Alternative Dispute Resolution (ADR): Mediation, Arbitration and Other Options

Daniel Crate
Founding Partner | Solicitor

Written by Amy Jacobs | Founding Partner & Solicitor

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Alternative Dispute Resolution (ADR): Mediation, Arbitration and Other Options: Why Consider Alternative Dispute Resolution?

One of the most common concerns clients have when dealing with litigation is its unpredictability.

I often say to my clients that I can advise them as best I can and present the options available to settle the dispute. However, I cannot predict what the other side will do or what steps they may take that could undermine our position.

As well as unpredictability, litigation is costly and time-consuming. With the courts still feeling the effects of Covid-19 and ongoing scheduling delays, the time to trial is regularly measured in months, if not years.

Even when a party is successful in court, the outcome rarely represents a complete victory. For many commercial disputes, where the risks and potential rewards are uncertain, Alternative Dispute Resolution (ADR) can provide a more practical and cost-effective solution.

This blog outlines some common forms of ADR and the pros and cons associated with them.

Mediation

Mediation is probably the most popular form of ADR.

During a mediation, the parties are typically placed in separate rooms (either in person or virtually) while an independent, qualified mediator moves between them. The mediator’s role is to identify areas of agreement, explore potential compromises and facilitate a resolution to the dispute.

Mediation is non-binding. However, if an agreement is reached, the mediator can help draft formal settlement terms. Where court proceedings have already commenced, these terms may be incorporated into a consent order, bringing the matter to a formal conclusion. If a resolution cannot be achieved, the parties remain free to pursue litigation.

Benefits of Mediation

Mediation is conducted on a strictly “without prejudice” basis. This means that any discussions, admissions or settlement offers made during the process cannot be relied upon in subsequent court proceedings.

As a result, parties can negotiate openly without fear that their discussions will later be used against them.

When a successful mediation takes place, clients typically comment on the smooth process and reduced stress involved in reaching an agreement.

Arbitration

Arbitration is another well-established form of ADR and is frequently included in commercial contracts as an alternative to court proceedings. Many contracts require parties to consider or participate in arbitration before commencing litigation.

The parties may agree on an arbitrator, or one may be appointed on their behalf, often with expertise in the relevant industry or subject matter. An arbitrator has powers similar to those of a judge and can make binding decisions regarding the dispute.

At the outset, the arbitrator will usually meet with the parties to establish a timetable and determine the procedure to be followed. This flexibility often makes arbitration a more adaptable process than traditional litigation.

Following the hearing, the arbitrator issues an Arbitration Award, which determines the outcome of the dispute in much the same way as a court judgment. Arbitration awards are legally binding and can be enforced through the courts if necessary.

Benefits of Arbitration

Arbitration can offer:

• Greater flexibility than court proceedings
• Industry-specific expertise through the appointed arbitrator
• Confidentiality
• A legally binding outcome
• Potentially faster resolution than litigation

Other Forms of Alternative Dispute Resolution

ADR has expanded significantly over recent years, and there are now a wide range of dispute resolution options available.

Some examples include:

Early Neutral Evaluation

The parties ask a neutral third party to provide a preliminary view of their respective positions and make a recommendation.

Expert Appraisal

An expert in the disputed field provides a non-binding opinion.

Judicial Appraisal

A legal expert offers a preliminary assessment of the merits of each party’s legal position. The parties can decide whether the outcome should be binding.

Expert Determination

An expert provides a binding opinion on the dispute. Although the decision cannot be enforced as a court order, it forms a binding contractual agreement between the parties.

Final Offer Arbitration

An arbitrator is asked to choose between the final offers put forward by each party.

Med-Arb

Parties first attempt mediation, with the agreement that if mediation does not resolve the dispute, they proceed directly to arbitration.

Mini-Trial

An independent chairperson oversees negotiations and assists the parties in exploring whether a settlement can be reached.

Is ADR Right for Your Dispute?

ADR offers many potential benefits, including cost savings, flexibility and quicker resolution. However, every dispute is different, and each form of ADR comes with its own advantages and disadvantages.

In our experience, it is important to obtain legal advice as early as possible in any disputed matter. Early advice can help parties understand their options, assess the merits of their position and facilitate resolution in the most cost-effective manner possible.

Contact Crate Jacobs

If you have a matter you would like to discuss, whether pre-action or post-action, or you are interested in exploring Alternative Dispute Resolution as a means of resolving a dispute, please contact us on 01737 339 618 or email info@cratejacobs.com and a member of our team will be happy to assist.