Alternative Dispute Resolution

Alway Associates works with its clients and their management teams to:

The following is a paper prepared by Kevin McKee, on Alternative Dispute Resolution methods for a talk at the Thames Valley Branch of the Chartered Institute of Arbitrators on Wednesday 8 February 2006.

What do we mean by ADR?

Alternative Dispute Resolution (ADR) is any procedure or combination of procedures entered into voluntarily by the parties to a dispute or disagreement.  ADR has also been described as Appropriate Dispute Resolution.

ADR and the Courts

Whilst ADR has always been with us, since the civil procedures rules (CPR) were introduced in 1999 the courts now encourage parties to use ADR instead of litigation where this is appropriate.

The CPR imposes an obligation to further the objective to deal with cases justly by actively managing cases including ‘encouraging the parties to use an alternative dispute resolution procedure if the Court considers that to be appropriate’.  This encouragement can be given at any time but the CPR require that specific consideration is given pre-action and through the allocation questionnaire sent to the parties following the pleadings which requires the parties to state whether they would like a stay to consider ADR.  The court can also order such a stay on its own initiative.

The courts have made clear their support for ADR.  In Cowl v Plymouth City Council the Court of Appeal stated that ‘today sufficient should be known about ADR to make the failure to adopt it, in particular where public money is involved, indefensible’.

Mediation is a process often encouraged by the courts.  In Dunnett v Railtrack plc the Court of Appeal told the parties that they should attempt ADR; which Railtrack refused to consider.  Notwithstanding that Railtrack won the appeal, they did not recover their costs from Ms Dunnett.  The court stated that if lawyers ‘turn down out of hand the chance of ADR when suggested by the court, as happened on this occasion, they may have to face uncomfortable costs consequences’.

A number of subsequent cases have made it clear that there are situations where a winning party can refuse to mediate and still receive its costs, but this involves a significant risk.

It can be seen that there is now support through the CPR and the courts for ADR and particularly for mediation.

Classification of ADR Processes

On the 23 March 2001 the Lord Chancellor published a formal pledge committing government departments and agencies to settle disputes by ADR techniques.This pledge is restated in a document published by the Office of Government Commerce (OGC) entitled Dispute Resolution Guidance.This document provides and overview of dispute resolution and considers that dispute resolution techniques can be seen as a spectrum ranging from informal negotiations through increasing formality and more directive intervention from external sources, to a full court hearing with strict rules of procedure.It describes ADR as a commonly used term to include a range of processes which involve the use of an external third party and that can be considered as an alternative to litigation.

It does not, therefore, consider direct negotiation or litigation as forms of ADR.  It also accepts that there is a debate over whether arbitration is a form of ADR but states that for the purposes of the government pledge, arbitration is deemed to be a form of ADR.

It categorizes dispute resolution techniques as follows:

Negotiation – the most common form of dispute resolution, where the parties themselves attempt to resolve the dispute. Mediation – a private and structured form of negotiation assisted by a third party that is initially non-binding. If settlement is reached it can become a legally binding contract. Conciliation – as mediation, but a conciliator can propose a solution. Neutral evaluation – a private and non-binding technique whereby a third party, usually legally qualified, gives an opinion on the likely outcome at trial as a basis for settlement discussions. Expert determination – a private process involving an independent expert with inquisitorial powers who gives a binding decision. Adjudication – an expert is instructed to rule on a technical issue – primarily used in construction disputes as set out in the Housing Grants, Construction and Regeneration Act 1996 where awards are binding on the parties at least on an interim basis – i.e. until a further process is invoked. Arbitration – a formal, private and binding process where the dispute is resolved by the decision of a nominated third party, the arbitrator or arbitrators. Litigation – the formal process whereby claims are taken through the civil courts and conducted in public. The judgements are binding on parties subject to rights of appeal.