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  • Warren Traynor

Ignore PACT At Your Peril

Occassionally there is big ground breaking case law. Here is one of the latest. Professional arbitration on court terms (PACT) is a form of alternative dispute resolution (ADR). It is partiularly suitable for lease renewal procedings under the Landlord and Tenant Act 1954. It is essential that your property advisers understand the latest legal developments.

The case of PGF II SA v OMFS Company 1 Ltd [2013] EWCA Civ 1288 sends out an important message to civil litigants, requiring them to engage with a serious invitation to participate in ADR, even if they have reasons which might justify a refusal, or the undertaking of some other form of ADR, or ADR at some other time in the litigation.

Put simply, a party ignored attempts or requests from the other to mediate the dispute, yet eventually went on to 'win' the case. Despite this it was decided that their costs should not be recoverable, on the basis that mediation might have avoided further costs.

Here is the judgement: "...In my judgment, the time has now come for this court firmly to endorse the advice given in Chapter 11.56 of the ADR Handbook, that silence in the face of an invitation to participate in ADR is, as a general rule, of itself unreasonable, regardless whether an outright refusal, or a refusal to engage in the type of ADR requested, or to do so at the time requested, might have been justified by the identification of reasonable allow the present appeal would, as it seems to me, blunt that message...

...The court's task in encouraging the more proportionate conduct of civil litigation is so important in current economic circumstances that it is appropriate to emphasise that message by a sanction which, even if a little more vigorous than I would have preferred, nonetheless operates pour encourager les autres...."

If you are engaged in a commercial property lease renewal, and you refuse to engage in PACT, this is a clear message that you run the risks of not being awarded costs following a successful event. Warren Traynor is a practising and trained RICS panel arbitrator. Contact him to consider appointing him for your arbitration dispute.

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