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Which Type of Alternative Dispute Resolution (ADR) is Best for You and Your Business?

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By Charlotte Dawes, Senior Associate, Ince

Due to increasing delays in Court Proceedings exacerbated by the pandemic, Alternative Dispute Resolution (known as “ADR”) is becoming more important than ever for businesses and individuals alike to resolve disputes.

Whilst some cases may require Court intervention to resolve a dispute, early involvement and use of the correct means of ADR can facilitate parties in setting aside their differences and in some cases enable them to reach an early resolution.

The suitability of each type of ADR depends both on the matters in dispute and the nature of the parties’ relationship. The primary objectives of the parties will also affect which type of ADR may be more suitable. For example, a party is likely to take a different view if their main priority is to preserve their relationship with the other party, than if their main priority is to obtain a final determination to end a dispute without trying to maintain the relationship.

There are a number of forms of ADR you can use to resolve disputes in place of Court proceedings. The most common forms of ADR for Civil cases are: Mediation, Arbitration, Conciliation, Negotiation and Neutral Evaluation.

Mediation

Mediation can often help defuse animosity between the parties by involving a third-party neutral Mediator; who will facilitate the parties and help them focus on the key issues in dispute, with a view to agreeing a solution.

In many cases, even if Court proceedings have commenced, the Court can insist the parties attend Mediation before continuing with Legal Proceedings, with any refusal by a party being penalised when it comes to the issue of costs.

Mediations can take place in person or via virtual means, where the Mediator will try to facilitate a mutually acceptable resolution for the dispute between the parties. Typically, Mediation starts with both parties providing their position, with the Mediator helping the parties identify the issues in dispute and offering options for resolution in reaching a settlement.

Mediation is particularly useful to parties who wish to seek to maintain a relationship following the conclusion of the dispute.

Arbitration

For many types of dispute, Arbitration is a popular alternative to Court proceedings due its time and cost-saving benefits.

Arbitration is a private and more flexible method of judicial determination of a dispute conducted/facilitated by an independent third party. Whilst in Court proceedings parties have no say in the Judge who presides over proceedings, in Arbitration, the parties can appoint the Arbitrator themselves, unless an agreement or contract specifies otherwise. However, Arbitration is as binding and final as a Court judgment.

Whilst there may be an Arbitration clause within a contract, there is usually nothing preventing parties agreeing to refer a dispute to Arbitration by agreement.

Conciliation

Similar to Mediation, Conciliation is a process whereby a third-party is appointed as a neutral and unbiased person to help parties steer negotiations towards an amicable conclusion.

Whilst a Mediator will remain neutral and try to find common ground between parties, a Conciliator will weigh up each party’s position, offer their opinion regarding merits, and make proposals regarding the terms of settlement. It is for the parties to decide whether they will accept the Conciliator’s proposals as they will not impose their suggestions.

The Conciliator’s opinions will give parties “food for thought” of the risk of proceeding to Court proceedings.

Negotiation

There is significant benefit in parties seeking to engage in pre-action negotiations to determine whether common ground or compromise can be agreed to reach a settlement. This can be undertaken by written correspondence, telephone calls or ‘round table’ meetings. The parties can determine whether these negotiations take place in an open or ‘Without Prejudice’ manner (meaning they cannot be brought to the attention of the Court, save for the issue of costs).

‘Without Prejudice’ ‘round table’ meetings can prove an effective means of focusing the minds of parties to work together to reach a resolution. It allows parties to come face-to-face with the support of their legal advisor to seek to reach a resolution of matters in dispute.

Early Neutral Evaluation

The objective of Early Neutral Evaluation is to give parties an indication of both the strengths and weaknesses of their respective cases to aid negotiation of a settlement.

Whilst non-binding on the parties, the independent third party is likely to be a Judge or retired Judge who will give their view on the likely outcome at trial.

Choosing the right form of ADR

Forms of ADR are often not mutually exclusive, and methods which include obtaining a non-binding assessment from an independent third party can provide a springboard into other forms of ADR.

Choosing the right form of ADR can seek to ensure a swift and cost-effective method for resolving your dispute. Court proceedings should be a last resort, and engaging in early ADR can avoid matters becoming inflamed and allow parties to settle their differences.

How we can help

Ince is here to support you during these challenging times. For more information about Alternative Dispute Resolution, please contact a member of our Dispute Resolution team:

Janice Powell, Partner & Head of Dispute Resolution at [email protected]

Emma Hughes-McEwan, Managing Associate at [email protected]

Charlotte Dawes, Senior Associate at [email protected]

The information above is not and should not be taken to be legal advice. You should not take action or omit to take action based on this information.

If you require any help on the issues raised above, please get in touch using the details above.