Costs and benefits of different ADR methods

Question 1

What are 5 advantages of arbitration?

Answer 1

1. Provides for commercial certainty about how disputes will be resolved
2. Parties can select an arbitrator with suitable experience and expertise
3. The process can be relatively structured
4. The process is private
5. The process can be relatively simple and cost effective if the dispute is decided on the basis of written submissions
6. Aspects of the process can be tailored to an individual dispute

Question 2

What are 5 potential drawbacks of arbitration?

Answer 2

1. It may not be a cost saving option if a process similar to a trial is used.
2. The parties leave the final decision to a third party and will be bound by it
3. The arbitrator needs to be selected with care so that parties have confidence in an award made
4. Arbitrators do not have the wide powers of judges to manage the parties and compel compliance

Question 3

What are three advantages of adjudication?

Answer 3

1. Adjudication can take place very quickly
2. Parties can tailor an adjudication process around their specific needs
3. Adjudication is more flexible and cost effective than arbitration

Question 4

What are two disadvantages of adjudication?

Answer 4

1. An adjudicator may not have the case management powers of an arbitrator or a judge
2. An adjudication is not necessarily low cost
3. Adjudication may not be binding on the parties and may mean litigation or arbitration may still be necessary
4. It is private

Question 5

What are two disadantages of expert determination?

Answer 5

1. The cost of the process as experts may be expensive
2. The decision of the expert is likely to be binding even in the event of mistake
3. The expert will need to be carefully chosen to give both parties confidence in her decision

Question 6

What are two advantages of expert determination?

Answer 6

1. It can be cheaper to use expert determination than for both parties to hire expert witnesses in litigation
2. An expert can provide flexibility, with only one issue in the dispute decided in this way
3. Expert determination can provide commercial certainty and can take place quicker than arbitration or litigation

Question 7

What are two disadvantages of expert determination?

Answer 7

1. Expert determinators may be expensive
2. A decision is likely to be binding on the parties even if it is flawed (eg by mistake).
3. It may be difficult to select an appropriate neutral expert

Question 8

Name 5 situation when ADR may not be appropriate

Answer 8

1. The need for a precedent
2. Court order necessary for a declaration of legal rights
3. Interim injunctions or orders may be necessary
4. Where one party reasonably believes she/he has a very strong case
5. If there is a need for strong evidential rules
6. If the case is very complex
7. If there are high levels of animosity
8. Where there are quasi criminal allegations
9. Where contractual compromise of the claim may not be suitable

Question 9

What must a party seeking to enforce an international arbitration under the New York Convention 1958 produce for the Court?

Answer 9

The duly authenticated original award or a duly certified copy, and
The original arbitration agreement or a duly certified copy.

Question 10

What are two grounds it is possible to challenge an arbitration under?

Answer 10

Serious irregularity

Appeal on a point of law

Question 11

The Court may sanction a party who unreasonably refuses to do what three things?

Answer 11

1. Comply with an order made by the court directing the parties to attempt to resolve the dispute by ADR
2. Accept an offer made by the other side to attempt to settle the dispute using an ADR process before issue of proceedings
3. Accept an invitation by the other side to use an ADR process during the course of litigation, or even after judgment and prior to the hearing of an appeal

Question 12

Name 5 sanctions a Court may impose for unreasonable conduct in relation to ADR?

Answer 12

1. Depriving the party of costs even if they are successful in the litigation
2. Ordering them to pay some or all of the other side’s costs even if they are successful in the litigation
3. Ordering them to pay costs on an indemnity basis
4. Ordering a higher rate of interest to be paid on damages awarded; or
5. Depriving a party of interest on damages awarded by the court

Question 13

Name 3 factors that would make a case suitable for expert determination

Answer 13

Cases that need speedy resolution
Cases which are highly technical
Cases in which parties need a conclusive determination on an issue

Question 14

What are 3 advantages of offer and acceptance negotiation?

Answer 14

• Very flexible and can be conducted by parties and/or lawyers
• Relatively cost effective, as only a limited amount of special preparation may be required
• Clients retain complete control of the outcome through giving instructions, and approval of any agreement reached

Question 15

What are 5 disadvantages of offer and acceptance negotiation?

Answer 15

• Success depends to a significant extent on how well the case has been researched and analysed
• Success can depend on the skill of the negotiator, and the strategy and tactics employed
• Negotiation can lead to a relatively weak outcome for a client if the strengths of the case are not properly exploited
• The relative informality of negotiation can lead to confusion as to process
• A negotiation may fail if party expectations are unrealistic, or the parties are too entrenched

Question 16

Name 5 benefits of mediation

Answer 16

1. A neutral third party can help a party to see the strengths and weaknesses of a case more clearly
2. A mediator can help parties step outside an adversarial framework and entrenched positions, so mediation may work where negotiation has failed
3. A mediator can make possible offers and concessions look more acceptable
4. A robust and experienced mediator can help to find a way forward even in a relatively intractable dispute
5. The structure of a mediation allows a lawyer and client time to review offers and options in a way that may not be possible in a negotiation
6. The flexibility of mediation can be used to advantage, for example letting a party make a statement about something of particular importance

Question 17

Name 5 drawbacks of mediation

Answer 17

1. Success depends partly on abilities of mediator
2. Mediation can increase costs if a case might have been resolved by negotiation if the mediation fails
3. Mediation may need to be approached with skill by a mediator and by lawyers if a party tries to misuse the process, e.g. to get an unjustified offer in a weak case
4. Mediation may not work if the parties are deeply antagonistic
5. Mediation can be more difficult where one or both parties are not represented and/or not fully advised in advance

Question 18

Name an advantage of early neutral evaluation

Answer 18

An independent report may facilitate the early and cost-effective settlement of a case, especially where third party has confidence of the parties, more cost effective – costs of contested expert evidence at trial may be avoided

Question 19

What is a disadvantage of ENE?

Answer 19

The evaluator may only work with the documents disclosed to her.

The success will depend on the quality of the report by the evaluator

Question 20

What is the difference between mediation and early neutral evaluation?

Answer 20

Mediation is generally facilitative, ENE is advisory and evaluative process. Disengaged from the negotiation

Question 21

Describe a mini trial

Answer 21

Arranged to determine specific issues. Each side makes summary submissions, and the senior officers seek to reach an agreement. If they fail to do so the independent adviser may issue an opinion, following which the parties will again try to reach agreement

Question 22

What are 3 benefits of negotiation?

Answer 22

1. It is very flexible
2. It is cost effective
3. Clients remain in complete control of the outcome

Question 23

What are 3 disadvantages of negotiation?

Answer 23

1. Success depends on how well researched the case is
2. Success can depend on the skill of the negotiator
3. Negotiation can lead to a weak outcome for a client if the strengths of a case aren’t properly exploited
4. The relative informality of negotiation