ADR reasons, types and choice

Question 1

What is negotiation?

Answer 1

Negotiation is a communication process between the parties that is intended to reach a compromise or agreement in satisfaction of both parties.

Question 2

What is mediation?

Answer 2

Mediation is a confidential process intended to facilitate the resolution of disputes through the medium of an impartial third party – the mediator.

*Mediator has no authority to make any decision which is binding on the parties.

*In the event that mediation does not end in an agreed resolution, the content of the mediation will remain confidential and will not be made known to the court.

Question 3

What is arbitration?

Answer 3

Arbitration is a process by which a dispute is resolved by an impartial adjudicator whose decision the parties have agreed will be final and binding. The question of whether to arbitrate or not arises in two key stages:

a. Contract may include an arbitration clause; or

b. When a dispute has arisen, the parties choose to deal with it by way of arbitration.

Question 4

What are the advantages and disadvantages to arbitration?

Answer 4

It can be a long and formal process which is governed by rules and statute.

The advantages include:
*Privacy
*Easier enforcement in certain jurisdictions
*The ability to choose a specialist to determine the dispute
*Flexibility

Question 5

What is Med-Arb?

Answer 5

Parties agree that initially they will try to resolve the dispute by mediation. In the event that does not resolve the dispute, the matter will move on to an arbitration.

Question 6

What is early neutral evaluation / expert appraisal / expert evaluation? ENE

Answer 6

Independent party is appointed who will provide a non-binding assessment of the matter.

*Parties will have to pay them for their time and costs.

*The assessment provides an impartial `opinion’ which might usefully influence the parties in future settlement discussions.

*The independent party could be a lawyer or an expert in the relevant matter.

Question 7

What is expert determination?

Answer 7

Independent expert on the subject matter is appointed by the parties to determine the dispute.

*The procedure is determined by the contract between the parties.

*The expert does give a binding decision.

*Suitable for disputes requiring technical knowledge, but may not be suitable if the parties wish to be fully heard and there are issues of credibility.

Question 8

What is conciliation?

Answer 8

Independent neutral third party helps parties resolve their dispute. The process is facilitative like mediation, but may occasionally involve more of an evaluation, like ENE.

Conciliation often forms part of a statutory scheme or other regulatory scheme, and that scheme might provide who the conciliator should be, and the process involved.

Question 9

What ADR processes operate without third-party intervention?

Answer 9

Negotiation.

Question 10

What ADR processes operate with third-party intervention which does not result in a binding determination?

Answer 10

Mediation

Early Neutral evaluation / expert appraisal / expert evaluation

Conciliation

Question 11

What ADR processes operate with third-party intervention which does result in a binding determination?

Answer 11

Expert determination

Arbitration

Question 12

What are the benefits of ADR?

Answer 12

1. Privacy/ confidentiality
2. Less disruption
3. Outcomes reflect risk
4. Range of outcomes
5. Parties move involved
6. Parties in control
7. Less expensive
8. Saves time
9. Court expectations
10. Better relationships

Question 13

What is the benefit of `court expectations’?

Answer 13

The court expects parties to act reasonably in relation to considering and engaging in ADR, and can impose sanctions if they do not.

Question 14

What is the benefit of `preserves or creates a better relationship between the parties’?

Answer 14

Parties can explore emotional dimensions, or agree a future trading relationship. Court proceedings do not offer such opportunities.

Question 15

What is the benefit of less expensive and/or saves time?

Answer 15

An appropriate form of ADR, if successful, can lead to a resolution at less cost than litigation and conclusion more quickly.

Question 16

What is the benefit of greater privacy/ confidentiality?

Answer 16

Litigation involves filing documents at court which might be accessible by the public, and hearings will generally be public. All forms of ADR are essentially private and confidential.

Question 17

What is the benefit of less disruption to clients?

Answer 17

Forms of ADR such as mediation can be much less disruptive to clients – they might not need to search for documents, engage in a many internal meetings or attend court the way they might in the case of court proceedings.

Question 18

What does outcomes that reflect risks mean?

Answer 18

In non-binding forms of ADR the parties can agree a settlement that reflects the risks to each side.

For example, in a financial claim, the parties might agree that the claimant has a 60% chance of winning, and if the claimant wins, they will recover £100,000. In such circumstances, both parties might be attracted by a settlement by which the defendant pays £60,000 to the claimant – less than the full sum to reflect the possibility that the claimant loses and recovers nothing.

In court proceedings, the judge cannot decide the claim in such a way. The judge must decide each issue and then give a judgment accordingly, and cannot discount the judgment sum to take into account the uncertainty that it is the right judgment.

Question 19

What does greater control over the process mean?

Answer 19

In many forms of ADR, the parties have greater control over the process. One aspect of control, is the ability to choose any third party.

Question 20

What does greater involvement of the parties themselves mean?

Answer 20

Clients often prefer mediation to litigation as there is a greater opportunity to get involved in the process and have their say.

Question 21

What is the role of lawyers in ADR?

Answer 21

A legal representative acting in their client’s best interests will:

1. Ensure their client is fully aware of the options for ADR.
2. Help their client to pursue any ADR which it wishes to pursue.
3. Act within the authority to settle granted by the client in any settlement discussions. It is generally prudent to involve the client directly in the final approval of any settlement agreement.