ADR typically refers to processes and techniques of resolving disputes that fall outside of the judicial process (formal litigation – court). Courts are increasingly requiring some parties to utilize ADR of some type, most often mediation, before permitting the parties’ cases to be heard. There are generally four categories of ADR. These are mediation, arbitration, negotiation and collaborative law. Conciliation is sometimes included as a fifth category.
All ADR procedures, but negotiation, include the presence of a neutral person capable of providing an unbiased opinion who acts as a facilitator or decision maker. An exception exists with collaborative divorce or collaborative law where each party retains counsel who assists in the resolution process through explicitly contracted terms.
Despite historic resistance to ADR by many popular parties and their advocates, ADR has gained widespread acceptance among both the general public and the legal profession in recent years. In fact, some courts now require some parties to resort to ADR of some type, usually mediation, before permitting the parties’ cases to be tried (indeed the European Mediation Directive (2008) expressly contemplates so-called “compulsory” mediation; attendance that is, not settlement at mediation). The rising popularity of ADR can be explained by the increasing caseload of traditional courts, the perception that ADR imposes fewer costs than litigation, a preference for confidentiality, and the desire of some parties to have greater control over the selection of the individual or individuals who will decide their dispute. Some of the senior judiciary in certain jurisdictions is strongly in favor of the use of mediation to settle disputes.
If a company has a dispute over the supply of goods or services that it has been unable to settle through negotiation, it may wish to consider using an alternative dispute resolution scheme rather than taking court action. These schemes use a third party such as an arbitrator or an ombudsman to help you and the supplier reaches a solution. The company will usually have to complete the supplier’s internal complaints procedure beforehand and it may have to pay a fee for using the scheme. This is usually refunded if they are successful. Some schemes are legally binding, which means the company cannot take court action if you aren’t satisfied with the decision, except to enforce an award. If the company claim is over £5,000, it should discuss the possibility of ADR with your solicitor. If its claim is less than this amount, you should look at the pros and cons of ADR and small claims actions and decide which would be the best course of action for the company.
Advantage and Disadvantage of ADR
There are many advantages, and some disadvantages, to using Alternative Dispute Resolution.
Advantages include the fact that it usually takes far less time to reach a final resolution than if the matter were to go to trial. Usually (but not always), it costs significantly less money, as well. Furthermore, in the case of arbitration the parties have far more flexibility in choosing what rules will be applied to their dispute (they can choose to apply relevant industry standards, domestic law, the law of a foreign country, a unique set of rules used by the arbitration service, or even religious law, in some cases.).
The parties can also have their dispute arbitrated or mediated by a person who is an expert in the relevant field. In an ordinary trial involving complicated and technical issues that are not understood by many people outside a relevant industry, a great deal of time has to be spent educating the judge and jury, just so they can make an informed decision. This large time investment often translates into a great deal of money being spent. Both sides might have to call expert witnesses, who may charge very large fees for their time. If an arbitrator has a background in the relevant field, however, far less time needs to be spent on this, and the parties can get to the actual issues of the case much sooner.
There are some disadvantages, as well. Generally, arbitrators can only resolve disputes that involve money. They cannot issue orders requiring one party to do something, or refrain from doing something (also known as injunctions). They cannot change title to property, either. Also, some of the safeguards designed to protect parties in court may not be present in ADR. These might include the liberal discovery rules used in U.S. courts, which make it relatively easy to get evidence from the other party in a lawsuit.
Also, there is very limited opportunity for judicial review of an arbitrator’s decision. While a large arbitration service could, if it so chose, have some kind of process for internal appeals, the decision is usually final and binding, and can only be reviewed by a court in limited cases. This generally happens when the original arbitration agreement is found to be invalid. Because both parties must voluntarily agree to arbitration, if the consent of one party is obtained by fraud or force, it will not be enforced. Also, if the decision of the arbitrator is patently unfair, it will not be enforced. This is a difficult standard to meet. The fact that the arbitrator made a decision that the court would not have made is not, by itself, a basis to overturn the decision.
A court might also overturn an arbitrator’s decision if it decided issues that were not within the scope of the arbitration agreement.
It is important to consider these advantages and disadvantages before agreeing to arbitration, or any other kind of alternative dispute resolution. Chances are, you have already agreed to arbitration in many situations, without even knowing it. Many lease agreements and employment contracts have mandatory arbitration provisions, and they will usually be enforced, as long as certain standards are met.
Alternative dispute resolution (ADR)
Different kinds of ADR processes:
In consumer disputes, conciliation is the first stage in the arbitration process and the conciliator is usually a member of the trade association. Both you and the supplier will be asked to give written details of the complaint, including any evidence, and the conciliator will give an opinion on the best solution. Any decision is not binding and won’t prevent you from taking court action. If you disagree with the opinion offered, you can then proceed to the arbitration stage or consider suing in court. There is usually no charge for conciliation.
