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There is a range of different methods of resolving disputes without going to court. These alternative methods are referred to as ‘ADR’ i.e. Alternative Dispute Resolution. They differ and range from informal negotiations between the parties to more formal arbitration hearings, which are often applied in business or commercial transactions. I will now describe and give examples of the use of the various methods.
Negotiation. In the case of negotiation the parties or their legal representatives deal directly with one another to discuss the resolution of the dispute. It is dependent upon the parties communicating with each other and engaging in meaningful discussion.
Negotiation can be seen as a positive first step and may result in a settlement without going to court. Negotiation will start with one side approaching the other with details of their complaint and of what they consider a satisfactory outcome. The other side will not have to agree to take part in negotiation before you, or your representative, approach them. You can negotiate face to face, by letter, email or telephone, if both sides are happy to deal with the problem in the same way.
If an agreement is reached both sides can make a legally binding contract by producing and signing an agreement making it possible to take court action if the other side does not fulfil the agreement.
In negotiations there will be no independent third party, you may have someone negotiating on your behalf and that person will act for you and will represent your interest, but they are not independent and they are able to advise you of the best action to take. In this respect negotiation is different from conciliation and mediation.
Parties will often resolve the matter themselves, faulty goods taken back to the shop or returned to the supplier are usually replaced or the money refunded once the two parties have agreed on a course of action. Negotiation is often used to settle business disputes and when dealing with personal situations such as disputes with neighbours, marriage and divorce.
Whereas court proceedings are usually open to the public and press, negotiation is completely private. Negotiation can be the quickest and cheapest and also the most private method of settling a problem. The disadvantages are that the dispute may not be settled at all in which case the parties will have to try something else and, if negotiation leads to an agreement, that is the end of your dispute, you are not able to re-open it later.
The longer the negotiations go on the higher the costs and this will always be the case if lawyers are instructed to conduct the negotiations on behalf of their clients. Negotiations are possible not just at the outset prior to the commencement of court proceedings but can continue even after court proceedings have begun.
Mediation is the attempt to settle a legal dispute through active participation of a third party (mediator) who works to find points of agreement and make those in conflict agree on a fair result. It is a voluntary and confidential form of alternative dispute resolution.
Mediation differs from arbitration, in which the third party (arbitrator) acts much like a judge in an out-of-court, less formal setting but does not actively participate in the discussion.
Mediation has become very common in trying to resolve domestic relations disputes (divorce, child custody, visitation) and separating couples will be expected to try to sort their problems out using mediation before going to court.
Mediation has become more frequent in contract and civil damage cases. There are professional mediators or lawyers who do some mediation for substantial fees, but the financial cost is less than fighting the matter out in court and may achieve early settlement and an end to anxiety. However, mediation does not always result in a settlement.
With mediation a neutral third party is used as a facilitator to help the parties find a possible resolution to their dispute. A mediator does not give opinions on the merits of either side’s case. Their role is to ask questions of both parties in the hope that this will reveal the underlying problems. The mediator will try to assist the parties to understand the issues and will be seeking common ground and sounding out the options and positions available to each party. They will act as a go between to communicate offers between the parties.
A feature of mediation is that there is an assumption that the parties are willing to reach a compromise. Whereas court proceedings are usually about winning and not losing, this is not the purpose of mediation. The focus of mediation is to come to a common sense settlement which is agreeable to both parties in a case.
Mediation is flexible as there are various forms and the parties are in control and make the decisions. This is not the case with legal proceedings where legal professionals and judges take control and participate and influence decisions.
Proposals made in mediation do not constitute binding agreements but a solicitor can draft a binding agreement.
Formalised settlement conference is another method of approaching mediation. This includes a mini trial but the results are not binding. Examples of this form of ADR include more localised mediation services to resolve neighbour disputes.
If the parties can not reach an agreement, they can still go to court. Details about what happened during mediation will not be disclosed or used if the issue is taken to court. Examples of the use of mediation include family or matrimonial disputes which are often considered to be more appropriate for mediation.
Conciliation is the process of adjusting or settling disputes in a friendly manner through extra judicial means. It means bringing two opposing sides together to reach a compromise in an attempt to avoid taking a case to trial.
This is similar to mediation but the conciliator takes on a more active role and even suggests possible solutions to the dispute. The conciliator, like a mediator, is also a neutral third party and is there to help the parties resolve the dispute. In their more active role they will put forward ideas and suggestions for a compromise. It may be that a settlement is not reached at the end of the conciliation and the commencement of court proceedings remains an option.
Conciliation is often used in industrial disputes. In the case of industrial disputes the Advisory, Conciliation and Arbitration Service ACAS may well become involved and put forward their impartial opinions about the legal opinion in an endeavour to encourage a solution.
From 6 April 2014, ACAS have implemented a process of trying to resolve a dispute before it goes to an employment tribunal. This process is free and confidential and is called early conciliation. If a complaint is settled through ACAS, the agreement will be legally binding.
Arbitration This is where the parties involved in the dispute agree to refer their dispute to an independent arbitrator. The Arbitration Act 1996 governs written arbitration agreements. Arbitrators are experts in their particular field whereas a judge is only an expert in the law. Therefore arbitration hearings are shorter as there may be no need for the arbitrator to hear lengthy and complex evidence from expert witnesses because he or she will be familiar with the forms of contract and nature of disputes that can arise in, for example, building or civil engineering contracts.
The argument to refer a matter to arbitration can be made at any time. It is common to include an agreement to arbitrate in the event of a dispute as part of commercial contracts. These are known as Scott v Avery clauses.
The courts and parliament acknowledge arbitration as a valuable means of resolving disputes. The Arbitration Act 1996 provides that where there is a binding agreement to arbitrate then the matter must go to arbitration and the court will not normally intervene. The decision of the arbitrator, known as an award, is binding and can be enforced through the courts if necessary. The courts will only overturn the award if there has been some serious irregularity or a breach of principles of natural justice or on a point of law.
There is a growing expertise in the field of arbitration with the development of such organisations as the Centre for Dispute Resolution and the Institute of Arbitrators. These organisations provide training for arbitrators, as arbitration can still be complex although it can usually be dealt with more quickly and cheaply than through the courts.
Examples of situations where arbitration is used include building contracts, holiday contracts and business or commercial contracts generally.
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