Alternative Dispute Resolution ("ADR")
21st July 2022
21st July 2022
In any dispute, it is always important to consider alternative dispute resolution (“ADR”) to attempt to resolve the dispute before rushing into Court or Tribunal action. Even an informal “roundtable meeting” early on in a dispute can save a lot of time, costs and stress if the parties are able to air their grievances, explore options for settlement and (ultimately) resolve the dispute without litigation.
ADR provides a confidential way of effectively resolving disputes outside the Court or Tribunal. Litigation can take months - even years - to bring a dispute to an end and the process can become very costly to both parties, adding to frustration and further damaging already tense relations between the parties. ADR can be a quicker and less expensive way of sorting out the issues in dispute, as well as wider issues not necessary within the proceedings or within the jurisdiction of the Court or Tribunal to determine.
The Courts and Tribunals encourage ADR, both prior to the issue of proceedings and post commencement. The Court Rules provide that in considering costs the Court must have regard to the conduct of the parties and, in particular, the efforts made (if any) before and during the proceedings in order to try to resolve the dispute. Parties who refuse to engage in ADR attempts (including reasonable proposals for mediation) are at risk of being penalised on costs by the Court.
This update provides information on three main types of ADR.
1. Informal Discussion - without prejudice negotiations/roundtable meetings
There are many advantages of informal discussions between the parties. They can take place in a location that is most convenient and at a time that is acceptable to the parties (and, if applicable, their legal representatives). The process is entirely voluntary and should be based around an informal discussion that is flexible and adapted to suit the parties and the circumstances with each party being given an opportunity to speak. They can be dealt with swiftly and therefore cost less. However, unless both parties are genuinely keen to resolve their issues, the informal discussions may fail to bring about a resolution and it may still be necessary to commence Court action.
However, it may be that negotiation early on in the process can bring about a negotiated settlement or at least a reduction in the issues to later to be resolved by the Court or Tribunal.
Anybody involved in a dispute should consider whether such without prejudice negotiations may be appropriate for the circumstances of their case. Our Legal Update here outlines the different types of settlement offers when looking at settlement discussions including Part 36 Offers and Calderbank Offers, and the costs protections these can offer.
2. Formal Facilitated Dispute Resolution Process
(i) Mediation is the most popular facilitated dispute resolution process. A third party neutral mediator is used to either provide a determination or to assist the parties in reaching a negotiated resolution of their dispute. Specially trained mediators facilitate negotiation, they do not take sides or tell the parties what to do. The parties can talk in confidence to the mediator about what they hope to achieve, knowing that the mediator will not pass that information to the other side unless specifically authorised to do so.
There are different ways of mediating. Some people do not wish to meet at all and some prefer to have a face to face discussion. Usually a substantial part of the mediation will take place with the parties in separate rooms, with the mediator going between them and discussing the available options. Mediations can also take place by telephone or online. At the end of the mediation, the parties agree with the mediator what the summary of the outcome will say and with whom it will be shared and then both parties sign it.
In most cases, it will be advisable to have lawyers present at the mediation. Mediators do not give legal advice and you will need to be able to make informed decisions during the mediation process. Your lawyer will be able to turn the proposals into a binding legal agreement and if you have already commenced legal action, they will be able to put the agreement in the form of a directly enforceable Court/Tribunal order. Where agreement is not possible, either or both parties are free to initiate or continue with Court or Tribunal action, but cannot call the mediator to give evidence.
The cost of mediation is usually shared by the parties and it is possible to agree a fixed price for a mediation which covers the mediator’s preparation before the mediation and time on the day.
Around 75-80% of cases settle on the day of the mediation itself and another 10-15% settle shortly after, so mediation is highly effective when it comes to settling disputes (statistic courtesy of the Civil Mediation Council see here).
In the Small Claims Court, where legal costs are not recoverable, there is the option for the parties, once a claim has been issued, to use the Court Service’s mediation service free of charge. This can only be used if both parties agree to the mediation and is usually conducted by telephone with the mediator calling the parties in turn and then acting as a go-between to facilitate a settlement. In order to be successful, both parties must approach the mediation with a willingness to compromise and a genuine desire to settle the proceedings.
Since the COVID-19 pandemic and government lockdowns, we have seen the emergence and popularity of online mediations, on platforms such as Zoom. This enables parties to explore settlement via mediation more easily (and cheaply) without having to come together on one location. We previously wrote about KDL Law’s experience of online mediation here.
(ii) Early neutral evaluation (“ENE”) can also be considered, where the parties invite a neutral third party to given a non-binding opinion on the merits of the case or particular aspects of the dispute. This can assist the parties to make a decision as to how to proceed, whether this is by settlement or further ADR. ENE is not as popular as mediation and is not commonly used.
3. Formal Imposed Decision
For example, through expert determination, a third party neutral, usually a professional familiar with the subject matter of the dispute (such as a qualified surveyor, in the case of property disputes), is engaged to determine the matter in dispute. The parties present the facts and arguments to that person, with the the process being agreed between the parties at the outset. The expert appointed makes a decision for the parties which is binding. There is no negotiation and the process is inflexible. Unlike with litigation, the decision is not usually appealable.
At KDL Law, we advise our clients of all possible options including ADR throughout the lifecycle of a case, and pride ourselves in trying to secure a positive outcome for our clients at the earliest stage possible, at the least cost and hidden time.
Litigation should always be a last resort and so, irrespective of the relationship between the disputing parties, some form of ADR should be considered (even if not pursued) at all stages of a claim, where there is the ability to compromise. Whatever form of ADR the parties to a dispute may choose, even if it fails the parties may look to try another form of ADR where there is a willingness to settle. Given current timescales for Court and Tribunal cases to reach conclusion and the associated legal costs for contested litigation, ADR will in the vast majority of cases be the quicker and cheaper option for resolving the dispute. Of course, this will always require parties on both sides who are willing to compromise, and this can often be where attempts at ADR fall down, meaning that litigation is the only option to resolve the dispute.
For more information, please feel free to contact a member of the team on 01435 897297 or firstname.lastname@example.org.
This legal update is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of KDL Law or by KDL Law as a whole.
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