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17.10.19

Conflict Resolution Day

Conflict Resolution Day (17^th October 2019) is a global event, intended to promote the concept of peaceful conflict resolution.

One of the main purposes of Conflict Resolution Day is to increase awareness of various peaceful methods of resolution available, such as mediation and arbitration.

In this short article, we discuss two popular methods of alternative dispute resolution (ADR), arbitration and mediation.

What is Alternative Dispute Resolution (ADR)?

Alternative Dispute Resolution is any method that is used to resolve a dispute instead of resorting to litigation or formal legal proceedings. In civil disputes, parties are encouraged to follow pre-action protocols which encourage ADR. This is because the judiciary believe that litigation should be a last resort and want to encourage parties to resolve disputes outside the doors of the court. More often than not, commercial contracts will feature dispute resolution clauses and they sometimes prescribe the type of ADR that should be followed before escalating disputes to the formal proceedings stage.

Including such a clause in a contract focuses the minds of the parties and guides them in how to attempt to resolve a dispute. Disputes can be time consuming and costly so a process to follow in a bid to end the dispute is often welcomed by all involved.

There are many forms of ADR, two particularly popular methods are arbitration and mediation. 

What is arbitration?

Arbitration is a process whereby parties agree contractually to have a dispute resolved in a private setting by (usually a panel of) arbitrators; the result is binding. An arbitration can follow a specific process and be governed by particular rules (for example, an ICC arbitration) or be more fluid, known as an ad hoc arbitration.

Usual steps in an arbitration are:

• Agreement to arbitrate
• Select an arbitrator
• Prepare for the hearing
• Present the case to the arbitrators
• Award
• Enforcement

 

Advantages

• Binding process achieves certainty
• Confidential- protects reputation
• More flexible process than court proceedings
• The parties can choose their arbitrators
• Usually quicker than litigation

 

Disadvantages

• In some cases, it can be as costly as litigation
• Relies on both parties agreeing to arbitration
• Opportunities for appeal more limited
• Decisions don’t set a precedent

What is mediation?

Mediation is a process that parties to a dispute engage in with a view to settle a dispute with the assistance of a neutral third party.

It is often used before parties to resort to litigation.

Advantages

• Confidential – again seeks to protect damage to reputation, rather than a court hearing which can attract public observers/ press attention
• The parties involved are in control of the process – they decide if a settlement is reached
• It can include an ‘outcome’ that cannot be achieved in litigation (for instance, an apology)
• It doesn’t rely upon rules of evidence as litigation does
• Relatively speedy and cost effective (when compared to arbitration or litigation)

 

Disadvantages

• It can result in horse-trading to reach a settlement
• Settlement is not guaranteed
• There is a cost attached to it which in lower value disputes could be significant

 

Both arbitration and mediation have the advantage that they are confidential. This can be very valuable, particularly in commercial disputes where trade secrets, professional reputation and preserving commercial relationships can be at stake.

For more information, contact Rebecca on 0114 225 3082 / r.draper@shulaw.co.uk.