When parties are in dispute with each other there are a few options such as mediation, negotiation, arbitration that available to them to resolve their dispute and they are free to choose which alternative dispute resolution (ADR) they would like to pursue.
I’ve listed the options below in order of the least expensive (usually) to the most expensive (again, usually).
First up we have negotiation. It’s generally a straightforward process. Negotiation involves some form of direct communication between the two parties in dispute or between the parties’ representatives with the ultimate aim of coming to a settlement that is mutually agreeable to both parties. The parties can use representatives or not. It’s up to them.
Then we have mediation. Mediation is usually more expensive than negotiation because it involves, at least, the involvement of a third-party - the mediator, who will have some costs, although they are usually much less than litigation. Mediation is probably the main method that people use when opting for ADR. It involves the use of a mediator, a neutral third party who helps the parties in dispute to communicate with each other in order to find a settlement that is agreeable to all parties. Mediation is effective where those in dispute have struggled to come to a solution previously or aren’t able to communicate effectively with each other. Mediators are usually professionally trained, with some having specialist training for certain types of disputes, such as family, divorce and child care or they may have relevant business experience for commercial disputes. The mediation process is voluntary and confidential and is generally conducted through a discussion between those in dispute, until arriving at a contractual agreement. The last mediation audit by the Centre for Effective Dispute Resolution (CEDR) in 2018 showed an 89% success rate for mediation.
Arbitration is another method of ADR that has a more ‘judicial’ feel to it and it is similar to litigation. Having said that, arbitration does allow the disputing parties some ability to decide how to shape their arbitration. As a result, it provides more flexibility that straight forward litigation. Arbitrators will often be experts in a particular field and because of that, arbitration is a popular option in commercial disputes, due to the expertise required in certain areas.
There are some other areas of ADR that are worth mentioning.
Conciliation is fairly similar to mediation but has a slightly different approach. The conciliator in these situations will actively try to promote settlement and suggest possible options or areas of potential concession. Conciliation is more commonly used in industrial disputes, such as those dealt with by the Advisory, Conciliation and Arbitration Service (ACAS), a Crown non-departmental public body of the Government of the United Kingdom.
Another is Early Neutral Evaluation. This is a non-binding form of ADR that has become increasingly popular in recent years. In an early neutral evaluation, the neutral party, who is likely to be a judge, a retired judge or a Queen's Counsel, hears each party's submissions and then states his view on the likely outcome at trial. That view is without prejudice and has no binding effect. The parties can then use this evaluation as a basis for further and fuller negotiations, or, at the very least, it can help parties avoid further unnecessary stages in litigation.
Finally, if all avenues of ADR have been explored there is litigation. In the past, litigation would have been the only route to be seriously considered by parties wanting to resolve a dispute. However, this has led to a considerable backlog of cases, a very slow system and, ultimately, too much work for the court system to handle efficiently. In some countries ADR is becoming more mandatory, with many cases being encouraged to try mediation or another form of ADR prior to coming to court.
In Ireland for example, The Mediation Act 2017, obliges solicitors to suggest their clients consider mediation. In fact, this obligation brings with it the requirement for litigants to confirm to the courts that they have considered mediation. The Act encourages the use of mediation which has the potential to:
Whilst the Act does not apply to arbitration and certain disputes under tax and customs legislation it’s certainly a step forward for ADR.
In general, the growth of ADR has been significant. It should be encouraged before pursuing litigation as many disputes can be settled outside of court. It’s worth noting now that the courts have the power to impose costs penalties on parties who refuse to mediate. Whilst ADR is not compulsory, and it doesn’t have a 100% success record, it does save considerable court resources and saves a lot of time and money that could otherwise be wasted on litigation.