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Alternative Dispute Resolution (ADR) is an alternative to other litigation routes and can be more cost effective and with a more positive outcome than going to Court. The three most common types of ADR:
This involves an independent trained mediator in a confidential setting that allows each party to reach a negotiated settlement. It would usually mean each party is in a separate room with the mediator passing between but sometimes mediations can work with parties all in the same room. This is the most common ADR route but can be used together with other ADR processes (for example, arbitration). Even when mediation isn’t successful it is still a useful route in narrowing issues in dispute. It can be initiated before or during court proceedings.
If an agreement is reached this would usually be drawn up in a consent order which would be approved by the court to ensure it is binding on the parties.
Arbitration is more formal than mediation. It runs as a tribunal process. There will be a hearing and the arbitrator/arbitrators make a decision which is final and binding.
Arbitration is more commonly used with more complex matters and particularly useful when technical knowledge is required. Some contracts contain a clause that the parties agree for the resolution of disputes to be by way of arbitration rather than court proceedings. and there are many contracts that include this in a clause, which requires arbitration to be used when a dispute arises.
Adjudication is generally reserved for construction disputes as there is a statutory right for adjudication for disputes arising from construction contracts. As with arbitration, the adjudicator’s decision is binding.
An adjudicator’s decision is enforceable unless and until the dispute is resolved by litigation/arbitration or by agreement between the parties. This is often a quick way of resolving disputes due to the procedure. An adjudicator often has 28 days to reach a decision.
Although ADR is not a compulsory part of any proceedings, under pre-action protocols (guidance on steps to be taken before court proceedings) parties are required to at least consider it and any party that doesn’t may have to prove a legitimate reason for not doing so. A court will also expect parties to consider this throughout court proceedings. There may be cost consequences in failing to consider ADR. However, ADR may not always be a preferred route and this depends on the individual case.