Table of Contents
In Short
- Alternative Dispute Resolution (ADR) offers cost-effective and faster solutions compared to litigation.
- ADR methods include mediation, arbitration, and negotiation, each suited to different types of disputes.
- Choosing the right ADR method can preserve business relationships and ensure a more amicable resolution.
Tips for Businesses
Consider ADR as a first step in resolving disputes. It saves time, reduces costs, and can maintain valuable business relationships. Evaluate which ADR method best suits your situation and seek professional advice to guide you through the process.
There may be times when your business disputes with another company. This could be, for example, due to a poor level of service or because one of you breaks a clause in your contract. Business disagreements do not always have to end up in court. There are quicker and often more accessible ways to resolve your dispute. This article will explain potential alternative dispute resolution (ADR) options for your business and commercial disputes.
What is ADR?
ADR is a method of resolving a dispute out of court. Although definitions of ADR vary, it generally refers to all dispute resolution methods other than court proceedings. It is often quicker and cheaper than a court case.
Should I Consider ADR?
ADR for your dispute is worth considering. Some of the reasons for this are:
- it usually saves time;
- it typically saves costs;
- you have choice and control over the type of ADR you use and the type of outcome;
- it is confidential;
- it can save business relations; and
- you can focus on a commercial decision rather than get into legal arguments.
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ADR Options
There are various ADR options for your business dispute. Below, we briefly describe those you are likely to have heard of and others you may not have.
Mediation
In mediation, parties to a dispute voluntarily select an independent third party to help them reach a resolution.
Conciliation
This is similar to mediation. However, rather than only facilitating a resolution, a conciliator helps parties reach an agreement by giving them a potential resolution.
Negotiation
Negotiation involves the parties to a dispute discussing how to resolve it. It normally takes place without prejudice. If you do not resolve the conflict, any discussions or correspondence marked as ‘without prejudice’ cannot be referred to in court proceedings.
Arbitration
Arbitration is a form of private ADR that usually occurs when parties have an arbitration clause in their commercial contract. They appoint an arbitrator or panel to listen to their evidence and make a legally binding decision on the dispute.
Expert Determination
Expert determination is similar to arbitration, as the expert makes a legally binding decision on the dispute. However, the team appoints the expert to address a technical issue in dispute rather than a legal one.
Early Neutral Evaluation
In early neutral evaluation, a third party gives the parties to the dispute a non-binding opinion. This may cover the whole issue or only part of it.
Med-Arb
This is where mediation turns into arbitration, as the former has not worked. Appointing the mediator as an arbitrator allows them to issue a legally binding award.
Executive Tribunal
People may refer to an executive tribunal as a mini-trial. It involves a panel of senior executives who can be part of either party and an independent chairperson. They will make a non-binding decision, or binding, if you prefer, on the dispute after you present your side to them.
This guide outlines how to resolve commercial disputes.
Key Takeaways
One way to resolve a dispute is by using ADR. These are methods to resolve a commercial dispute outside of court. ADR is beneficial in many ways. For example, it is cost-effective and something a court expects you to try. There are various ADR methods, and we have explained about:
- mediation;
- consolation;
- negotiation;
- arbitration;
- expert determination;
- early neutral evaluation;
- med-arb; and
- executive tribunals.
If you need help understanding alternative dispute resolution options, our experienced disputes and litigation solicitors can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. So call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
ADR stands for Alternative Dispute Resolution. It involves resolving disputes outside of court, using methods like mediation, negotiation, and arbitration. ADR is generally quicker and less expensive than going to court.
ADR is worth considering because it often saves time and costs, controls the process and outcome, and maintains confidentiality. It can also preserve business relationships and allow you to focus on commercial solutions rather than legal arguments.
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