Alternative Dispute Resolution (ADR) refers to methods of resolving disputes outside of traditional court litigation. ADR processes are designed to be less adversarial, more flexible, and more cost-effective than going to court.
Negotiation
Negotiation is often the first option for those wishing to resolve a dispute. In some cases, disputes can be solved by both parties taking a ‘cards on the table’ approach and attempting to negotiate a compromise. If required, dispute resolution specialists are able to take instructions and negotiate on behalf of the parties.
Mediation
Mediation involves an independent trained mediator who facilitates communication between the two parties having the dispute, with the aim of achieving a settlement or resolution. The mediator will discuss the issues and try to help the parties reach an agreement, but will generally not offer their own opinions or assessment.
Conciliation
Conciliation is generally used for employment situations rather than commercial disputes. Conciliation is a compulsory process before an individual wishes to bring a claim to the Employment Tribunal. The conciliator will discuss the issues and try to help the parties reach an agreement, often providing their own opinion after assessing the situation and the different arguments. Their opinion may help to form a settlement or achieve a conclusion to the dispute.
Arbitration
This is more formal than mediation, and involves a process in which the dispute is resolved by the decision of an arbitrator. The arbitration process can be particularly useful in disputes which require an understanding of technical knowledge and where privacy is important (e.g. to avoid disclosure of commercially sensitive information) or if there is an international element (i.e. to avoid multiple legal jurisdictions). It runs as a tribunal process and decisions are binding. Many contracts will contain an arbitration clause, which requires arbitration to be used in the case of a dispute.
Adjudication
This form of ADR is generally reserved for disputes which arise out of construction contracts. It is a relatively formal process which involves: providing a written Notice of Adjudication which sets out the brief details of the dispute; appointment of an agreed adjudicator; serving a referral notice which sets out the dispute in detail by the aggrieved party; a response to this referral notice (essentially the defence); and finally a decision being reached by the adjudicator within 28 days of the referral notice. This decision is final and binding.
Expert Determination
This is another fast method of resolving disputes. An expert is chosen to determine the outcome of a dispute and makes a binding determination. A common area where expert determination is used is in corporate transactions, mergers and acquisitions. An example would be to have an expert determination clause added into a contract for completion account disputes. Thus it is pre-agreed to in the contract as a method of dispute resolution. There might be a dispute as to how much a company is worth as it may have increased or decreased in value since the time the agreement was made. An expert accountant might then be appointed to determine how much the company was worth on a particular date.
Early Neutral Evaluation
Similar to expert determination, early neutral evaluation can be used to give expert opinion on the likely outcome of a dispute. It is not binding but gives a good indication on the likely outcome were it to go to court. A barrister or retired judge would be asked to give their initial thoughts and can help you to come to an agreement quickly due to their neutral, but non-binding evaluation.
ADR offers a way for disputes to be resolved with the help of a third party without the need for costly litigation, but it may not be suitable for all disputes. It is therefore important to consider the specific circumstances when choosing the appropriate method for resolving disputes.
