ADR stands for Alternative Dispute Resolution and essentially refers to all forms of private resolution that parties to a dispute can participate in as an alternative to court based litigation. In most cases ADR is an effective way of resolving a dispute quickly, cost effectively and without the stress of Court proceedings.
The Courts of England & Wales now expect parties to attempt ADR before embarking on litigation and may make adverse costs orders against a party who unreasonably refuses to participate in ADR when the opportunity presents itself.
What are the most common forms of ADR?
Perhaps the most common and straightforward form of ADR, negotiation is a process whereby the parties and their legal advisors seek to resolve the dispute by reaching an agreement either through written correspondence or a meeting between all concerned. Negotiations can take place on a “without prejudice” basis. This means that any statements made by either side seeking to settle the dispute cannot later be submitted to court so as to be used against another party in determining the dispute. Negotiation and settlement tends to be more cost effective than court proceedings or a protracted dispute.
The key difference between negotiation and mediation is that the latter is conducted with the assistance of an independent third-party mediator. The mediator is a specially trained professional who is jointly appointed by the parties to assist them in resolving the dispute. The mediator may also be a lawyer or a professional practicing in the same field as the dispute. The mediator’s task is to attempt to broker a settlement between the parties, and will not favour one party over another. The cost of mediation is generally in the region of a few thousand pounds and can be a swift, economic, method of ADR, provided all parties enter it in the spirit of compromise and are willing to settle. This is currently the most popular form of ADR available and is particularly favoured by the courts.
If the parties prefer a method of ADR where the decision/agreement reached is binding upon the parties, arbitration may be preferable to mediation. Whilst costlier than mediation, arbitration is generally less costly than court proceedings. An Arbitrator is appointed who generally has a professional background in the same field as the dispute. The arbitrator acts in a quasi-judicial capacity to determine the issues in dispute and make a final decision based on the evidence presented by the parties. The fact that an Arbitrator may have professional expertise in the same field as the dispute renders arbitration a useful method of ADR where the dispute has arisen in relation to a specific type of contract (e.g. construction or IT) or to narrow an issue.
An arbitration award is intended to be a final determination of a dispute and is recognised as such by the Courts of England & Wales.
When disputes arise in relation to an ongoing contract it is important that commercially minded parties be able to swiftly resolve disputes without putting at risk the balance of the contract value. Adjudication is a process whereby the parties have often agreed, at the time of entering into the contract, to refer any dispute to a third party adjudicator for a swift decision rather than to terminate the contract and commence lengthy and costly court action.
Adjudication is generally a very swift process whereby an adjudicator is appointed, is presented with both parties’ evidence, will convene a hearing and make a decision on the disputed issue, all within a 28 day period. The process therefore lends itself well to disputes where the issues are fairly limited and where the parties intend on concluding the balance of the contract. Adjudication is also of benefit where both parties require a swift decision in order that their contractual relationship may continue.
The parties agree to be bound by the decision of a professional expert who is jointly instructed to give an opinion on the dispute.
Early Neutral Evaluation
At an early stage in a dispute the parties may agree to jointly instruct a neutral expert to give his or her opinion on which of the parties may succeed if the case is to go to trial. The opinion is non-binding and will not usually be referred to in Court. This gives the parties an idea of where litigation may lead them and therefore allows them to make a choice on whether to settle or fight on.
To discuss ADR please contact a member of our team on 01204 377 600. Alternatively you can send an email with your name, contact information and brief details as to the nature of your issue to firstname.lastname@example.org and one of our team will be able to help you.