Alternative dispute resolution (ADR) can be used as an alternative to litigation in any dispute between 2 or more parties which relates to civil legal rights and/or duties.
Court proceedings do not need to have been issued in order for parties to engage in ADR. It is often popular in disputes between businesses because the negotiations and settlement terms remain confidential, whereas most court proceedings are public.
ADR has been an increasingly successful method of resolving disputes. Between 2017 and 2018, there were 20% more mediations than in 2016 and according to the results of a survey of mediators, the current success rate of mediations is 89%. Almost half of this increase can be attributed to scheme-related activity such as NHS Resolution and various court mediation schemes. Mediation has also become more accessible, with the introduction of a free small claims mediation scheme, which boasts a 70% success rate for resolving disputes.
Although mediation is the most common form of ADR, there are a range of other options from evaluative arbitration to facilitative negotiation and mediation. These include:
Without prejudice correspondence. Offers of settlement can be made via written correspondence and letters of this nature are very commonly sent between the parties as the litigation progresses. There are different types of offers that can be made but can be split into two categories:
Negotiation and round table meetings – these are the least evaluative and are often the starting-point of ADR, sometimes done without the input of legal professionals.
Mediation – this is a more formal process than round table meetings as it involves a skilled, neutral mediator to help facilitate a resolution and often occurs after solicitors have been instructed. However, it is still a flexible and facilitative form of ADR rather than evaluative as the mediator does not direct the parties to settle but rather, they elicit solutions to attempt to resolve the dispute. A mediation is always confidential and conducted on a without prejudice basis.
Early Neutral Evaluation (ENE) – there are two forms of ENE: judicial and private. A private ENE involves an independent, neutral expert and can be arranged before court proceedings have been started. It is generally not legally binding. Judicial ENE involves a judge giving their opinion on the merits of each party’s case. This can be useful to give each side an idea on whether they would win if the case proceeded to trial. If the case does not settle after a judicial ENE, the judge will not take any further part in the proceedings and a different judge will hear the case at trial. ENE can take place at any stage of proceedings; however, it is most effective after the disclosure stage of litigation. The court can order ENE but generally only with the consent of both parties.
Arbitration – this is the most evaluative because it involves an arbitrator who has a high level of expertise in the relevant area. An arbitration clause is often included in commercial contracts in order to prevent either side from bringing court proceedings. The arbitrator’s decision is usually binding, unless the parties both agree that it is not.
Parties are encouraged to think about ADR at all stages of proceedings and the courts strongly promote the use of ADR. The court cannot force parties to use ADR, however if a party refuses to engage in ADR, they will have to justify the reasons for doing so and may face costs sanctions from the court as a result.
If a settlement is reached through ADR, we always suggest to our clients that the settlement terms be recorded in a legally binding settlement agreement so that both parties have certainty as to the settlement deal reached. Settlement documents should be drafted with care, preferably by legal professionals, so that it accurately reflects the terms of the agreement.
Our dispute resolution team has a significant amount of experience in dealing with all forms of ADR. Our solicitors regularly attend mediations with clients and experience very high success rates of settling the case at mediation. Part of our expertise is advising clients on the most suitable form of ADR for their dispute, as well as whether it is suitable and when it is likely to be most effective. We also have expertise in drafting comprehensive settlement agreements. Please do not hesitate to contact a member of our dispute resolution team today if you need advice on ADR and/or settlement.