SQE1 Dispute Resolution.

A man is considering suing a former business partner for £75,000 over a broken profit-sharing promise. He tells his solicitor that he will go to court only if three things can be arranged: that no competitor learns what is said about his profit margins, that the claim is heard by a judge who has worked in his industry, and that he and his former partner can fix their own timetable and depart from the court's rules where those rules are inconvenient.

Will a claim in the civil courts give the man the three features he requires?

1. No, because civil hearings are public and the court, not the parties, controls the judge, the procedure and the timetable. Correct
2. No, because although civil hearings are held in private, the parties cannot select their judge or set their own timetable.
3. Yes, because the parties may agree their own procedure and timetable and depart from the Civil Procedure Rules by consent.
4. Yes, because the court will, on request, list a claim of this size before a judge with experience of the parties' industry.
5. Yes, because statements of case and judgments are confidential to the parties, so nothing said about his margins can be reported.

Two companies which have traded together for ten years disagree about how a clause in their distribution agreement should be read, and both want the relationship to continue. They agree to spend a day with a mediator before either issues a claim, and the mediator will ask each company to sign a mediation agreement before the day begins. A director of the supplier expects to make concessions about past deliveries in order to reach a deal.

What should the director be told about the concessions he expects to make at the mediation?

1. The mediator may take them into account in the decision he gives if the parties do not agree.
2. The mediator may direct that they be honoured if he considers the resulting terms reasonable.
3. The concessions cannot be referred to in later proceedings if the mediation ends without agreement. Correct
4. The concessions may be put to the company at trial as admissions if the mediation fails.
5. The concessions will bind the company once the mediation ends, whether or not any agreement is signed.

A woman and her brother each own half the shares in the family company they run together. They have fallen out over its future direction, and the woman wants to buy her brother's shares. They cannot agree on what the shares are worth, and each takes a different view of how the buy-out should be paid for and who should run the company afterwards. Both say they want to remain on speaking terms.

What advice should the woman be given about how to resolve the disagreement?

1. Litigation, because only the court can determine the fair value of shares in a private company.
2. Arbitration, because an arbitrator can fix the price of the shares and impose binding terms for the company's future management.
3. Mediation, because parties to a dispute within a family must attempt mediation before a claim may be issued.
4. Mediation, because the parties control the outcome and can agree payment and management terms a court could not order. Correct
5. Expert determination, because a valuer's decision on the price will bind the parties only if each accepts it.

A shareholders' agreement provides that if the shareholders cannot agree the value of shares being transferred, the value is to be fixed by an independent accountant, whose determination is to be final and binding. A shareholder gives notice that she is selling her holding, and the others cannot agree what it is worth. The clause requires the accountant to value the holding on a going-concern basis, and he has done so. She would prefer a judge to decide the figure and asks whether the accountant's valuation will actually settle the matter.

Will the accountant's valuation bind the selling shareholder even if she disagrees with it?

1. No, because the valuation is a recommendation which each shareholder may accept or reject.
2. No, because a valuation of this kind takes effect only when the court has confirmed it.
3. Yes, because she agreed that the accountant would fix the value and that the figure would be final. Correct
4. Yes, because the valuation takes effect as an arbitration award under the Arbitration Act 1996.
5. No, because the value of shares in a private company can be fixed only by the court on a petition.