The crucial role of Alternative Dispute Resolution in infrastructure projects

Andrew Beaumont and Martin Borley, Associate Surveyors here at DM, discuss Alternative Dispute Resolution (ADR) methods and the role they play in compulsory purchase compensation negotiations for infrastructure projects. 

When a Compulsory Purchase Order is made to acquire land or buildings as part of an infrastructure project, the acquiring authority must negotiate fair compensation with the owner. Being transparent, empathetic and open-minded in the negotiation process gives the best possible chance of reaching an agreement. However, this process is not always straightforward. 

If, after initial engagement, you cannot reach an agreement, Alternative Dispute Resolution (ADR) can be a very effective tool. While it does not provide a silver bullet, it does offer a faster, more cost-effective and less adversarial approach than litigation. 

ADR is not a procedural or legal requirement, nor is it suitable for all disputes. However, parties are strongly encouraged by professional bodies such as the RICS and the courts to use ADR wherever it is appropriate to do so. Those who refuse to engage with ADR may have to justify their decision to the court. They also risk having to bear the ultimate costs of potentially expensive and avoidable litigation. 

What is the Alternative Dispute Resolution process? 

At Dalcour Maclaren, our Land & Property team acts for acquiring authorities in infrastructure projects that require compulsory purchase processes. If we cannot reach a negotiated agreement with a claimant, we can progress the process to Alternative Dispute Resolution (ADR). 

ADR is a method of addressing (and resolving) disputes when compensation for the compulsory purchase of a land or property cannot be agreed. The ADR process begins when both parties recognise that negotiation between themselves alone will not be sufficient to achieve a resolution. It requires voluntary participation from both parties and is usually handled with professional support acting on behalf of the respective parties.   

ADR is a valuable resource in these situations, as it can prevent disputes from proceeding to litigation before the Upper Tribunal. The guiding principle behind ADR is that it offers conflicting parties an opportunity to settle at an earlier stage in legal proceedings, or to head off such proceedings entirely.  

What are the Alternative Dispute Resolution methods? 

There are several ADR processes that can be effective at different stages of a dispute. The most appropriate method will be dictated by the particular circumstances of the case, and also the preference between the parties as to whether they want a binding outcome. 

Negotiation (non-binding) 

Negotiation is the most common, flexible and informal of the ADR processes. Negotiators acting for both parties will attempt to reach an agreement on the matters in dispute without applying to an independent third party.  

Negotiation is a voluntary, non-binding process. However, both parties should enter into it with a genuine effort to resolve or limit the areas of dispute. Even when court proceedings have been issued and are ongoing, negotiation can and should continue.  

Our intention is to pursue negotiations for as long as they remain productive and hold a genuine chance of achieving resolution: even, in colloquial terms, until we reach the cusp of formal adjudication.   

Mediation (binding or non-binding) 

In mediation, a trained, independent and neutral professional (the mediator) will assist the two parties in their negotiations. They aim to help them find a middle ground between their positions and reach a mutually acceptable agreement. Although mediation is not automatically legally binding, both parties may agree to be bound by the outcome. 

Mediation enables both parties to discuss their requirements in confidence, and the options for resolution. The mediator will not make a determination of the issues or impose a settlement on the parties. Instead, their role is to guide the discussions. 

Evaluative mediation is a common technique. In this case, the mediator considers the issues in dispute and offers an informed view on the merits of each party’s position. They can also suggest specific settlement terms, and offer opinions on the potential outcome were the case to proceed to litigation.   

Early Neutral Evaluation (non-binding) 

Early Neutral Evaluation (ENE) is a form of ADR in which a neutral third party provides a non-binding opinion on the merits of a case. That third party is typically an experienced surveyor, judge or legal practitioner.  

Their professional opinion aims to help parties understand the strengths and weaknesses of their respective positions. That can lead to a settlement before incurring the costs and delays of full litigation. 

Arbitration (binding) 

In arbitration, an accepted expert in the disputed area (or in rare instances, a panel of arbitrators) makes a legally binding decision based on the information given to them by the respective parties. Flexibility can be built into the arbitration, by adopting a tailored approach which can involve informal hearings, written submissions, and limited disclosure. A further benefit is that arbitration hearings are private, which can be preferred in dealing with family matters where discretion is important. 

Mediation-Arbitration or Med-Arb is a common form of arbitration. This hybrid approach uses elements from both processes to reach a settlement. In the first instance, mediation is pursued. However, if the parties cannot agree on all the matters in dispute, the mediator will become an arbitrator. The arbitrator will then make a legally binding decision.  

Expert Determination (binding or non-binding) 

In this process, the two parties jointly choose an expert to decide on some or all of the disputed points. They also agree on a detailed outline of the expert’s powers and duties, and the specific issues to be determined. The parties agree to accept the expert’s decision as legally binding.  

Expert determination offers a quick and cost-effective way to resolve technical or specialist disputes. We have been involved in negotiations where expert determination has decided market values, the reduction in land value due to the impact of a project, and the potential value of land acquired for mineral extraction.  

How we act for our clients 

At DM, we usually act for clients throughout the compulsory purchase compensation negotiations. While we always aim to reach a settlement without the requirement for ADR, there are times when the positions of the claimant and the acquiring authority are too far apart. At that point, we will propose and support suitable ADR processes.  

When done well, ADR has the power to help people out of their entrenched positions. However, when it’s unsuccessful, or the parties do not engage constructively with the process, participants can respond by bunkering down and becoming less likely to engage in further conversation or negotiation. That’s why it’s so important to work with an experienced team you can trust.   

The costs of ADR can be shared or covered by the acquiring authority. This will depend on the circumstances of the particular case. However, ADR typically offers excellent value for money, particularly when compared to the potential cost of litigation. 

As an example, the cost of a joint instruction for professional third-party property valuation confers significant value to the scheme if both parties are prepared to agree to the outcome as the basis of a negotiated settlement. 

What is the DM difference? 

At Dalcour Maclaren, we exclusively represent acquiring authorities in the infrastructure sector. That unrivalled experience with utilities, gas, rail and water companies enables us to identify early on when negotiation alone may prove insufficient to achieve our client’s objectives. Often, this is a gut feeling given credibility by years of experience.  

However, even when ADR is inevitable, we continue negotiating with the claimant and maintain an open and constructive dialogue throughout. Central to that is being completely transparent with the claimant and their representatives. That could be a surveyor, solicitor, land agent or family member who is acting on their behalf.  

If we take on a case that is in deadlock, in the first instance, we ask:  

“Where is there scope in this case for common ground?” 

“How can we establish the groundwork for open conversation and negotiation?”  

If that’s not possible, we try to understand the reasons why and investigate the history of the case to ascertain what may or may not have been agreed or committed to in the past. 

Disputes can arise because past assurances that have been made by one or more parties have not been fully or successfully delivered. Opening up an honest and constructive dialogue gives us a clearer understanding of what outcomes are possible, the likely timeframe for resolution, and the best possible routes to get there.  

Alternative Dispute Resolution is a practical solution that can help acquiring authorities and claimants achieve a positive outcome, but like all processes, it needs to be handled with care and tailored to the particular case. 

At DM, we offer dispute resolution and ADR services for infrastructure projects and take pride in the results we have achieved for our clients. 

Call 0333 188 5310 or get in touch with our specialist contacts to discuss your project.