Alternative Dispute Resolution

What is alternative dispute resolution?

Alternative dispute resolution (ADR) is any type of procedure or combination of procedures voluntarily used to resolve issues in controversy.

The main types of alternative dispute resolution used in consumer disputes are ombudsmen, conciliation, mediation and arbitration and are usually provided by trade associations. Other types of ADR used in commercial disputes include adjudication, early neutral evaluation and expert determination.

Parties who decide to use alternative dispute resolution to settle their dispute can select a method and a provider of their own choosing, depending on the source of the dispute. While ADR is not usually compulsory, clauses providing for ADR in contracts are binding as long as they are specific. The Civil Procedure Rules provide for the judiciary to encourage the use of ADR in appropriate cases. However the extra-judicial procedures are not themselves governed by statute except for a number of Ombudsman Schemes and arbitration schemes which have been established by Act of Parliament.

It is not obligatory to seek legal advice when using alternative dispute resolution, but it is advisable. It is also advisable to ensure that any ADR provider used has accreditation and carries indemnity insurance. Any particular terms you require, such as confidentiality clauses, should be agreed between the parties and the ADR provider at the outset before undertaking ADR.

Ombudsmen

Ombudsmen investigate and resolve complaints about public and private organisations. They also encourage good practice in the way complaints are handled by organisations and government bodies. The majority of recognised ombudsman schemes are set up by statute; others are voluntary non-statutory schemes set up on the initiative of the service sectors concerned. For example, services provided by insurance companies, banks and building societies are all covered by the Financial Ombudsman Service (FOS).

Conciliation

Conciliation involves an impartial third party helping the people in dispute to resolve their problem. The parties are free to agree to the resolution or not. In consumer disputes, conciliation is the first stage in the arbitration process and the conciliator is usually a member of the trade association.

Mediation

Mediation involves an independent third party helping disputing parties to resolve their dispute. The disputants, not the mediator, decide the terms of the agreement. The mediator has an important role, however, in 'reality testing' any agreement, ie in checking carefully that the parties are able to do what they agree to do.

Mediation is now widely recognised in the UK and Europe as the most popular form of alternative dispute resolution as it offers solutions beyond those that a court could ordinarily impose. It is increasingly used in commercial, personal injury and clinical negligence cases.

Family mediation helps those involved in family breakdown to communicate better with one another and reach their own decisions about children, property and finance.

Arbitration

In arbitration an independent, impartial third party hears both sides in a dispute and makes a decision to resolve it. In most cases the arbitrator's decision is legally binding on both sides, so it is not possible to go to court if you are unhappy with the decision.

Arbitration is in many ways an alternative form of court with procedural rules which govern issues such as disclosure of documents and evidence. But arbitration is private rather than public. Hearings are less formal than court hearings, and some forms of arbitration do not involve hearings but are decided on the basis of documents only.

Adjudication

Adjudication involves an independent third party considering the claims of both sides and making a decision. The adjudicator is usually an expert in the subject matter in dispute. Adjudicators are not bound by the rules of litigation or arbitration. Their decisions are often interim ones, ie they can be finalised using arbitration or another process. Adjudication decisions are usually binding on both parties by prior agreement.

In relation to construction contracts, adjudication is a statutory procedure by which any party to the contract has a right to have a dispute decided by an adjudicator, normally used to ensure payment. It is intended to be quicker and more cost effective than litigation or arbitration. The right arises by virtue of the Housing Grants Construction and Regeneration Act 1996.

Adjudication is also sometimes used to describe a non-specific alternative dispute resolution process in which a third party makes a decision as to the best way to resolve the dispute. In this sense, ombudsmen, arbitrators and judges are all types of adjudicators.

Early neutral evaluation

In early neutral evaluation (ENE) an independent third party considers the claims made by each side and gives an opinion, either on the likely outcome or on a particular point of law. The opinion is non-binding; the parties can use it if they wish in considering how they want to proceed with their case. The opinion can be the basis for settlement. ENE can be particularly valuable to get an opinion on a point of law or to get a more realistic view of the chances of success at trial.

Expert determination

In expert determination, an independent third party considers the claims made by each side and issues a binding decision. The third party is usually an expert in the subject of the dispute and is chosen by the parties, who agree at the outset to be bound by the expert's decision. It can be most suitable for determining technical aspects of a complex dispute. Expert determination is also a process of adjudication (see above), and parties agree at the outset to be bound by the expert's decision.

Med-arb

Med-arb is a combination of mediation and arbitration. Mediation is attempted first, and if no agreement results, the dispute will go to arbitration, where a binding decision will be issued. In some cases the same person acts as mediator and arbitrator; in others a different neutral is brought in to arbitrate.

Med-rec

Med-rec is a form of mediation in which the mediator gives the parties a recommendation for resolving the dispute. Mediation is conducted in the usual way, with the mediator encouraging the parties to reach their own agreed resolution. If they do not, they can ask the mediator to recommend a resolution. This recommendation can be accepted or not. If accepted by both parties it can become a binding settlement.

Resources

• Europa EJN - Alternative Dispute Resolutions in England & Wales
• Euroconsumer - website and email advice service for the UK European Consumer Centre operated by Citizens Advice.
• ADRNow
• Mediation UK - a national voluntary organisation dedicated to developing constructive means of resolving conflicts in communities
• Department for Constitutional Affairs: Alternative Dispute Resolution
• DTI: Dispute Resolution and Consumer Redress
• European Extra-Judicial Network (EEJ-Net) - a network of out-of-court redress mechanisms operating in the EU/EEA countries
• Chartered Institute of Arbitrators

Alternative Dispute Resolution providers

Lawfinder: ADR Services

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