Alternative Dispute Resolution – Mediations/Other Dispute Resolutions

Alternative dispute resolution (ADR) is any type of procedure or combination of procedures voluntarily used to resolve disputes between one or more parties. Parties who decide to use ADR instead of court proceedings to resolve their dispute can select a method and provider of their own choosing. ADR is encouraged by the courts and if not considered before issuing court proceedings or during proceedings can result in adverse cost order against the party refusing to take part unreasonably. ADR is commonly provided in contracts to be used upon a dispute arising.

Common types of ADR are explained below:

Negotiations – Without Prejudice

The parties to the dispute can enter into “without prejudice “negotiations either through correspondence or in a meeting with or without legal advisors. If an agreement is reached between the parties, the dispute will be resolved. The agreement should be documented and parties should ensure that it is binding and enforceable. If the parties cannot reach an agreement they can proceed to court or other means of ADR. The discussions in the without prejudice meeting or communication cannot be disclosed or used in the court hearing.

Mediation

Mediation involves an impartial third party (Mediator) helping the parties in dispute to resolve their dispute. The role of the Mediator is to help parties reach a solution to their problem and to arrive at an outcome that both parties are happy to accept. Mediators avoid taking sides, making judgments or giving guidance. They are simply responsible for developing effective communications and building consensus between the parties. The focus of a mediation meeting is to reach a common sense settlement agreeable to both parties in a case.

Mediation is a voluntary process and will only take place if both parties agree. It is a confidential process where the terms of discussion are not disclosed to any party outside the mediation hearing. If the parties are unable to reach agreement they can still go to court. Details about what went on in the mediation cannot be disclosed or used in the court hearing. Costs of the mediation are shared (i.e. the mediators and the venue but excluding any other costs such as solicitors/other professional advising in relation to the claim).

The key benefits of mediation if successful are the cost saving, speed of resolution and maintaining the parties business relations.

Mediation is recognised in the UK and Europe as the most popular form of alternative dispute resolution as it can offer solutions beyond those that a court could ordinarily impose. It can be used both in commercial and consumer disputes.

Arbitration

An Independent, impartial third party (Arbitrator) hears both sides in a dispute and makes a decision to resolve the dispute. In most cases the Arbitrators decision is binding on both parties, so you it is not possible to go to court if you are unhappy with the decision. There are circumstances when the decision may be appealed.

In many ways it is an alternative form of court with procedural rules which govern issues such as disclosing documents and evidence. However, arbitrations are private rather than public. Sometimes, arbitration can be dealt with on the basis of documents only. It is speedier than court proceedings.

Adjudication

Adjudication involves an independent third party (Adjudicator) considering the claims of each party to the dispute and makes a decision. Adjudicators are not bound by the rules of litigation or arbitration. Their decisions are often interim ones that is - they can be finalised using arbitration or another process. Adjudications are generally binding on both parties by prior agreement.

In construction contracts adjudication is a statutory procedure by which any party to the contract has the right to have a dispute decided by Adjudicator. It is intended to be quicker and more cost effective than litigation or arbitration and commonly used to ensure payment. The right arises by virtue of the Housing Grants Construction and Regeneration Act 1996.

Expert Determination

Again a third party (expert in the particular field) considers the claims made by each party and issues a decision. The expert is usually chosen by the parties. The parties agree at the outset to be bound by the expert’s decision. It can be most suitable for determining technical aspects of complex dispute. Expert determination is also a process of adjudication referred to above. The parties agree to share the cost of the expert.

Med-arb

This is a combination of mediation and arbitration. If the mediation fails, the dispute proceeds by way of arbitration. Sometimes the same third party appointed for the mediation may act as the Arbitrator.

Med-rec

This is a form of mediation where it is conducted in the usual way where the Mediator encourages the parties to reach an agreement. However if they fail do to so, they can ask the mediator to recommend a resolution. If the parties agree to accept the resolution, a binding settlement is achieved.

Ombudsmen

Ombudsmen investigate and resolve complaints about public and private organizations. Majority of the ombudsman schemes are set up by statute, others are voluntary set out up on the initiatives of particular service sector, for example insurance companies, banks and building societies.

February 2011

This article gives a general overview only and the legal position at the time of writing this article. It cannot be relied upon in any particular case. Specific legal advice must always be considered to include consideration as to whether the legal position contained in this article has changed since going to print. For further information and advice, please contact Marianne Johns on 01793 527141 or alternatively by email on Marianne.Johns@lemon-co.co.uk.