Alternative Dispute Resolution (ADR) refers to the various ways that a dispute may be resolved without going to court.
Going to court can be an expensive, risky, and lengthy process and therefore where suitable, you may want to consider other options to resolve your dispute.
ADR can provide a quicker and more accessible way to achieve your goal. If settlement of the whole dispute is not reached through ADR, some of the points of dispute can be settled which means there is less to deal with should the matter then have to proceed to court.
As well as saving time and money, ADR is useful for parties who wish to maintain a working relationship once their dispute is resolved. It is, however, not so appropriate in a situation where one of the parties does not acknowledge or admit that a dispute exists.
Some examples of Alternative Dispute Resolution processes are as follows:
- Executive tribunal
- Early neutral evaluation
- Expert determination
Negotiation is when both parties in a dispute try to come to an agreement without the assistance of a third party. It is a non-binding process. Negotiation is the most informal method of ADR, making it less expensive and time consuming than other methods. Discussions can remain confidential and take place on a ‘without prejudice’ basis, meaning if a settlement is not reached, the parties’ rights are not prejudiced.
The benefit of no third-party involvement is that the parties to the dispute remain in full control of the matter, however it also means that should negotiations reach a stalemate, there is often no way forward.
Negotiation is not likely to be useful in circumstances where the matter is especially complex.
Unlike negotiation, mediation involves a neutral third party in order to identify the issues in dispute, discuss the ways both parties may be open to resolving the matter, and attempt to reach an agreement. The parties can either agree to mediation or the court recommends it. They then agree on a mediator and prepare for the mediation by way of (amongst other steps) pre-mediation contact, putting together a case summary and supporting documents, and any agreed disclosure of documents. Parties then attend the mediation session and attempt to reach settlement.
Similarly to negotiation, mediation is a confidential and non-binding process, considered to be a good option for cross-border disputes. It is common for parties to agree to share the mediator’s fees and bear their own legal costs.
Mediation can be expensive and may not be cost-effective in lower-value disputes, particularly given that there is no guarantee that settlement will be reached.
In order to engage in the arbitration process, the parties to the dispute must all agree to submit the dispute to arbitration. An independent arbitrator is then selected, and the parties prepare for a hearing at which each parties puts their case forward. The independent arbitrator makes an award to finalise the dispute.
Parties can choose a tribunal with relevant expertise to the dispute at hand. As with negotiation and mediation, the process is confidential, but unlike negotiation or mediation, arbitration is a binding process, meaning the outcome is final and can be enforced.
Tribunal costs and administrative fees involved in the arbitration process can become expensive. The options available to challenge or appeal an arbitration award are very limited, which can be a positive factor if the award is made in your favour, but a negative one should you consider the arbitrator has determined the dispute incorrectly.
Ultimately, there are pros and cons to each ADR process and much depends on the circumstances of your specific dispute.
Please contact us on 0203 440 8000 and ask to speak to a member of our dispute resolution team should you wish to discuss using ADR to resolve a dispute you are having.