- Using the courts to resolve disputes can be costly, in terms of both money and time, and does not always lead to a satisfactory outcome.
- In addition, the court proceedings are usually open to the public and the press.
- Therefore, more and more people and businesses are seeking other methods of resolving their disputes.
- These alternative methods are referred to as 'ADR', which stands for 'Alternative Dispute Resolution', and include any method of resolving a dispute without resorting to using the courts.
- In the 1990s, there were many moves to encourage the use of ADR - the Woolf Report included more use of ADR as one of its recommendations.
- The Civil Procedure Rules 1999 allows a judge to stop court proceeding, so the parties can try mediation or another method of ADR.
- Anyone who has a dispute with another person can always try to resolve it by negotiating directly with them.
- If the parties cannot come to an agreement, they may decide to take the step of instructing solicitors, and those solicitors will usually try to negotiate a settlement.
- Completely private, and is the quickest and cheapest method of settling a dispute.
- Even when court proceedings have been commenced, the lawyers will often continue to negotiate on behalf of their clients - this reflected in high number of court cases which are settled out of court.
- Once lawyers are involved, there is a cost element. Longer case goes on, higher the costs.
- There are a number of cases that drag on for years, only to reach a settlement on the day of the trial.
- This is where a neutral mediator helps the parties to reach a compromise solution,
- The mediator is an impartial go-between who does not make a decision of the parties, but will try to find areas upon which they agree.
- A mediator can still be asked for an opinion of the merits, and in this case the mediation becomes more of an evaluation exercise.
- Used in family disputes and some divorce cases.
- Companies can benefit the most from this approach.
- Parties can choose the exact method they want.
- Parties are in control; they make the decisions.
- Only suitable if the parties are going to co-operate.
- No guarantee case will be resolved.
Mediation - Formalised Settlement Conference
- More formal method of approaching mediation.
- Involves a mini trial whereby each side presents its case to a panel composed of a decision-making executive from each party, and a neutral party.
- Once all submissions have been made, the executives, with the help of the neutral advisor will evaluate the two sides' positions and try to come to an agreement.
FURTHER ADVANTAGES OF MEDIATION
- Decision need not be a strictly legal one sticking to the letter of the law.
- Method makes it easier for companies to continue to do business with each other.
- Avoids adversarial conflict of the court room. With mediation, everyone wins.
- One of the main ones is the Centre for Dispute Resolution which was set up in London in 1991.
- Most large London law firms and large commericial companies are members.
- Using the Centre to resolve disputes has saved thousands of pounds in court costs.
- Centre prevents cases of litigation going to court.
- Typical cost for a mediator is £1,000.
- This has similarities to mediation in that a neutral third party helps to resolve the dispute, but the main difference is that the conciliator will usually play a more active role.
- He will be expected to suggest grounds for compromise, and the possible basis for a settlement.
- In industrial disputes, ACAS – Advisory Conciliation and Arbitration Service can give an impartial opinion on the legal position.
- Same as mediation, plus the extra of the power to suggest grounds for compromise.
- Does not necessarily lead to a resolution.
- May be necessary to continue with court action.
- This form of ADR is where the parties involved agree to submit their case to a private arbitration.
- It is governed by the Arbitration Act 1996.
- The object of arbitration is to obtain a fair resolution of disputes by an impartial arbitrator without unnecessary delay or expense.
- The agreement to go to arbitration will be made in writing. The precise way in which the arbitration is carried out is left to the parties to agree.
The agreement to arbitrate
- The agreement to go to arbitration can be made by the parties at any time.
- It can be made before a dispute arises or when the dispute becomes apparent.
- Many commercial contracts include what is called a Scott v Avery clause, which is a clause where the parties in their original contract agree that in the event of a dispute arising between them, they will have the dispute settled by arbitration.
- Section 15 of the Arbitration Act 1996 states that the parties are free to agree on the number of arbitrators, so that a panel of two or three may be used or there may be a sole arbitrator. If the parties cannot agree on a number then the Act provides that only on arbitrator should be appointed.
- There is also the Institute of Arbitrators which provides trained arbitrators for major disputes.
- In many cases, the arbitrator will be someone who has expertise in the particular field involved in the dispute, but if the dispute involves a point of law then the parties may decide to appoint a lawyer.
- If there is no agreement on who or how to appoint, then, as a last resort, the court can be asked to appoint an appropriate arbitrator.
The arbitration hearing
- The actual procedure is left to the agreement of the parties in each case. In some cases, the parties may decide on a 'paper' arbitration, where the two sides put all the points they wish to raise in writing and send it to the arbitrator.
- Alternatively, all documents can be sent to the arbitrator, but the parties will attend a hearing to make oral submissions to support their case. Witnesses can be called to give evidence.
- The date, time and place of the arbitration hearing are also matters for the parties to decide. This gives a great deal of flexibility to the proceedings.
- The decision made by the arbitrator is called an award and is binding on the parties.
- It can be enforced through the courts.
- The decision is usually final, but it can be challenged in the courts on the grounds of serious irregularity of the proceedings or on a point of law.
Advantages of Arbitration
- Parties have the freedom to make their own arbitration agreement.
- Parties can choose their own arbitrator.
- Parties can decide where the matter will be dealt with.
- The time and place of the hearing can be arranged to suit both parties.
- The procedure is flexible.
- The award is final and can be enforced through the courts.
- More informal than the court.
- Cheaper than court.
- Dealt with in private with no publicity.
- The dispute will be resolved more quickly.
Disadvantages of Arbitration
- An unexpected legal point can arise which is not suitable for an arbitrator to decide.
- If a professional arbitrator is used, his fees are expensive.
- If the parties opt for a formal hearing with witnesses it can be expensive.
- Rights of appeal are limited.
- Delays for commercial arbitration can be nearly as great as the courts if a professional arbitrator is used.
- The problem of delay and expense has meant that arbitration has lost popularity with companies, more and more businesses are turning to mediation, and the Centre for Dispute Resolution.
- A Tribunal is a formal process that is used to resolve disputes. All Social Services and Employment matters are dealt with by Tribunals.
- This is to reduce the amount of cases being dealt with by the courts. It is also quicker and cheaper than using the courts for these common forms of dispute.