Alternative Dispute Resolution

Question 1

What is alternative dispute resolution (ADR)?

Answer 1

An umbrella term for several formal and informal ways of resolving disputes outside of court.

Question 2

What are the consequences of failing to engage with ADR?

Answer 2

Court has discretion as to costs payable.
A party who unreasonably refuses to enter into an ADR process may be penalised by costs.
Even if they win, they may not get a costs order.
A failure to respond to an invitation to participate in ADR is itself unreasonable, even if there is a good reason for refusing to do so.

Question 3

What are the advantages of ADR?

Answer 3

1. Speed - quicker than going to court.
2. Flexibility
3. Client can withdraw at any time.
4. Preserves business relationships.
5. Privacy.
6. Cost

Question 4

What are the disadvantages to ADR?

Answer 4

1. Award may not be enforceable.
2. Limited disclosure.
3. The opponent can withdraw at any time.
4. Unsuitable if the client wants to set a legal precedent.
5. Unsuitable if the party needs an injunction.
6. If a client has a very strong case, they may prefer the court to find in their favour.

Question 5

What methods of ADR are there?

Answer 5

1. Negotiation/round table discussions.
2. Mediation.
3. Arbitration.
4. Early Neutral Evaluation

Question 6

What does negotiation/round table discussions involve?

Answer 6

All parties come together for a discussion.
Conducted on a without prejudice basis.

Question 7

What is negotiation/round table discussions suitable for?

Answer 7

Can be used in various types of claims and at all stages, but often used as first step in a dispute.

Question 8

What are benefits of negotiation/round table discussions?

Answer 8

Gives client opportunity to have case aired and appreciate the strengths and weaknesses of their opponent’s case.
Cheapest method.

Question 9

What are the disadvantages of negotiation/roundtable discussions?

Answer 9

Inequality between parties.
Parties can become entrenched in their position, as there is no neutral party to assist.

Question 10

What does mediation involve?

Answer 10

The parties and an independent mediator gather at a neutral venue.
Initially the parties will outline their dispute to the mediator in the presence of the other side in a public room.
The parties will then separate into private rooms and the mediator will speak to each, (often repeatedly), to try to reach a solution.

Question 11

What is mediation suitable for?

Answer 11

Can be used for all types of disputes, at any stage, even during trial.

Question 12

What are the benefits of mediation?

Answer 12

• Parties agree to a resolution of their choice (wider in scope than limited options available to court);
• “win-win” result can be achieved (more favorable to both parties than win-lose of litigation);
• Mediator is an independent and neutral individual;
• Conducted without prejudice (parties cannot use information obtained in mediation in court);

Question 13

What are the disadvantages to mediation?

Answer 13

Mediator costs and own legal costs are payable.
Resolution is not agreed - other party may not be willing to compromise.

Question 14

What are the two types of arbitration?

Answer 14

1. Judicial arbitration.
2. Contractual arbitration.

Question 15

What does judicial arbitration involve?

Answer 15

Process where parties seek a final and binding decision that deals with the areas of dispute.
Can be decided by either: expert determination (by a neutral third party specialist in the area), or arbitration panel hearing (similar to a tribunal).

Question 16

What does contractual arbitration involve?

Answer 16

Where the parties are contractually bound by an arbitration clause to use a particular arbitration process, rather that court proceedings, in the event of dispute.

Question 17

What is arbitration suitable for?

Answer 17

Substitute for litigation - cannot operate in addition to court proceedings.
Used commonly in high value business disputes, where the parties wish to keep matters private and maintain their relationship.

Question 18

What are the benefits of arbitration?

Answer 18

• Binding and can be enforced by the courts.
• Decision made by an impartial third party with a degree of expertise in matter.
• If scheme is run by a trade body, any fees association will usually be less than court fees.

Question 19

What are the disadvantages of arbitration?

Answer 19

More time consuming than other methods.
Cost of expert or panel can be expensive.
Each party has to pay their own fees.

Question 20

What does early neutral evaluation (ENE) involve?

Answer 20

Parties refer their dispute to a third party (usually an expert in the field), to make a preliminary assessment of the merits of the case.
Aim is to determine the likely outcome of the dispute if it proceeds to trial.
Third party will hear evidence and discuss the case with each party on a without prejudice before making a recommendation.

Question 21

What is ENE suitable for?

Answer 21

Commonly used in large technical building and engineering or commercial cases.

Question 22

What are the benefits of ENE?

Answer 22

Quick.
Confidential.
Assists parties in reaching a reasoned settlement and avoid trial.

Question 23

What are the disadvantages of ENE?

Answer 23

Non-binding.
May be costly, depending on the expert and preparation involved.