What is alternative dispute resolution?

What is alternative dispute resolution?

Alternative dispute resolution encompasses a wide range of methods of dealing with disputes without going to court. Essentially, it is a way for businesses to settle disputes without having to step foot in a court room.

The most commonly-used method of alternative dispute resolution is mediation. However, conciliation may also be used. Both procedures require the guidance of an unbiased third party, helping the parties to reach a solution without imposing one.

There are other methods that can be classed as alternative dispute resolution methods, namely adjudication, arbitration and expert determination. These methods are very similar to the court process as they require a third party to impose an enforceable solution, rather than merely facilitating a negation where a settlement can be agreed.  However, both may be a requirement of a contract, and are often found in JCT contracts. These methods are far swifter than the court process.

In many instances, alternative dispute resolution is a cost-effective way of achieving a solution as it avoids costly courtroom fees and provides parties with an opportunity to settle their dispute without having a third party, such as a judge, decide on a solution for them.

When would alternative dispute resolution be best used?

Alternative dispute resolution (ADR) is often a far cheaper and much more timely option than going through the courts. In addition, all alternative dispute resolution procedures are completely confidential. This means it’s a safer way of handling a dispute where the issues are confidential, which is particularly useful if trade secrets are at risk or there are commercially sensitive terms of trade involved.

By utilising Stephensons to handle ADR, businesses stand more of a chance of reaching a solution where both parties can continue with their working relationship and achieve a satisfactory outcome. Alternative dispute resolution procedures also ensure that neither party is seen to lose publicly.

If you decide to commence court proceedings, a judge will usually expect to see that both parties have at least considered the use of an alternative dispute resolution procedure, before taking the matter to court; this is required by the Civil Procedure Rules.

When would an alternative dispute resolution procedure not be the best course of action?

In cases where one or more of the parties involved refuse to accept the fact there is a problem or will not allow negotiations to take place, an alternative dispute resolution process can be difficult to start. In addition, alternative dispute resolution may be unsuitable where the parties are willing to negotiate but it is clear there is almost no chance of a successful outcome. This could mean one party is suing purely to cause trouble or pursuing an extremely unreasonable amount of money, and has made it clear that they would not be satisfied with anything less.

Although the courts are very much stressing that disputants should try to reach an outcome before going through the legal process, in cases where there is no chance of both parties reaching an agreement mediation may be refused.

Alternative dispute resolution may not be suitable in instances where one party is demanding that another stops what they are doing. For example, one party may want another party to stop selling products that are of a similar or identical design to their own.

Due to their confidential nature, alternative dispute resolution procedures are not advisable where one party wants to send a message out to others publicly, an example being someone with the intellectual rights to a property who wants to signify that these rights will be defended vigorously and they will sue anyone who decides to infringe on these rights.

Why should I use an alternative dispute resolution settlement?

An alternative dispute resolution settlement can speed up the process of coming to a mutually beneficial agreement. It can cost far less and takes less time to resolve matters than it would if you were to go through the courts. Alternative dispute resolution is the perfect solution for small to medium sized businesses who need to reach a settlement, as the costs of handling their dispute are significantly reduced.

In addition, a more beneficial agreement can be reached by both parties as they are the ones who are deciding on the outcome, rather than a judge or arbitrator. As a result, the agreements are usually more satisfactory than they would be, should the issue go to court.

Mediation may also mean that certain positives are achieved, where litigation would not allow. For example, something as simple as an apology or a new way to co-operate in the business could be achieved. Again, the process is completely confidential which helps avoid any unwanted interest from the press or a competitor.

What do I need to consider?

If you have an issue with another party, you are advised to consider alternative dispute resolution, especially now that the courts feel ADR should be pursued or at least considered before taking the issue further.

The expert solicitors at Stephensons have many years of experience in dealing with these types of claims, helping business owners achieve positive outcomes.

All aspects can be handled on a fixed fee basis, which means costs are reduced significantly, leaving you to focus on running your business.

What should I do?

Involved in, or anticipating, a business dispute? To speak to our team about our alternative dispute resolution services, call 0175 321 6399.

Find out more about our alternative dispute resolution services.