A justice of the UK High Court recently held that “friendly discussion” is a legitimate form of alternative dispute resolution. The parties had a contract requiring them to “first seek to resolve [a] dispute or claim by friendly discussion”; if it was unsuccessful, they would move to binding arbitration. Asked to rule on whether the clause was valid, Teare J said: “There is obvious commercial sense in such a dispute resolution clause. Arbitration can be expensive and time consuming. It is far better if it can be avoided by friendly discussions to resolve a claim. …[T]here is a public interest in giving effect to dispute resolution clauses which require the parties to seek to resolve disputes before engaging in arbitration or litigation.” The NSW Court of Appeal has previously found that an agreement to undertake “genuine and good faith negotiations” to resolve disputes was valid.
One Reply to “UK court upholds “friendly discussion” as valid ADR”
Dear Ignorantia Juris,
You rightly highlighted this judgment. There are two striking things about this decision:
1. The UK High Court decided that an agreement to engage in “friendly negotiations” as a condition precedent to arbitrating a dispute was enforceable by following a decision of the NSW Court of Appeal and by NOT following the 1982 decision of the House of Lords, Walford v Miles  2 AC 128.
2. The decision brings the UK High Court in 2014 to approximately to the position on enforceability of agreements to negotiate that the NSW Supreme Court had achieved by 1992 with Giles J’s judgment in Hooper Bailie Associated Ltd v Natcon Group Pty Ltd (1992) 28 NSWLR 194. A Great Leap Forward to 1992?
Robert Angyal SC
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