Alternative Dispute Resolution (ADR)
The court requires that both claimant and defendant provide evidence that alternative means of resolution were considered 'appropriate and proportionate' to the case. This is the first question in the guidance booklet for completing your claim form as supplied by Her Majesty’s Court Service (HMCS).
Which? Survey 22 August 2013 found almost half of the British population wouldn't take a claim to the small claims court because they don't know what it does or what the process is.
Which? states "although the small claims court should be used as a last resort, it can be the answer if you've failed to find a solution by exhausting all other possibilities. Using the small claims court can be vital when it comes to getting your money back in many breach of contract claims - sometimes it can be the only way to do so."
Which? goes on to say "You should always use an Alternative Dispute Resolution (ADR) scheme, if there is one available to you, before resorting to court action."
What is Alternative Dispute Resolution (ADR) and why use it?
Historically people relied on the courts to resolve their legal disagreements. However, going through the court system was time-consuming, expensive and confrontational.
Traditionally alternative dispute resolution was used where parties had an on-going business relationship that they were keen to preserve and for one-off transactions it was used for substantial cost and time savings over litigation.
Since the introduction of Pre-Action Protocol (PAP) the use of skilled Alternative Dispute Resolution (ADR) providers has proved to offer further valuable benefits:
In addition to saving time and money the emotional stress on parties can be reduced through early resolution of the dispute.
Mediation the most common alterative used can be arranged in a relatively short period of time and has the effect of bringing settlement negotiations 'to a head' quickly.
Alternative dispute resolution takes place in private and the details of the dispute and its resolution need not be publicly disclosed.
Each of the parties maintains control of the dispute and its resolution because, unlike the trial process, the parties design the settlement and agree to live by it only if it is acceptable to them.
The atmosphere and setting is conducive to productive communication between parties and many of the tensions and stresses of the adversarial process are avoided.
Separating the people from the problem
Very often in disputes personal feelings and emotions become confused with substantive legal issues and play a powerful role in fueling litigation. The third party helps to separate the personal dimension from the issues in dispute, reducing tension and making settlement more likely.
Recognised types of Alternative Dispute Resolution (ADR)
The most commonly used adr procedures:
Facilitative Mediation uses a neutral intermediary to encourage parties to reach settlement that can be reduced to a binding and enforceable agreement. This usually focuses on the parties' interests rather than their legal rights and if possible achieves a creative win-win solution.
Evaluative Mediation is less common and uses the intermediary to give the parties a non-binding opinion to assist the parties in achieving settlement.
The conciliator is more pro-active and evaluative than a mediator and suggests settlement terms, makes recommendations and evaluates the legal merits of the case.
Direct communication between parties with no third party involvement.
Early Neutral Evaluation
This procedure is usually through the Commercial Court. A judge is appointed to hear the case put by each of the parties. The judge may give directions as to the preparatory steps the parties are to take and the form this is to take. The judge then delivers an initial evaluation together with an indication of the merits of the case and the likely outcome at trial. This may encourage the parties to open settlement discussions. If the case proceeds to trial a different judge will try the case.
A type of early neutral evaluation where a retired judge will sit for a fee and give an appraisal of a case, usually corporate, complex or large insurance cases. This is usually based on written submissions from the parties. The parties are free to agree whether or not his view is binding on them or merely indicative for the case.
The parties jointly/severally appoint an agreed expert to report on a particular issue in dispute. Used where a dispute is of a technical nature.
Mini-Trial / Executive Tribunal
The parties present their case in outline to a panel made up of senior executives from each party and a neutral adviser. Experts may be required to give their views. The tribunal gives its opinion which may lead to a successful solution.
Non-Binding / Binding Arbitration
Less formal than court and held in private. The parties control the issues to be determined and they decide if they will be bound by the decision given by the arbitrator.
A hybrid mediation-arbitration approach called med-arb combines the benefits of both techniques. In this process, parties first attempt to collaborate on an agreement with the help of a mediator. If the mediation ends in impasse, or if issues remain unresolved, the parties can then move on to arbitration. The mediator can assume the role of arbitrator (if qualified) and render a binding decision quickly, or an arbitrator can take over the case after consulting with the mediator.
Parties can choose to use any combination of adr. Such clauses can be found in contracts.
Finding a suitable Alternative Dispute Resolution (ADR) provider
Your choice of ADR provider should ensure that parties are on a equal footing and the dispute is dealt with in way that is proportionate to the:
- money involved
- importance of the case to each party
- complexity of the issues
- financial position of each party
The last point is especially important where the dispute is between a consumer or smaller trader and a larger business where the strengths of the parties as so unequal that adr, and particularly mediation, could lead to injustice.
The choice of a suitably experienced professional provider will ensure adr is always offered in good faith and it is not allowed to be used by one party as a process to delay resolution of a dispute.
The choice of the point at which mediation is to take place varies. Used at an early stage it can significantly reduce costs but in most cases mediation is likely to be more successful if the parties are in possession of the pre-action disclosure and, where relevant, witness statements.
Following pre-action disclosure the ability to be aware of, and to assess the strength of the evidence on both sides is likely to lead the parties to a have a greater degree of confidence in the process and therefore increase the chances of success.
The availability of 24/7 on-line dispute resolution using written communication and telephone mediation are both proportionate and can achieve excellent results with reduced costs when offered by experienced professional providers. These compliment the more traditional face to face mediation which involves travel time and costs.
It is sometimes appropriate for adr to be undertaken in parallel with preparations for trial ie post issue of proceedings.