What is Alternative Dispute Resolution?
Litigation can be a very lengthy and expensive process. Alternative Dispute Resolution, or ADR, is a way of settling disputes without a trial, which can often be quicker and less costly.
The benefits of ADR
Due to the public nature of court proceedings, ADR may assist in maintaining a degree of privacy over the details of the dispute. Some forms of ADR may also require matters to be kept confidential, which could preserve the reputation of any individual of business involved in the dispute.
ADR requires the parties to work together to resolve the dispute. It can help to minimise conflict and preserve important business or personal relationships that could otherwise be harmed if the matter were to proceed to trial.
ADR also offers more control in resolving the dispute. The outcome of court proceedings is never certain, no matter how strong your case might appear to be. ADR avoids the uncertainty of placing the decision in the hands of the court.
The types of ADR
The three most common methods of ADR are as follows:
- Mediation: this involves an independent mediator who facilitates communication between the parties, to encourage and invite settlement proposals. A mediator will generally not offer their own opinion or assessment of the case. More information on mediation can be found here.
- Arbitration: this is a more formal type of ADR, where an arbitrator is appointed to make a legally binding decision. Arbitration is usually used for larger commercial disputes and some contracts contain an arbitration clause, under which the parties may be required to attempt to resolve the dispute through arbitration.
- Negotiation: this is a less formal method than mediation and arbitration. At any time during the dispute, the parties’ legal representatives can agree to negotiate a settlement. This is often done by letter or telephone but can also be achieved by a “round-table” discussion between the parties and their lawyers.
The duty to consider ADR
Litigation should be considered as a last resort, and the court expects parties to take reasonable steps to resolve the dispute without the involvement of the court. Any ADR proposals should be considered very carefully, as the court has the power to impose sanctions (such as financial penalties) if a party unreasonably refuses to engage in ADR.
It is important to note that ADR is usually conducted on a “without prejudice” basis. This means that, if ADR is not successful, nothing disclosed during the ADR process can be referred to in any subsequent court proceedings.
For expert assistance with resolving a commercial or civil dispute, call us on 020 7632 4300 or make an enquiry.