Shortly before the trial, the complainant and Niagara entered into a low-cost agreement with a maximum of $US 185,000 and a minimum of $155,000. Thus, Niagara`s exposure – beyond the minimum it was already willing to pay – was limited to US$30,000 under the low-cost agreement, an area the Court of Appeal described as „quite narrow,“ suggesting that the real motivation of the complainant and Niagaras to conclude the agreement was to obtain a tactical advantage over Garlock`s costs. (2) With respect to the second category of questions: this article provides an overview of the main findings of a recent study (and the corresponding article illustrating the results of the study) by J.J. Prescott, Kathryn E. Spier and Albert Yoon („Trial and Settlement: A Study of High-Low Agreements“) . In this study, the authors first articulate a theoretical model of very low chords. Based on a national insurance company`s claims data, they then describe the characteristics of these agreements and empirically examine „factors that may influence the question of whether the litigants are discussing or opposing them.“  Their empirical results correspond to the predictions of their theoretical model. The study asks us whether agreements favour more jury processes, what the consequences of the agreements might be, who uses them and why they are used. Among its various findings is the finding that deep-depth agreements significantly promote the resolution of judicial proceedings and not by a full settlement; Parties are more likely to be brought to court than if there were no high-level agreements. These and other results will be developed below.
The Court of Appeal set it aside and ordered a new trial. It found that the Tribunal`s failure to disclose the existence of the high-level agreement had prevented Garlock from achieving a fair determination of its rights and commitments. According to the Tribunal, „a very low agreement between a plaintiff and less than all the defendants has the potential to oppose the rights of the non-consensual defendant, if not all parties have invoked the existence of the agreement.“ In addition, the court found that secret agreements can . . . „Distort the true adversarial nature of the dispute and cast a cloud over the judicial system.“ In the end, the Court of Appeal found that Garlock`s low-cost agreement, which was not disclosed, was entitled to a fair trial because The $185,000 cap on Niagara $US`s liability had prompted the complainants to minimize Niagara`s liability and maximize the garlocks. According to the Tribunal, which requires a low-level agreement to be disclosed to the court and to all defendants who disagree, „there is a fair balance between the public policies of that state, which encourage the prompt resolution of claims, and the need to ensure that all litigants are informed of the actual attitude of the dispute so that they can adapt their strategy accordingly.“ Low-cost agreements appear to be applicable throughout the United States.