The well renowned investor Charlie Munger once stated that going to court is “notoriously time-consuming, inefficient, costly and unpredictable”. It’s hard to disagree with him, and unfortunately for many people in the UK, these problems are only getting worse. But is there an alternative to court action? Is there a way people can get justice faster and cheaper? Thankfully, Alternative Dispute Resolution (ADR) could be the answer.
What is ADR?
ADR is a confidential and alternative method of tackling legal disputes which avoids going to court. There are many different types of ADR that can be used to solve a dispute:
Mediation: Mediation is where a trained mediator will speak to both parties in a dispute and will assist the parties in coming to an agreement. The mediator is trained in diffusing tensions between the parties and finding creative solutions. This method is good for maintaining business or neighbour relationships and it allows parties to have their voices heard. The decision will be binding if the parties enter a signed agreement which resolves the problem.
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Arbitration: Arbitration is more formal than mediation. It involves an arbitrator making a binding decision after hearing from both parties. The arbitrator can be selected by the parties, which is useful if the dispute involves a complex area of law or if there is a neutral individual that already understands the background of the dispute.
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Early Neutral Evaluation: Early Neutral Evaluation involves an impartial evaluator (usually a retired judge) who will give their opinion on the merits of either side of the case. This is not a binding evaluation but it can help the parties see how the dispute might be decided in court. This is likely to help the parties negotiate and come to their own solution. This process can also be used in combination with other methods of ADR.
Benefits of ADR
So what are the benefits of using ADR instead of going to court?
– It usually takes a lot less time to come to a solution.
– It offers a much cheaper alternative.
– It helps to maintain relationships between the disputing parties.
– The solution can be much more creative than a court order. For example, a dispute involving parties may be solved by entering a commercial contract. This option is not available in court.
– The process is confidential. This is useful for maintaining a company’s reputation.
As you can see, the benefits of ADR are overwhelming and it represents a great alternative to going to court. But if it is so great, why don’t more people use it? Unfortunately this is mainly due to very few people knowing that ADR is an option. As a result, changes are being made to raise awareness of ADR. There are also several cases where the parties’ relationship is too fractured to come to an agreement. So what does the future hold for ADR?
How is ADR being encouraged?
Currently, ADR is voluntary, so the courts cannot force you to do it, even if they believe it would be beneficial. However, the courts can strongly encourage it and even stay proceedings for ADR to be attempted. There can also be cost consequences at the conclusion of a case if a party is deemed to have unreasonably refused to attempt ADR.
The Civil Justice Council published an ADR Final Report 2018, that has proposed several measures to increase the awareness, availability and encouragement of ADR. They suggest that court documents should include a presumption that ADR will be attempted and stricter cost consequences for those that unreasonably refuse ADR. These measures are an attempt to make ADR more mainstream in society. Only time will tell if this is the case.
Many organisations are beginning to recognise the benefits of ADR. A large number of commercial contracts contain an arbitration clause which states that any dispute under the contract will be resolved by arbitration. This is very useful for businesses that would like quick decisions and certainty about the future. The confidential element of ADR is also particularly useful for companies that would not like their sensitive information disclosed in public. More organisations beginning to recognise these benefits will result in increased commercial disputes resolved through arbitration, and a reduction in court cases.
ADR can be a fantastic tool for disputes as it can provide a must faster and cheaper method of resolution. However, few people know about this opportunity, which has led to overburdened courts and unsatisfactory solutions. Hopefully, this article will help spread the word of ADR, so that disputes across the UK can be resolved much more easily.
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