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<h3>Conway v Conway teaches an expensive lesson to not overlook mediation in disputes</h3>
Business owners may assume that the courtroom is the only place to settle a dispute. But alternative dispute resolution (ADR), an out-of-court process involving mediation or arbitration, can resolve disputes quickly and efficiently and with much lower management time and legal costs. In fact, a <a href="https://www.familymediationcouncil.org.uk/wp-content/uploads/2020/01/Family-Mediation-Survey-Autumn-2019-Results.pdf">2020 survey</a> by the Family Mediation Council found that mediation is successful in over 70% of cases.
Further, the overriding objective of the Civil Procedure Rules – which are essentially the rules that govern civil court cases – explicitly refers to ADR with regard to saving costs in section 1.1(2)(f). And section 1.4(2)(e) states a ‘court must further the overriding objective by actively managing cases’, which includes ‘ordering or encouraging the parties to use, and facilitating the use of, alternative dispute resolution’.
However, misconceptions and scant information surrounding out-of-court mechanisms can lead business owners to think of ADR as a waste of time and money and a process that will lead to a less favourable outcome than going to the courts. This was certainly the case in <a href="https://www.bailii.org/ew/cases/Misc/2024/19.html">Conway v Conway &amp; Anor</a> last May, a property dispute over a site in Bedworth, where defendants continuously rejected offers for mediation made by the claimant’s solicitor.
Despite winning their case in court, His Honour Judge Mithani KC applied a 25% reduction to the costs that the defendants could recover because they had, in his view, unreasonably refused to engage in ADR. He wrote in his judgment: ‘One matter that seriously concerns me is why the Defendants did not agree to mediation when it was put to them.’ It emerged that the claimant’s solicitor made an offer for pre-action mediation in 2022, another offer that year, and a third and final offer on the first day of trial.
This case echoes the judgments in Churchill v Merthyr Tydfil County Borough Council and Northrop v BAE Systems, which signpost that courts are likely to continue to penalise those who refuse to engage in mediation.
<h3>RTI Ltd v MUR Shipping BV: the sanctity of the contract</h3>
This <a href="https://www.bailii.org/uk/cases/UKSC/2024/18.html">case</a> was of considerable interest as it settled a series of conflicting decisions and shone a light on the increasingly murky waters of force majeure, reinforcing the importance of clarity when drafting contracts.
Unfortunately, ‘force majeure’ events, which essentially means ‘acts of God’ – in other words, unforeseen events beyond anyone’s control – have become more prevalent in recent years, with a greater number of climate-related disasters, pandemics and conflicts around the world. In this particular case, it was the Ukraine war that triggered a force majeure clause, when US sanctions imposed on the parent company of RTI Ltd (RTI) prevented the charterers from paying shipping company MUR Shipping (MUR) in US dollars. As the contract between the two parties stated freight must be payable in US dollars, MUR ceased performance.
In the force majeure clause, it was stated that ‘neither Owners nor Charterers shall be liable to the other for loss, damage, delay or failure in performance caused by a Force Majeure Event’, and one of the definitions of the force majeure event in this clause – alongside other requirements such as its unpredictable and uncontrollable nature – was that ‘It cannot be overcome by reasonable endeavors’. RTI proposed to remedy the problem by paying in euros, but MUR refused this as such a provision was not provided for in the original contract. To the Court of Appeal, RTI’s proposition was held to be a valid solution that would not cause detriment to MUR and was only breaching the contractual terms as a means to ‘overcome the state of affairs caused by the imposition of sanctions.’
However, the Supreme Court unanimously overruled the Court of Appeal, finding that without clear wording to the effect, accepting an offer of non-contractual performance did not constitute undertaking ‘reasonable endeavours’.
<ul>
<li>See also: <a href="https://linnearcms.wpenginepowered.com/resources/ai-literacy-making-sure-business-complies-new-eu-regulations/">AI literacy: making sure your business complies with new EU regulations</a></li>
<li>See also: <a href="https://linnearcms.wpenginepowered.com/resources/terms-and-conditions-for-smes/">How to issue shares in your company</a></li>
