As can be inferred, dispute resolution is the resolution of a dispute between two or more parties. It exists in both commercial and civil law and is often viewed to have several benefits over the traditional court routes. These benefits include, but are not limited to, speed, cost savings and increased flexibility. Despite these benefits, dispute resolution can quickly become complicated by the amount of mechanisms available to an aggrieved party. From conciliation, to the traditional form of dispute resolution of litigation, the multitude of mechanisms can quickly become overwhelming. This blog will explain the forms of alternative dispute resolution (ADR). While ADR in itself is not a form of resolution, it is the umbrella term for resolving a dispute without litigation.
This is usually the most cost effective way of resolving disputes between parties. This method involves the two parties coming together and discussing a resolution for their issues. Compared to other forms of ADR, this dialogue is different as it involves the parties talking to each other directly, rather than using a third party as a middleman. This dialogue happens before any of the formal processes are embarked upon and involves a series of meetings that can happen with or without legal representation. Despite this, many parties will often use legal representation for the benefit of safety and peace of mind.
Conciliation is another cost effective method of ADR. It is often used in B2C contexts because it is less formal than other methods, such as arbitration. The process of conciliation is similar to the pre-claim dialogue; however, it uses a conciliator. The conciliator identifies what both parties want and try to find a solution to the issues at hand.
Ombuds institutions are government-appointed officers who investigate and attempt to resolve complaints via recommendations or mediation. Sometimes, these institutions play a larger role in identifying systemic societal issues resulting from poor governance. While they are government appointed, they are still used in the private sector, offering an alternative form of dispute resolution. They operate in many different areas, including the finance, energy and communications sector and look into how a decision was made, rather than trying to resolve the dispute itself.
Mediation is the process of two parties coming together with an independent presence who will attempt to resolve the dispute. Alternatively, the mediator will try to narrow the claims that both sides are making in order to reduce the size of the case if it were to go into a more traditional process. Mediation is more formal than conciliation, but is still less formal and less expensive than alternatives such as arbitration or litigation. In mediation, the parties still retain their independence as the mediator is not there to come up with a solution, but instead to facilitate one. Mediation means that the parties can agree to terms on their own initiative, rather than those that would be handed down via a judgement or via an arbitrator.
Arbitration is more formal than mediation and removes some of the flexibility from the parties. The process of arbitration is similar to the litigation process in that the parties submit details of their claims to the arbitrator and their relevant team. The submissions result in the arbitrator delivering a decision which can then lead to the end of the dispute. The decision made by the arbitrator is known as the arbitral award and it is generally enforceable in a way similar to court judgements. A benefit that arbitration has over other forms of dispute resolution comes via the arbitrator. In cases where specialist advice and knowledge are necessary to identify a correct decision, an arbitrator will have access to these things in a way that courts and mediators will not.
This is the most formal legal process and is the one that the layman will be the most familiar with, so I will not go into detail. Using the court process can be complex and time consuming, but ultimately it is the most formal and final method, as alternative forms of dispute resolution will often not be legally binding.
It is of interest to note that the English and Welsh judicial system often prefers that parties resolve their disputes outside of courts - and rightly so! The court system, being publicly funded will always struggle when overloaded with cases, either resulting in cases taking a long time to be resolved, or cases being resolved poorly due to them being rushed. Given that this is the case, courts will look dimly upon parties who have not tried ADR methods. Deciding to go straight to litigation, without exhausting the less formal options, may have financial penalties in the form of reduced damages. If a contract has provided a preferred ADR process, ignoring these clauses will also have the same result.