Going through the court system is only one way to resolve a dispute and is rarely the best option for any party involved.
The court process is costly and time consuming and even if the final judgement is found in their favour, parties are often left drained and unsatisfied.
Alternative Dispute Resolution (ADR) refers to the various methods that can be used to resolve disputes without having to resort to litigation.
These methods often involve using an independent neutral individual to assist the disputing parties in reaching an agreement.
ADR at Oracle Law Giffnock can either be a voluntary process that parties enter into in an attempt to protect their relationships and shared interests, or a mandatory program that is specified in the contractual agreement between parties.
ADR is not a replacement for traditional formal dispute resolution routes but is simply another option that can be attempted alongside legal proceedings.
It is often a useful way to have a judgement made that can settle a dispute quickly and permanently, however the system is not without its flaws.
ADR Types
There are 4 commonly used forms of ADR.
These are:
Mediation
The most common form of ADR, mediation involves using a third party to facilitate communication and negotiation between two parties.
The mediator themselves has no power to adjudicate on the dispute and should simply encourage parties to compromise and reach a middle-ground solution.
Mediation is hugely successful with around 80% of disputes approached using this method being resolved without escalation.
Negotiation
By far the simplest form of ADR, negotiation refers to the direct communication between both parties without the assistance of an independent middle-man.
This informal approach is usually best suited to disputes where both parties are intent on reaching a swift conclusion and maintaining the existing working relationship.
Arbitration
For those looking for a definitive judgement on a dispute case without having to go to court, arbitration could be the way forward.
Arbitration involves the appointment of an arbitrator, who is a neutral third party who will assess both sides of the dispute before rendering a final and binding decision.
It is a similar process to litigation except the arbitrator will be selected by the parties involved and not the legal system and a decision is usually made much faster.
Arbitration as a form of dispute resolution is often written into contractual agreements between parties in order to encourage disagreements to remain private should they arise.
Adjudication
Most commonly used to resolve construction contract disputes, adjudication is often regarded as a “pay now, argue later” process.
Adjudication is designed to prevent a party from withholding payments from the other for a sustained period whilst dispute proceedings are under way.
The decision made by an adjudicator is enforced by the court and a failure of either party to accept the decision can lead to arbitration or litigation.
Advantages of ADR
Resolving dispute cases using ADR has several advantages for the parties involved.
These include:
- Faster resolution – ADR generally takes far less time to conclude than a court case.
- Lower Costs – The cost of going to court is substantial and most businesses would prefer to avoid this expense if at all possible.
- Flexibility – Whether decided during the contractual agreement or immediately prior to ADR proceedings, ADR gives parties many more options when it comes to choosing the rules of the process.
- Protect Relationships – It is possible to enter dispute cases and yet maintain a working relationship with the opposing party once the issue has been resolved. Litigation should generally be reserved for when communication has broken down completely and there is no other way to move forward.
- Confidentiality – Unlike court findings, there is no obligation to make ADR resolutions public, allowing companies to keep their disputes in-house and protect the reputation of both parties.
- Finality – In general, Arbitrary awards are not subject to appeal meaning that once a decision has been made both parties can move on, unlike litigation cases that can drag on for many months and even years.
Disadvantages of ADR
ADR is far from perfect and relies upon the well-meaning of both parties to reach a conclusion to the dispute.
Some of the potential negatives to taking this route include:
- No obligation – Unless ADR has been written into a contractual agreement between two parties there is no obligation for them to enter proceedings meaning it only takes one party to force a litigation case.
- No Guaranteed Resolution – Unlike a court case, there is no guarantee that some ADR procedures will ever lead to a resolution. However, the process does have an excellent success rate of around 85%.
- Reluctance to look weak – In some situations, parties are unwilling to enter into ADR proceedings out of fear of looking weak. If a party is completely sure that they are in the right, it is unlikely that they will be willing to negotiate or compromise as this could lead to other parties trying to take advantage of them in the future.