<li>See also: <a href="https://linnearcms.wpenginepowered.com/resources/what-does-new-eu-ai-act-mean-your-business/">What does the new EU AI Act mean for your business?</a></li>
</ul>
In other words, the contract itself was binding, and what the Court of Appeal considered to be ‘common sense’ was contractually invalid.
With force majeure disputes becoming increasingly common, this case served as a timely reminder to those drafting contracts to account more fully for unforeseen events and avoid ambiguous drafting.
<h3>Arbitration Bill passes through Lords</h3>
Following recommendations by the Law Commission in 2023, the UK government has reintroduced the <a href="https://bills.parliament.uk/bills/3733">Arbitration Bill to amend the Arbitration Act 1996</a>.
Changes will include allowing tribunals to issue awards on a summary basis (this usually means making an award without the need for a hearing where the Tribunal believes that a party has no real prospect of success), and giving courts extra powers to act on the orders of arbitrators. A further amendment seeks to clarify that England and Wales will be the seat of the law if parties do not specify otherwise.
The bill is especially significant as some commentators have noted that London’s position as the leading seat for international arbitration has been challenged in recent years by jurisdictions such as Singapore. It is hoped that these changes to modernise the law will help to protect and bolster London’s reputation.
It’s expected that the bill will be passed into law in the first half of 2025.
<h3>Shepherd Construction v Kingspan and others: new cladding law remains untested</h3>
What was set to be a landmark dispute this year was settled out of court, potentially sparing cladding manufacturer Kingspan from a claim valued at nearly £70 million.
This case was set to be the first time the courts would consider action against a cladding manufacturer under section 149 of the Building Safety Act 2022, which was introduced in 2022 as part of the post-Grenfell Tower building safety regime. The provision allows parties who have suffered injury, damage or loss from dangerous classing to sue cladding manufacturers.
The Claimant, Shepherd Construction, argued that Kingspan knew or should have known that its insulation contravened building regulations, whereas Kingspan insisted that third-party assessments ruled the cladding was compliant with building regulations. A judgment in this case would have signposted how the courts might interpret each party’s share of responsibility under the Building Safety Act, but the law remains untested. The settlement was not disclosed, but court documents show that <a href="https://www.constructionnews.co.uk/buildings/building-safety/kingspan-settles-in-cladding-compensation-test-case-30-08-2024/">Shepherd had already received more than £45 million</a> in separate settlements.
<h3>New legislation promises to crack down on the misuse of NDAs</h3>
Before the dissolution of Parliament on 30 May 2024, <a href="https://www.legislation.gov.uk/ukpga/2024/21#:~:text=Changes%20to%20legislation%3A,or%20before%2023%20December%202024.">legislation</a> was fast-tracked into law to crack down on the misuse of non-disclosure agreements (NDAs) or so-called ‘gagging orders’, providing victims with the ability to access support and legal advice.
NDAs, also known as confidentiality clauses, can be useful for companies who want to protect sensitive commercial or confidential information in a business-to-business context, but in recent years there has been increased scrutiny on NDAs being used to prevent individual victims of sexual misconduct, harassment or discrimination from speaking out.
Previously, NDAs could be abused to prevent victims of a crime from accessing justice or support services. The Victims and Prisoners Act 2024 voids the contractual provisions of an NDA for victims of a crime and allows them to speak to law enforcement agencies, qualified lawyers, support service professionals and relatives for support, among others.
Further to this, it is expected that regulators are unlikely to look favourably on template NDAs being forced on individuals without justifiable circumstances or an appropriate assessment.
To find out more about the <a href="https://www.linnearlegal.co.uk/commercial/">commercial law services</a> we offer at Linnear Legal, <a href="https://www.linnearlegal.co.uk/get-in-touch/">speak to one of our lawyers today.</a>

Commercial law 2024 roundup: key cases and developments

A roundup of the most significant cases and developments from 2024 in commercial law, including the Arbitration Bill and a crackdown on NDAs.

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