Date 1 March 2011
When I sat down to consider how to approach writing an interesting and engaging piece about the topic of Alternative Dispute Resolution (“ADR”), initially I struggled for inspiration. It is a subject often discussed amongst litigators and which occasionally makes ripples in the press but it wasn’t until I incorporated the acronym into the opening lines of Edwin Starr’s 1970 hit single “War” that the creative juices began to flow. However, unlike “War, [huh, yeah]”, ADR is good for something.
Why use ADR?
With numerous county courts across the country set to close as government budget cuts are enforced at the Ministry of Justice, there will be greater commercial pressure than ever exerted on litigants to consider and explore ADR rather than proceeding to trial. We are already seeing this in the family law arena.
Like it or not mediation, arbitration, adjudication etc. are very definitely here to stay. Experienced litigants will be familiar with the fact that it is necessary to consider and for us as solicitors to advise, upon whether a case is suitable for ADR at the earliest opportunity. Not only that, a litigant will need to justify any refusal to enter into ADR when the issue of costs comes to be determined at the end of a case. Great care should always be taken if electing to push ahead to trial regardless, as the cost penalties can be severe.
Critics of the emphasis the courts place on ADR believe that rather than assisting in settling disputes, it can simply add to the overall cost of litigating to the extent that in lower value disputes justice itself is undermined.
What are the options?
There are a variety of types of ADR, often employed in different scenarios. Our “ADR Glossary” provides a more exhaustive list but some of the main ones you will have heard of are:
1. Mediation
An independent mediator acts as a go between in order to broker a deal between the parties. This is probably the most popular form of ADR and its supporters rightly point to its high success rates as a reason for choosing it. The spirit of compromise is vital to its success as mediators tend to look to find common ground as a way to thrash out a deal.
2. Adjudcation
This is a form of private litigation specific to construction disputes and the adjudicator makes a decision on the dispute based upon the information before him or her as provided by the parties. The decision is usually made within 28 days of referral, and can lead to rough and ready justice, particularly in more complex disputes. The rules are less formal than litigation/arbitration and is a common way of resolving construction disputes. Parties to a construction contract often have the right to refer a dispute to an adjudicator, whose decision will be binding unless and until either of the parties has the matter determined by agreement or by the court. The adjudicator can also make determinations on the costs of the proceedings.
3. Arbitration
The arbitrator conducts a mini hearing in private to determine the dispute and there are similar rules of procedure to litigation. Often used in international commercial transactions and employment disputes.
4. Expert Determination
Where a dispute centres upon expert evidence, obtaining a decision from an expert rather than having various experts outline their arguments to a judge can be an attractive alternative to litigation. However, where there is no issue of expert evidence, the appropriate expert to make a determination is likely to be a judge!
5. Round the table meeting
This is the good old fashioned “without prejudice” settlement meeting. With no rules and no referee this is the bare knuckle fighting of ADR. However, it too has persuasive cost implications as any reasonable but unsuccessful attempt to resolve a dispute without a Court determination should be looked upon favourably by the Court when determining costs at the end of a case.
How and when do I do it?
Unless parties are contractually obliged or have a statutory obligation to use a particular form of ADR then it is only a consensual process. You can take a horse to water but you cannot make it drink. If the other party will not accept your invitation, then this can provide you with some cost protection if their refusal is unreasonable, even if you ultimately go on to lose the case.
ADR can be used before proceedings are issued or thereafter. However, last ditch attempts at ADR are generally less persuasive when it comes to determining costs than ones made at an earlier stage and parties can be more reluctant to settle once the majority of the costs of the litigation have been incurred.
Comment
My own experience of ADR is mixed. The most recent mediation I was involved in was a success for my client both in terms of the settlement terms and the avoidance of the costs of a full trial. The without prejudice nature of a mediation assisted in softening our opponent’s unreasonable open position. However, many parties find ADR considerably more uncertain than court proceedings and remain reluctant to submit to be bound by the outcome of arbitration or expert determination.
There is certainly anecdotal evidence to suggest that a dispute that is resolved by using one of the forms of ADR will cost less and be resolved faster than proceeding all the way to a fully contested trial. However, there are also cases where a failed attempt at ADR will simply add to the cost of the litigation and the time it takes to reach a trial. Therefore, to use the tried and tested lawyers caveat, the suitability or otherwise of every case needs to be judged on its own merits but ADR is something that should not be ignored lightly.
If you would like more information or advice relating to a specific matter, please do not hesitate to contact Chris Alexander on 01727 798042 or by email at chris.alexander@salaw.com or any member of the Commercial Dispute Resolution team.
© SA LAW 2011
Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them. You are recommended to obtain specific advice in respect of individual cases.