What is Alternative Dispute Resolution?

What is Alternative Dispute Resolution? And what do I need to know about it?

A person’s right of access to bring a civil claim before the court is one of the fundamental principles of law which is almost universally recognised.  It is enshrined in UK law and is protected by Article 6 of the European Convention on Human Rights. In short, this means, that if you have been ‘wronged’ you have a right to have your claim determined by the courts.

That being said, parties are expected to attempt to settle their dispute without recourse to the courts and, if a dispute cannot be settled prior to litigation, the courts expect parties to narrow the issues as far as possible to enable a swift, and just determination to be made.

The problem with legal disputes is that often both parties feel that they are right, and both seek vindication of their positions by a judge – the closer one gets to the court date the more entrenched the parties are in their positions.

Alternative Dispute Resolution, or ADR, is a form of resolving disputes out of court, there are many different approaches to ADR some are very informal and therefore nothing like court itself, whereas others (the adjudicative options) are more formal and more closely resemble trials. One key difference between ADR and court is that both parties must agree to undertake ADR, whereas in litigation, once a party issues a claim the other party has few options other than to admit the claim or defend their position – when proceedings have begun unless the issues can be settled out of court it will generally result in a trial and judgment in favour of one of the parties, whether the other likes it or not.

The non-adjudicative options in ADR are the least formal and include offer & acceptance; negotiation; and mediation.  Offer and acceptance and negotiation are the least formal approaches of all; they include a party accepting the offer of another, thereby forming an agreement and settling the dispute without the need for lawyers or other third parties. Negotiation is much the same – essentially a discussion (verbal or written) that ends in an outcome acceptable to both sides. Mediation is the next level up and involves a neutral third person assisting the parties to come to an agreement.  The mediator does not make decisions and has no interest in the outcome of the dispute, they simply facilitate the parties to narrow the issues and, if they can, to come to an agreed settlement.

Adjudicative options are more formal methods of ADR, they include adjudication, expert determination and arbitration.  These methods often more closely resemble a trial and, although the format of adjudicative options is still a matter of agreement between the parties, they ultimately result in a decision being made by the appointed third party.  As adjudicative methods are more akin to trials they do not always offer the same time or money-saving advantages that ADR is renowned for; they are most useful in disputes where an impartial decision or determination is required.

Why consider ADR?

The saving in time and money is an obvious consideration when weighing up the benefits of ADR over litigation.  There are, however, other benefits, which do not always immediately spring to mind. Some of these advantages are:

·      Confidentiality – this may be important for all kinds of reasons, court proceedings are generally public and may lead to publicity that neither party wishes;

·      Control – parties have no control over the court process, it is formal and laid down by procedure which is rarely susceptible to change.  ADR, however, is entirely within the control of the parties, they can choose what evidence to serve, how long the process should take, what format it should take and almost anything that one can think of;

·      Relationships – the majority of people who end up in a dispute have some sort of relationship, be that a regular business to business relationship, or perhaps neighbours who are now in dispute but were friends.  ADR offers a much greater possibility of maintaining a relationship at the end of the process. This is often more important to parties than they initially realise; and

·      Outcome – ADR offers a far wider range of outcomes than are available in a trial, a judge can only make a limited number of orders in line with the law.

Must I settle?

There is no requirement to undertake ADR or reach a settlement, as discussed in the opening paragraph above, everyone should have access to the court.  That said, the courts are very keen for parties to settle if possible, this is for a number of very good reasons: 

·      It reinforces the primacy of parties in their own dispute (ie it is their dispute and they should be afforded the opportunity to fix it on their own);

·      It saves time – for the individuals and courts; and

·      It saves money

Are there other disadvantages to not settling?At present the courts will not force parties to engage in ADR, that approach may be set to change, not only due to recent developments in case law, but also in light of the significant delays that the COVID-19 pandemic has brought to courts. For more information on mandatory mediation follow this link

Whilst the court does not force parties to settle, they do expect them to explore options for settlement. Where a matter proceeds to trial the court is becoming far more willing to exercise its discretion to award costs against any party who has acted unreasonably in refusing to engage in ADR; this can be expensive as the following cases illustrate: 

DSN v Blackpool Football Club Ltd [2020] EWHC 670 (QB): A claim for just under £20,000 resulted in costs of in excess of £200,000 for unreasonably refusing to engage in mediation. 

Wales (t/a Selective Investment Services) v CBRE Managed Services Ltd & Anor [2020] EWHC 1050 (Comm): A defendant was successful in court but had 50% of costs disallowed as the court held their refusal to mediate was unreasonable. 

Egan v Motor Services (Bath) Ltd [2008] 1 WLR 1589: “What I have found profoundly unsatisfactory…is that the parties have spent in the region of £100,000 arguing over a claim which is worth about £6,000…mediation is a perfectly proper adjunct to litigation…the results are astonishingly good. Try it more often” Per Lord Justice Ward

In Conclusion 

ADR is the term given to a range of methods that, by the agreement of both parties, may result in settling a dispute without having to go to court.  There are many advantages to ADR, most notably substantial savings in time and money and, even in the minority of cases that do not result in successful settlement ADR inevitably narrows the issues significantly, having its own time and money-saving effect.   

John-Paul is a barrister and accredited civil commercial mediator registered with the Civil Mediation Council. He is the principal mediator at DF Mediation.