Alternative Dispute Resolution
17th February 2014
Alternative Dispute Resolution (ADR) is a broad term which covers methods of resolving disputes that do not involve going to court.
There are three commonly used methods;
Why use ADR;
The Court generally encourages the use of ADR, and where a party unreasonably refuses to attend ADR, this may have costs consequences at any subsequent trial.
ADR is more informal and collaborative than Court proceedings. It provides the opportunity for both sides in a dispute to achieve something, rather than for there to be simply a winner and a loser. As such, it is a more amicable way of resolving disputes. Further, it is almost always cheaper and quicker than resolving a dispute through the Court and is therefore especially useful in relatively low value claims which may be dealt with on the small claims track and subject to its restrictive rules in relation to the recovery of legal costs.
In a lot of cases, a disagreement may well be resolved to the satisfaction of both sides. Negotiation is the process in which a party, or its legal representative, speaks directly with the other side and seeks to reach a settlement. The terms of this settlement will be confidential and binding; if one side agrees to pay a sum of money, for example, and subsequently fails to do so, the other side may bring a claim against them for breaching the agreement.
Negotiation may be successful even after a claim has been commenced, right up until the day of the final hearing.
Mediation is a form of structured negotiation. It is a confidential process and without prejudice to the participants’ rights to resolve their issue through the Courts if they wish. The ideal outcome, where all parties are satisfied, is very much the same as with negotiation. However, mediation utilises a mediator, an unbiased and impartial person who can assist in the negotiations. Often the solutions found through the assistance of the mediator can be more creative and bespoke than a court could provide. If a settlement is reached, it is binding on the parties.
The Court will often refer parties to mediation when a claim is commenced. A party that refuses to mediate unreasonably may subsequently be penalised in costs. However, the mediator cannot force the parties to settle the dispute or to accept a particular solution and, should mediation fail, the matter will most likely proceed to a trial.
Parties may agree to refer a dispute they are unable to settle to arbitration. Arbitrators are quite often people who are experts in a specific area of the law or a particular industry. Both parties will agree to be bound by the decision of the arbitrator.
At the hearing, you may have a representative speak for you may represent yourself. The arbitrator will make his decision, and like a Judge at a trial, will give his reasons for his decision.
When should ADR be used?
In short, as soon as possible. ADR should always be considered, unless it is plain that the parties can not or will not be able to agree. As the matter progresses, parties are less likely to want to agree to an amicable solution and the benefits of ADR, saving costs and time, will reduce.