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Could ADR have protected Lloyd’s in battle against the Rolling Stones?

The way disputes are resolved has changed significantly in recent years, and as the Rolling Stones case highlights, clients and lawyers should think carefully about their options before jumping straight into court proceedings.

The claim between the Rolling Stones and their insurers has now been settled, but what could have been done to minimise the risk of all this adverse publicity?

By Charles Gordon, mediator and arbitrator with JAMS International, and Samantha Collins, DLA Piper.

The Rolling Stones were “deeply upset”, after leaked court documents revealed confidential medical information on the band members. Highly sensitive material was disclosed and picked up with relish by the press about Mick Jagger, Keith Richards and Ronnie Wood.

The claim between the Rolling Stones and their insurers has now been settled, but what could have been done to minimise the risk of all this adverse publicity?

The claim between the Rolling Stones and their insurers has now been settled, but what could have been done to minimise the risk of all this adverse publicity?

Following the death of Sir Mick Jagger’s girlfriend, L’Wren Scott, back in March 2014, the band had to cancel part of its Asian tour. The band made a claim against their insurance policy for loss of earnings. The London underwriters rejected the claim on the ground that Scott’s death was not “beyond her control” and therefore not unforeseen.

The band challenged the underwriters decision by issuing a $12.7 million claim in the High Court in London. The underwriters subsequently filed applications in Utah and New York for permission to gather evidence on Scott’s mental health to defend the claim. In particular, underwriters wanted to take depositions from Scott’s friends, relatives and associates.

The claim between the Rolling Stones and their insurers has now been settled, but what could have been done to minimise the risk of all this adverse publicity?

The case highlights the importance of considering alternative dispute resolution to court litigation to avoid the risk that confidential information may be released.

One of the key elements of court litigation in the UK is that statements of case, judgments and court orders are documents of public record. A non-party is therefore entitled to make an application to the court for copies of these documents under Part 5.4C of the Civil Procedure Rules. A non-party is also entitled to obtain copies of other documents on the court file with the court’s permission. Such documents can include a consent order that annexes a settlement agreement, as held in ABC Ltd v Y [2010] EWHC 3176 (Ch). There is a risk, therefore, that sensitive commercial or personal information can be obtained by the public or interested persons in any court litigation.

In this case, the leak probably occurred as a result of the court applications in the US but the fact is that litigation is a public process and it simply cant be kept under wraps. As a result, ADR has become an increasingly attractive method of dispute resolution in recent years.

There are many forms of ADR, but mediation and arbitration are the most commonly used. Mediation is the process whereby parties engage an independent third person to assist them to reach an agreement by identifying the issues in dispute and evaluating the options for resolution. It is a voluntary, non-binding and confidential form of dispute resolution. The benefit of mediation is it allows parties to come to a confidential commercial resolution, and to take into account much broader issues than could be considered by a court., Maintaining a commercial relationship between the parties is still viable following mediation, whereas litigation usually destroys any ongoing relationship.

Arbitration is a binding form of ADR, whereby an independent arbitrator makes an award to finalise the dispute. The arbitrator reviews the issues of fact and law presented by the parties before making an award. The key advantage of arbitration is confidentiality with proceedings not held in the public domain, so the public are not able to attend hearings, or obtain copies of case documents.

The way disputes are resolved has changed significantly in recent years, and as the Rolling Stones case highlights, clients and lawyers should think carefully about their options before jumping straight into court proceedings.

 

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