ADR Flashcards
Two Types of ADR
Negotiation
settling a dispute by trying to come to an agreement with the other party. usually a private conversation and a cheap and quick way to resolve a dispute. If the dispute cannot be resolved the parties may get a solicitor to send a letter and negotiate with the other party. This will incur a slight cost.
Mediation/ Conciliation A neutral third party assists parties to a dispute to reach a compromised settlement. Both parties must agree to use mediation (except in family disputes). The mediator identifies areas of agreement and keeps the parties talking. However, they cannot suggest ideas for solutions.
Mediation can be used for family disputes such as divorce and neighbour disputes. In family cases, parties must show they have attended a MIAM meeting (Mediation Information and Assessment Meeting) before they go to court. (The exception is in domestic abuse cases) Examples of mediation services
CEDR - This is the Centre for Effective Dispute Resolution that was set up in London in 1991. Used by many businesses to resolve commercial disputes. 2016 = 10,000 mediations took place saving approx.. 2.8 billion pounds in lawyer and court fees.
Kent family mediation service – offers mediation for family disputes such as property, finances and children.
West Sussex mediation service – offers mediation services for neighbour disputes.
Examples of issues include noise, parking and boundary disputes. In addition, offers mediation for workplace and family disputes.
Judges try to encourage mediation in order to reduce court hearings. In Halsey v NHS, the hospital refused to engage in ADR. When they won their case in the court, the judge refused to allow the loser to pay their legal fees for them because of their refusal to use ADR!
2.Conciliation A neutral third party helps to resolve the dispute, but they have a pro-active role and can suggest ideas for solutions. This is because the disputes are usually commercial ones and the conciliator is usually an expert in commercial issues. Both parties must agree to use conciliation.
Arbitration (8 marks)
- The parties hire someone (with expertise in the issue) called an ‘arbitrator’. They are not a judge.
- If the agreements in writing its subject to the regulations within the Arbitration Act 1996
- The decision for arbitration can be made before a dispute arises or at the point when a dispute arises.
- Many companies add an agreement to go to arbitration (in the event of a dispute arising) to their contracts. It is known as a Scott v Avery clause. It ensures that arbitrators who are experts in commercial issues resolve the dispute so that it does not go to court. Many businesses such as travel firms use arbitrators to resolve issues from dissatisfied customers.
- If you do sign an agreement to go to arbitration, you cannot take the issue to court. Courts will refuse to deal with matters that are subject to an Arbitration agreement except in cases of small claims where the party can avoid court by using the small claims track.
- Both parties must agree to use arbitration.
- There is usually one arbitrator, but the parties can choose up to four.
- The arbitrator will hear both sides of the argument and make a legally binding decision.
- Arbitration decisions are called ‘awards’. They are legally- binding and courts will enforce them.
- Arbitration is known as ‘privatised litigation’.
Evaluation of ADR
Negotiation
+ It is quick as there are no barriers to discussion.
+ It is confidential as no other people need be involved in the dispute.
+ It is cheap and often free. If solicitor’s letters are used, it may cost £50 or so.
+ It is good for small scale matters. There is no point going to court for minor issues that can be resolved through a discussion.
- It does not always lead to a resolution and therefore the parties may need to resort to solicitors if no agreement is reached. This will be more costly and cause tensions between the parties
. - The parties may lose out on legal rights in a private verbal agreement as it is not legally binding and there will be no consequences for breaking the agreement.
- Therefore, if negotiation fails, the parties may need to go to court to get a legally bound agreement. It defeats the point of negotiation, creates expense, and adds to strained relations.
Mediation & Conciliation
+ Private as debate remains between the parties. Better for businesses who may not want the press sat in court through fear of bad publicity ruining their reputation, leading to potential profit loss.
+ An informal discussion. This is not the case in court where you can only answer questions when asked. This can lead to anxiety and stress which mediation avoids.
+ It can help preserve relationships through reaching a compromise as both sides put their opinions forward, guided by the mediator/ conciliator. This is better than being a winner or loser in court which can raise tensions between parties who may still need to work/ live around each other in the future.
+ It is quicker than waiting to go to court. this can take a year which means the dispute is hanging over both parties until then. Mediation/ conciliation will be sooner than this.
- This method relies heavily on the skill of the mediator/ conciliator. If they are not very skilled, the dispute won’t be resolved through them and it will end up in court anyway.
- There is some evidence to suggest that the weaker party may be at a disadvantage. They may not be able to articulate their points as clearly, therefore be taken advantage of by the other party.
- The decision is not legally binding. This means that a party may go back on their agreement with no consequences. Therefore, the parties could end up in court in order to resolve the dispute anyway.
- The mediator is not likely to be legally qualified so there may be some legal rights that the parties lose out on because they are unaware of them.
Arbitration
+ The institute of arbitrators means that there are people with recognised qualifications to choose from. An experienced person in the field is important in ensuring they come to the right decision in your case. It also means that they may know more about the technical issues being disputed than a judge! It also reduces the need for independent experts to be questioned = cheaper!
+ The agreement can be informal and allows parties to decide on time/ place, level of formality and time scale for resolving the dispute. This saves time and money.
+ It is private. In open court there may be press that publish details of the dispute, causing damage to the reputation of a business.
+ It is quicker than the time scale for courts.
- Arbitration may be cheaper than going to court but are not without expense.
- Using legal representation may cause one party to be on a weaker footing and raise costs.
- The rights of appeal for this form of ADR are limited which will be an issue if you are unhappy with the decision.
- There is still some delay and some expense with this method that may deter parties. They will seek other forms of ADR that are not as effective.
