SMALL BUSINESS PROBLEMS, ADR SOLUTIONS
Small businesses are the backbone of our economy. The UK Department for Business, Innovation & Skills reports that, at the start of 2015, small businesses accounted for 99.3 percent of all private sector businesses in the UK and 48 percent of private sector employment. Small and medium sized enterprises (SMEs) together generate a combined annual turnover of £1.8 trillion. As with many businesses, when legal problems arise, SMEs often seek recourse in the court system. However, the conventional adversarial approach to justice is no longer sustainable due to the rising cost of litigating. Earlier this year, significant court fee increases took effect, hiking the cost of commencing proceedings by up to 600 percent in some cases. The Ministry of Justice has since announced that further increases are being mooted. In the midst of the fallout, a light is being shone on ADR once more, not just as a sound, cost-effective option to resolve commercial disputes, but critically as a means of providing access to justice for SMEs priced out of the court system.
Two tier justice
Civil court fees for claims between £10,000 and £200,000 increased dramatically in March 2015, to 5 percent of the sum claimed, with a maximum fee set at £10,000. For a claim of £150,000 the increase meant a rise in the upfront cost of bringing proceedings, from £1315, to £7500 (5 percent of the claim value). Barely had the dust settled when the Ministry of Justice announced a new round of consultation on further proposed increases, which would see the maximum fee for money claims rise from £10,000 to £20,000, or a removal of the cap completely.
Jan-Mar 2016 issue
Chartered Institute of Arbitrators (CIARB)