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 (or ADR) may be an option, hopefully resolving the dispute without the need to invoke potentially expensive court action. Learn more about our ADR services and if you need an alternative dispute resolution solicitor.
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.
Court’s expectation of ADR
Litigation by way of Court proceedings is the last resort. There is an expectation on the part of the Courts, and reinforced within the rules and case law, that ADR should be used by parties before commencing any Court proceedings. ADR includes a number of techniques or options with the purpose of assisting parties to reach a settlement.
What are the different types of ADR?
There are two most frequently used types of ADR which are are mediation and arbitration.
Mediation
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.
The process of mediation
Mediation typically begins with both parties attending an initial meeting (either separately or together) to understand how the process works and to assess whether it’s appropriate for their situation. If both agree to proceed, a series of joint sessions are arranged where the mediator helps guide discussions on the issues in dispute.
Throughout the process, the focus is on collaboration and finding common ground. The number of sessions will vary depending on the complexity of the issues, but mediation is generally quicker and more cost-effective than going to court. If an agreement is reached, it can be written up and made legally binding with the help of solicitors.
A mediator’s role during the process
Mediators act as impartial facilitators, guiding both parties through discussions to help them reach a mutual resolution. They do not take sides or provide legal advice, instead focusing on both parties having an equal opportunity to express their views and concerns.
Mediators may suggest possible solutions, offer insights, and clarify issues, but the final decisions are always left to the parties involved. Their role is to create a safe, respectful environment where constructive dialogue can take place.
Effectiveness of using a mediator
Mediation can be highly effective in resolving disputes, particularly for those who want to avoid lengthy and costly court battles. It tends to work best when both parties are committed to finding a compromise and are willing to collaborate.
Mediation is often quicker and more flexible than formal legal proceedings, allowing for more creative and personalised solutions. It can also help preserve relationships by fostering open communication and reducing conflict, making it a valuable option for both personal and business disputes.
Arbitration
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.
The process of arbitration
Arbitration begins with both parties agreeing to submit their dispute to an arbitrator, who will be responsible for making a final decision based on the facts and evidence presented. The process is usually more structured than mediation, with the parties submitting written statements and evidence.
A hearing may take place, during which both parties present their cases. Once all information is reviewed, the arbitrator delivers a legally binding decision, which can be enforced in court.
An arbitrator’s role during the process
The arbitrator’s primary role is to act as an impartial decision-maker. They evaluate the facts, evidence, and arguments presented by both parties and apply relevant laws or industry standards to reach a fair and just conclusion.
Unlike a mediator, who only facilitates discussion, the arbitrator has the authority to make a binding decision. The arbitrator’s expertise, often specific to the industry or legal issue in question, means that the resolution is based on sound knowledge and experience.
Effectiveness of using an arbitrator
Arbitration can be highly effective, particularly in disputes that require a quick resolution. It tends to be faster and more cost-effective than traditional litigation because it bypasses many formal court procedures.
Plus, the ability to select an arbitrator with specific expertise means that complex issues can be addressed efficiently. But, because the decision is binding, both parties must be committed to accepting the outcome. Arbitration is often a preferred option for business and commercial disputes where confidentiality and expert knowledge are key priorities.
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.
