There are several types of alternative dispute resolution (ADR), at least one of which should be suitable for your needs if you are looking to come to an agreement.
Types of alternative dispute resolution:
- Expert determination
- Early Neutral Evaluation
Mediation is the big one when it comes to ADR. We look at mediation as an alternative dispute resolution in more detail here. This is where a neutral third party assists the parties to reach a settlement by liaising with both sides trying to find a settlement through assisted negotiations, but without forcing a binding settlement or outcome until everyone agrees. This can vary from family mediation services to commercial mediations to resolve high value disputes between businesses.
At Blake Morgan we have qualified mediators and work with clients looking to go to mediation to settle a dispute. Mediation can take up to a day and has a high success rate, 93% of mediations were settled in 2020 according to the Centre for Effective Dispute Resolution (CEDR). If an agreement cannot be reached then you can look at another type of alternative dispute resolution or litigation.
The beauty of adjudication is that you can get a quick answer. This can be crucial in particular circumstances where you need a dispute to be settled quickly so that work can continue as soon as possible. Adjudication is common within the construction sector because of this need for a rapid resolution without going to court because you need work to be completed within a certain time scale. A lot of construction contracts are governed by JCT contracts which are standard worded contracts that you enter into with your builder and have an adjudication clause written into it.
A qualified adjudicator within an appropriate field is chosen by parties, who submit their case, and the adjudicator makes a decision. Usually the decision is not binding, and can be referred to arbitration if necessary to produce a binding decision.
Expert determination is growing in popularity. This is another fast method of resolving disputes and the clue is in the name, an expert is chosen to determine the outcome of a dispute and makes a binding determination.
A common area where expert determination is used is in corporate transactions, mergers and acquisitions. An example would be to have an expert determination clause added into a contract for completion account disputes. Thus it is pre-agreed to in the contract as a method of dispute resolution. There might be a dispute as to how much a company is worth as it may have increased or decreased in value since the time the agreement was made. An expert accountant might then be appointed to determine how much the company was worth on a particular date.
Early neutral evaluation
Similar to expert determination, early neutral evaluation can be used to give expert opinion on the likely outcome of a dispute. It is not binding but gives a good indication on the likely outcome were it to go to court. A barrister or retired judge would be asked to give their initial thoughts and can help you to come to an agreement quickly due to their neutral, but non-binding evaluation.
Arbitration is the use of a private court set up and paid for by the parties to a dispute, and often pre-agreed to in a contract. The outcome is binding on the parties and arbitration awards are recognised internationally. Arbitration is common in international contracts due to the ease of international enforcement. The other great benefit of arbitration is that the hearing takes place behind closed doors, so without of the glare of publicity so often associated with court hearings.
Why use alternative dispute resolution?
Suing the other party is not the only way to resolve a business dispute just like going to court is not the only way to reach an agreement when a couple separate. There are other ways – collectively known as ADR. Reasons to choose different types of alternative resolution include:
- To get a rapid resolution
- Any unwanted publicity can be avoided with ADR being private
- Greater flexibility in choosing how to resolve your dispute
- The parties are fully involved in deciding how to resolve the dispute
- There are a wide range of solutions that can be considered in ADR
- It is usually more cost-effective than litigation
How can ADR be effective for our clients?
Unlike litigation, ADR enables the parties to a dispute to focus on their future needs rather than past events.
The courts are actively encouraging parties to use different types of alternative dispute resolution as a means of resolving disputes. The court has the power to stay proceedings in order to refer a case to ADR, particularly mediation, and we are seeing a greater willingness on the part of judges to exercise this power. If a party unreasonably refuses ADR, they can be penalised by the courts at a later date – this might be in the form of costs sanctions.
If you have any questions regarding the forms of alternative dispute resolution, then contact our dispute resolution experts to see what would work best for you.
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