Arbitration is a procedure for settling disputes in which both you and the supplier usually agree to accept the decision of the arbitrator as legally binding. This means you cannot take court action, except to enforce the award if the supplier doesn’t pay. The arbitrator will usually be a member of the Chartered Institute of Arbitrators and often acts independently of the trade association. The arbitrator will make a decision based on the written evidence presented by you and the supplier. The decision is confidential and cannot be made public without the supplier’s agreement. You will have to pay a registration fee which may be refunded if you are successful.
Some contracts for services and delivery notes include an arbitration clause stating that you will refer any dispute to arbitration. Although this is binding once you have signed the agreement, if the total cost is below the small claims limit (£5,000), you cannot be forced to arbitrate unless you gave your agreement after the dispute arose.
If you use a mediation scheme, the mediator will help you and the supplier to negotiate an acceptable agreement and will act as a go between if you don’t want to meet. If the supplier agrees to mediation, you will both be asked to give details of the dispute, including copies of any evidence and will be asked to sign a mediation agreement giving a framework for the mediation. The mediator may arrange joint or separate meetings with you and the supplier and will help you to identify the strengths and weaknesses in your case. If an agreement is reached, you will both be asked to meet to draft the terms of the settlement. This will be legally binding unless you state otherwise and will prevent you from taking court action except to enforce the award. Mediation can be expensive, but you may be able to get legal aid to help with the costs.
Many services have an Ombudsman scheme that you can use. For example, services provided by insurance companies, banks and building societies are all covered by the Financial Ombudsman Service (FOS). You will only be able to refer the matter to the Ombudsman after you have completed the supplier’s internal complaints procedure. You will need to give written details of your complaint, together with copies of any of your evidence. The Ombudsman will make a recommendation or a ruling which is usually accepted by the supplier, but isn’t legally binding. Hence you can still take court action if you aren’t satisfied with the decision. However, the court will take the Ombudsman’s ruling into account when deciding your claim. All the Ombudsman schemes are free.
Access to justice
Access to justice is not just about courts and lawyers, but is also about better and early access to information and services to help people prevent and resolve disputes.
While courts are an important part of the justice system, there are many situations where other options for resolving a dispute will be faster, cheaper and more suitable in the circumstances. Often a full blown court case will be completely disproportionate to the issues in dispute.
Sometimes, simply having access to good information can help people to resolve their own disputes quickly and effectively. It may also be that parties will have an ongoing relationship after the dispute is resolved, such as a family matter or employment issue, so using a method of alternative dispute resolution that promotes agreement between the parties may be a better option. In complex and entrenched disputes, a court determination may be the most appropriate outcome. Ways to resolve issues include:
Information, advice and support:
- Administrative law remedies
- Alternative Dispute Resolution (ADR)
- Family Dispute Resolution (FDR) services
Access to justice also includes activities Government can do better to overcome barriers to justice, for example, clearer laws and better communication between agencies and applicants at the primary decision making level.
The Australian Government adopted a Strategic Framework for Access to Justice in the Federal Civil Justice System in September 2009. Application of the Strategic Framework will ensure that new initiatives and reforms to the justice system best target available resources to improving access to justice. The strategic framework comprises:
Principles for access to justice policy-making (objectives of the Australian justice system), and Methodology for translating the Principles into practice.
ADR options include:
- Mediation is a process managed by a dispute resolution practitioner called a mediator. The mediator assists participants to present points of view and facts. They also assist participants to identify the disputed issues, develop options and try to reach an agreement. The mediator does not give advice or make a decision on the facts of the dispute or its outcome. They may give advice on or choose how the process of mediation is conducted. Mediation may be undertaken voluntarily, under a court order, or as part of a requirement in an existing contract.
- Conciliation is a process managed by a conciliator. The conciliator assists participants to identify the issues in dispute, develop options and try to reach an agreement. A conciliator provides advice on the disputed matters and options for resolving them but will not make a decision about how to resolve the dispute. A conciliator may have professional expertise in the subject matter in dispute.
- Conference/conferencing is a general term for meetings run by a conference chair or convener. In the meeting, participants or their advocates discuss issues in dispute. The conference chair or convener may provide advice on the issues or possible options for solving them. ”Conference” often refers to processes in courts, tribunals and regulatory agencies that are similar to conciliation. These conferences may sometimes be referred to as “conciliation conferences”. Organizations with a regulatory or statutory responsibility often use conferences.
- Neutral evaluation is a process managed by a dispute resolution practitioner called an evaluator. Participants present points of view and facts to the evaluator who determines the key issues in dispute, and the most effective way to resolve it. The evaluator does not decide on the facts of the dispute.
- Arbitration is a process managed by a dispute resolution practitioner called an arbitrator. The participants present points of view and facts to the arbitrator and the arbitrator then makes a decision. Arbitration can be a much more formal and structured process than mediation or conciliation.
- In collaborative practice, you and the other people involved, as well as any lawyers or experts involved, all sign an agreement that you will focus on reaching a solution to the dispute through negotiation, rather than going to a court or tribunal. Collaborative lawyers agree that neither they, nor anyone from their firm, can represent the parties if they subsequently go to court.