When not to go to court
contractual dispute resolution clauses

When not to go to court

“When two or more people fall out with each other to the point where there is a dispute that can only be resolved by someone else deciding the answer, the first thought of most people may be to instruct a solicitor and go to court. However, where there is a written agreement that sets out a mechanism for dealing with disputes, such as the appointment of an arbitrator or expert adjudicator, the court has very limited powers to intervene. Perhaps surprisingly, even where there is a written agreement that sets out how disputes are to be determined, it is not uncommon for one of the parties to ignore all or part of the contractual dispute resolution provisions and go straight to court” advises Mark Sanders of Acorn Rural Property Consultants.

“When this happens, the other party, if properly advised, will inform the court that there is a written agreement with a contractually binding dispute resolution clause and the court will put any litigation on hold and allow the arbitration, adjudication or expert determination to take place. However, if, for whatever reason, the parties carry on with the court proceedings, both sides will be running up costs with solicitors which could end up being wasted”, remarks Sanders.

Acorn RPC has recently been advising a client in a case where there was a written agreement that stated that any disputes were to be resolved by an expert adjudicator. A number of disputes had arisen, and an adjudicator was duly appointed. The other party had also issued court proceedings. Our client had instructed solicitors and a barrister who failed to identify that the court proceedings included issues that the written agreement said should be determined by the adjudicator.

“Our client was unhappy about how the dispute was being handled by his legal team and decided to change solicitors. The new solicitors identified the point that the court proceedings included issues that the written agreement said should be determined by the adjudicator. The dispute, which had been running for several years with several unsuccessful attempts to reach a settlement, has now been settled by agreement”, says Sanders.

“This case is a good example of the general principle that, where two or more parties have signed up to a written agreement that sets out the mechanism for dealing with any disputes arising between them in a way that does not involve going to court, whatever they have agreed will take priority over the jurisdiction of the court”, concludes Sanders.

If you would like further information about any of the issues discussed above, please contact Mark Sanders on 01278 772655 or marksanders@acornrpc.co.uk

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