of the Civil Procedure Rule Committee