Scottish Court promotes Alternative Dispute Resolution
Although we are London based, and have only one other office globally (in Dubai), as a firm we provide advice to, and meet, clients all over the world. Our reach even extends to Scotland!
Being Scots Law qualified I try to keep an eye on the construction market in Scotland – both legally and commercially. From a personal perspective my eyes are somewhat distracted at the moment by the development of a new main stand at Tynecastle Park, Edinburgh, which interestingly is being procured under a construction management model (no main contractor), with the new stand being constructed over and around the current main stand whilst still in operation. This is similar, albeit on a smaller scale, to the construction of the new stand at Anfield.
The point of this blog is to highlight a new Practice Note issued on 27 March 2017 by the Court of Session (Scotland’s High Court) relating to Commercial Actions. A Commercial Action in the Court of Session is the closest Scotland has to proceedings raised in the TCC. A Practice Note gives guidance as to the manner in which a certain court might deal with procedure and what is expected of legal advisers in proceedings.
" A Practice Note gives guidance as to the manner in which a certain court might deal with procedure and what is expected of legal advisers in proceedings. "
There is no formal “pre-action protocol” for commercial or contractual disputes, such that our English clients would recognise, in Scotland. There is, however, a requirement for pre-action communication between the parties with the aim of ensuring that the nature and extent of the dispute has been the subject of careful discussion between the parties. Alternative Dispute Resolution (“ADR”) was mentioned in the previous Practice Note, now replaced, but this was really more of a nudge than anything more forceful.
ADR takes a bit more of the centre stage in the new Practice Note, although it remains relatively gentle. Parties “should” now “consider” referral of the dispute to ADR before raising proceedings. There are also potential cost implications if the parties have not properly considered whether starting the court action is truly necessary.
Post-commencement of proceedings, the court will take a proactive role in assessing whether a joint meeting between the parties ought to take place, in which respect a commercial judge can order that such a meeting takes place specifically with a view to the parties exploring whether or not settlement is possible or whether the issues in dispute can be restricted. There is an additional requirement for parties to consider ADR in advance of the procedural hearing.
Finally, but importantly, sanctions. It is easiest simply to quote the relevant paragraph:
“Any failure of a party to comply with a provision in the rules or a court order may result in a refusal to extend deadlines, dismissal of the action or counterclaim, decree in terms of the conclusions of the summons or counterclaim or a finding of expenses.”
This process is similar to the English pre-action protocol system although arguably less structured. It is certainly less prescriptive. However, the risk of costs sanctions is present if parties do not seriously consider ADR. There would be nothing, of course, to stop parties agreeing that a Scottish-based contract incorporates the Construction and Engineering Pre-Action Protocol as part of the dispute resolution mechanics. Such agreement might depend on a party’s attitude to ADR.