Resolving Disputes – A Guide to Alternative Dispute Resolution

This insight will take a look at how disputes are commonly resolved, and the options available to parties when they are facing a dispute.

Parties often come to us when something has gone wrong and there is an ongoing dispute or one that might be about to escalate. The types of disputes we see and deal with are almost endless, but the fundamental issues are usually the same; one party believes another has made a mistake, and the other party sees it another way.

Clients often think the only solution is to involve the Court. Sometimes a client will actively want to argue their case in front of a judge. On the other hand, there are usually very good reasons, including cost, time, and risk, which mean a Court process should very much be the last resort.

Historically, people have called this work litigation. However, in recent times, the focus has shifted to dispute resolution. Parties have realised that the court process is not always the best way to fix a problem and that, with the court’s encouragement, there are alternatives which can be more beneficial to both sides of the dispute.

How disputes can be resolved

Whilst the Court process will always be available to the parties as a mechanism for resolving disputes, we are more commonly seeing and advising on Alternative Dispute Resolution (ADR).

ADR is the term used to describe any out-of-court dispute resolution and comprises of many options, ranging from mediation to negotiations and arbitrations. The Courts are keen to ensure that formal court proceedings are used only as a last resort and have made ADR a mandatory preliminary step that must be considered by the parties, or they face costs consequences later on down the line.

ADR encompasses a broad range of pragmatic solutions to resolve a matter, including mediation, negotiation, and arbitration. In most cases, mediation is often the most productive way to reach an agreement between the parties.

Is mediation the king of ADR?

We have found that mediation is an effective solution in many cases, and the rate at which cases are resolved by mediation is consistently high. Mediation involves a third-party professional mediator who is often, but not always, a lawyer. The mediator’s job will be to assist the parties in finding a way to resolve the problem that is satisfactory to both parties. A mediator is not a judge and will not tell the parties what to do.

Some of the reasons why mediation, in particular, is successful are:

1. It can happen very early on in the process, and before court proceedings have been started;
2. It focuses the parties’ minds on things like risk and cost, but also the stress of the process and time;
3. The parties can agree on the shape, format, and venue of the mediation; and
4. The presence of the mediator (a totally independent third party) can be very helpful

Mediations can also be a cost-effective solution when considering the alternative of the formal court route, and the processes and costs that entail.

Arbitration

By comparison, arbitration involves the parties appointing an independent third-party arbitrator. The arbitrator’s role is to make a decision on the dispute rather than re-establishing the lines of dialogue between parties to facilitate resolving the issue. The benefit of this form of dispute resolution is that it avoids the Court process and therefore procedures can be tailored to the particular needs of the dispute. The parties can determine the extent of the process, as well as the timetable. This often means an arbitration process can be completed more quickly than a Court process. The result of an arbitration is binding on the parties and offers certainty as to the decision made. That being said, arbitration is often a more expensive option than in-court litigation, because in addition to paying your own legal costs, you are also obliged to pay half of the arbitrator’s costs as the process continues. The arbitrator can make an award of costs, including the costs of the arbitrator at he end of the hearing, and so the process can be more costly and risky, as a result.

Adjudication

Another option available for disputing parties is to utilise adjudication. This involves the parties agreeing on a neutral third-party adjudicator to make a temporarily binding decision to resolve a matter quickly. As the adjudication process generally lasts 28 days, it is time-effective and avoids delays in reaching a resolution. This also has the benefit of often curtailing costs, as, due to the tight timeframe, preparation costs are limited. However, a point parties should bear in mind is the complexity of their dispute. Where matters are complicated and involve both factual and legal intricacies, the dispute may not be suited to adjudication, as the adjudicator may not have enough time to consider the issues thoroughly, and they may be rushed to make a quick decision. Equally, the Courts can sometimes still be required to make final binding decisions, depending on the terms of the adjudication process. Adjudication is often a contractual obligation in construction disputes, depending on the type of contract used.

Negotiation

In contrast, negotiation is another option available to parties to resolve a dispute outside of the Court process. This involves the parties attempting to reach an agreement and settlement without involving a third party to assist. By nature, this is a more party-led option and, as negotiation does not involve third parties, the parties retain full control of the discussions. In the first instance, this is also a cost-effective method of resolution as it avoids the expenses associated with formal processes. However, a risk of this option is that parties may reach a ‘dead-lock’ and be unable to come to any sort of agreement. This may delay and lengthen the process for reaching an agreement, and, if lawyers have been instructed to assist, this can increase the long-term cost of resolution.

How is ADR used, and what are its benefits

ADR can assist in restarting a dialogue between you and the other parties involved in the case in a non-adversarial context to try and reach an agreement. This can help preserve your relationship with the other parties and promote reaching a pragmatic decision.

Utilising ADR could also allow for more tailored decisions for you and the potential to negotiate or reach a compromise that favours your position, rather than an independent judge deciding on a simple win-lose decision. For example, sometimes one party seeks an apology from the other. A Court cannot make a party apologise, but a resolution through ADR can achieve that..

Settling the matter before resorting to the court process can help you save on costs as well as provide a timely resolution, as this can avoid the delays that Courts are currently being faced with. Additionally, ADR avoids the emotional distress of having to present your case in court.

In all cases, an agreement reached by way of ADR will be written down, signed by the parties, and be legally binding. Any breach of the terms of the agreement can be enforced through the Court. Our experience is that such issues are extremely rare.

Is ADR as effective as an in-court resolution?

In short, no. The Court process is effective in that it will result in a definitive resolution of the case in every case. ADR requires the parties to want to reach an agreement and, in some cases, is not successful.

However, being effective needs to be looked at in the wider context. A resolution reached by way of ADR can be satisfactory to both parties and resolve a wide range of issues, including the parties’ conduct going forward. Whereas a judgment by a court at the end of a trial will almost certainly be satisfactory to only one of the parties and only on the issues live at that point. Even then, the process will have been a long and expensive one for all concerned.

How can we help

As experts in litigation and dispute resolution, we can help you navigate the various options available to you when looking to resolve a matter. We understand that no one case is the same, and, with our experience in litigation, we can untangle complicated disputes and fight your corner to reach the best resolution for you.

We are a top firm for client satisfaction, and through our experience of dealing with these cases regularly, we understand that no one case is the same. We therefore have built a strong reputation in problem-solving skills and adapting to the circumstances of the case.

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