What is alternative dispute resolution?
Finding yourself in dispute with another person, company or organisation is not uncommon. Very often, the differences can be worked out quickly and the dispute resolved. Where this is not possible, Alternative Dispute Resolution (ADR) may be an option, hopefully resolving the dispute without the need to invoke potentially expensive court action.
Questions to be answered in this article
What is alternative dispute resolution (ADR)?
Alternative Dispute Resolution is the collective name for a range of ‘alternative’ methods of addressing legal disputes. ADR is confidential and aims to resolve the dispute without the need to take court action. Whilst not appropriate in all situations, ADR is usually faster, cheaper, and less stressful than going to court. Alternative Dispute Resolution is used after you have tried to reach a resolution to your dispute directly, but have been unable to do so.
What are the different types of ADR?
The two most frequently used types of ADR are mediation and arbitration.
Mediation involves a neutral third party (the mediator) working with both parties to find a mutually acceptable resolution. A suitable mediator should be neutral and have experience in the relevant field. Both parties will need to agree on the mediator used. Witnesses can be included in the mediation process, but they cannot be forced to testify if they do not wish to. The outcome of mediation is not legally binding, however a separate, legally binding agreement can be drawn up based on the outcome, if required.
Arbitration also involves an independent third party, working with both sides. Here, the third party will consider the facts and then make a legally binding decision. Often an arbitrator is a legally qualified member of the Chartered Institute of Arbitrators and is likely to have specific knowledge in the area of dispute. Many industry groups have well established arbitration schemes, for example the Financial Ombudsman Service (FOS) which deals with disputes involving financial services providers.
Other types of ADR
There are other, less common types of ADR that you may come across.
Conciliation is used in employment situations and is a compulsory process, prior to an employee initiating employee tribunal action.
Collaborative Law is a type of mediation, often used in family law settings.
Adjudication is a type of arbitration most commonly used in disputes relating to construction contracts.
Is ADR legally binding?
Mediation aims to agree an outcome, mutually acceptable to both parties. The outcome itself is NOT legally binding. It is possible to produce a separate, legally binding contract, based on the agreed outcome of the mediation.
Arbitration is the final outcome of a dispute and IS legally binding. The outcome of the arbitration process is enforceable in law, in a similar way to a court judgment.
When should I use Alternative Dispute Resolution?
Once initial attempts to resolve a dispute directly have failed, ADR is often faster and cheaper than taking the dispute to court. Being confidential, it also offers more privacy than a court proceeding. So long as communication between the two parties has not been completely severed, ADR should be viewed as the preferred method of dispute resolution.
Which type of ADR should I use?
Many businesses will already have a certified ADR scheme or Ombudsman service to which they belong. This may be the appropriate route for specific disputes, and very useful when the ‘clout’ of the Ombudsman is greater than you as an individual. Mediation may be more appropriate for disputes between companies or organisations, where an ongoing future relationship is sought. Professional advice as to which approach may be the most appropriate, is often a good first step.
How much does Alternative Dispute Resolution cost?
This will vary depending on the complexity of the dispute and the appropriate ADR method to resolve the case. Mediation costs are typically split equally between the two parties, but this can be negotiated and form part of the agreed outcome. Costs are likely to be lower than taking direct court action, but may still be significant. As such you may wish to take professional advice prior to initiating such an action.
What should I do next?
If you have tried to resolve a dispute directly, but been unable to make sufficient progress, Alternative Dispute Resolution may be for you. Check the company’s website to see if there is a relevant ombudsman or approved ADR scheme. If you are in doubt as to the most appropriate course of action, we have a team of dispute resolution solicitors who will be happy to discuss the options available to you.