Reputation management and disputes: avoiding an avalanche of scrutiny

In recent times celebrity high profile litigation across the globe has taken place with actors, Gwyneth Paltrow’s successful defence of a claim arising from a ski collision on the slopes of Utah, and Jonny Depp winning his defamation lawsuit against Amber Heard, though losing an earlier case in London against UK newspapers in 2018. Such disputes have the potential to cause significant and sometimes business critical damage to the reputation of both the claimant and their intended target. In Ms Paltrow’s case she avoided her ski crash becoming a car crash and emerged reputation intact. But it is not always easy to achieve that outcome, given the inherent uncertainties of litigation.

Whilst organisations can be sued in national courts and tribunals for myriad reasons: product liability, employment breaches and negligence to name but a few, consideration should be given to additional dispute resolution options that avoid the harsh glare of publicity that consumes disputes that catch the public imagination. One only needs to see the avalanche of social media feeds emanating from celebrity disputes recently before courts to realise the voracious appetite the public has for bad news.

One additional dispute resolution option worth pursuing is mediation. There are cost sanctions in England and Wales for not taking this option where litigation proceeds to a conclusion. In Scotland, however, mediation is encouraged but with no adverse consequences if an offer to mediate is refused. Mediation allows organisations to meet in private to negotiate a resolution of their dispute under the watchful facilitation of a neutral third-party mediator. This option focuses on needs and interests rather than solely on rights and duties and is used to cut across issues quickly and effectively to procure a binding agreement (with of course an appropriately well drafted confidentiality provision). Mediation is used for any kind of dispute – contractual or otherwise – and is therefore easier to deploy than many other private resolution options.

Another additional dispute resolution option worth considering is arbitration. This has many of the advantages of court-imposed outcomes but avoids several of its pitfalls. In the UK, national arbitration Acts in England and Wales, and in Scotland, provide a mechanism for contractual disputes to be determined behind closed doors with helpful duties of confidentiality imposed on the parties and their supporting teams. This can ensure that any trial is not open to the public and that those participating are under strict obligations of confidence to keep what they see and hear private.

The award (judgment) is not published and is readily enforceable against the unsuccessful counterparty. Whilst it is possible to appeal an arbitral award the routes for so doing are limited and significant hurdles present. Leave to appeal is required as a preliminary step and it is necessary to show, where legal error is asserted against the arbitrator(s), that their decision was ‘obviously wrong’. This means that it is not enough for a court to take a different view of the case from the arbitrator(s) as any successful appeal of the arbitration decision needs to demonstrate that the award had gone completely off-piste.

The other ground of challenge where legal error is claimed is that the question the arbitrator(s) had to decide was one of general public importance and the decision of the arbitral tribunal is at least open to serious doubt. It is difficult to demonstrate this test because contracts between parties are by their very nature often bespoke to them and generally not of wider import.

To maximise prospects of going to arbitration if you cannot negotiate a resolution directly or through mediation it is necessary to provide for it as the mandatory means of formal dispute resolution in your contract. Arbitration can be agreed by parties after a dispute arises but inevitably it is much easier to have the process for resolving disputes agreed in advance, when the parties are focusing on the positives the commercial arrangement will bring.

Use of arbitration clauses in contracts or mediation of claims allows organisations greater protection from external scrutiny where commercial relationships sour and provides an attractive alternative to the hurdles and obstacles arising from litigation.