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A quick guide to Alternative Dispute Resolution

There are many forms of ADR and much confusion around both what they are and what they entail.

All of them are alternatives to litigation. Some are direct substitutes for the formal court process that parties can be forced to follow and which impose their own rules to deliver binding results. Others are consensual methods used to attempt to settle and avoid a (quasi) judicial route which can be used in parallel with other processes.

Here’s a quick, high level, summary of the main options:

Arbitration

Essentially private, confidential, litigation. An independent arbitrator hears evidence, determines the dispute and imposes a binding award. Typically agreed to as part of a contract. Very useful in international work where parties can choose their own rules and venues. Awards are enforced through national courts.

Adjudication

Specific to the construction industry and introduced to improve cash flow. Parties to a ‘construction contract’ have the statutory right to refer disputes to an independent adjudicator of their choice. Decisions are usually delivered during the course of a project using a 28 day procedure and have an interim binding effect pending the parties agreeing either to alter that effect, or a reference of a dispute to arbitration or litigation for final determination. Decisions can be enforced in the Technology and Construction Court which deals with enforcement claims quickly.

Mediation

A confidential, consensual, process conducted before, or during, any of the above. Good for finding commercial solutions, particularly in long term relationships. Parties engage a neutral mediator to help them identify issues and attempt to resolve them. Mediators cannot impose a result and will not give rulings on specific points. Their role is non-judicial but the settlements they broker can often deliver results that would not be possible in court. Settlements take the form of agreements which, if breached, are usually enforced by an action for breach of contract.

To read Associate Clare Mackay's article entitled 'why you should mediate', click here. 

Negotiation

Like mediation but without a mediator! Involves parties attempting to reach agreement on matters, usually on a without prejudice basis which prevents the contents of the negotiation being disclosed in litigation (or other proceedings). Can be conducted face to face, by letter/email or a mix of any of them.

Expert Determination

An inquisitorial, but informal process conducted by a specialist appointed by the parties. Often specified in contracts to deal with technical or accounting disputes. Well-drafted contracts will contain rules which define the expert’s role as well as the process they must follow. Can be used on an ad hoc basis but only if both sides agree. Determinations can be binding as well as non-binding. Binding determinations are enforced as contracts.

Early Neutral Evaluation

Conducted by an independent, party appointed, specialist to provide a non-binding opinion on the merits of their cases based on an evaluation of facts, evidence and law. Can deal with specific issues or a whole case. Its rationale is that armed with the specialist’s opinion, the parties will be able to negotiate an outcome, with or without the assistance of a third party. Alternatively, they are free to settle the dispute on the basis of the evaluation provided or to agree in advance that they will do so.

Each option has advantages, as well as disadvantages, which need to be considered before any choice on them is made.

CONTACT SIMON

If you would like more information or advice relating to this article or a Commercial Litigation & Dispute Resolution law matter, please do not hesitate to contact Simon Walsh on 01727 798085.

© SA LAW 2017

Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them alone. You are recommended to obtain specific advice in respect of individual cases.

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