The best alternative
10 September 2001
7 January 2014
English Commercial Court enforces obligation to resolve disputes by friendly discussion prior to arbitration
8 July 2014
15 July 2014
26 February 2014
18 October 2013
In recent years there has been an ongoing shift from the use of litigation to alternative dispute resolution (ADR) procedures in a number of practice areas. In some of these areas, the shift has been so great that it could be argued that 'alternative' dispute resolution has become the norm, with litigation being made the alternative. What seems clear is that the move towards ADR is set to continue and permeate more areas of the law.
Unsurprisingly, the arguments used in favour of ADR deal with a number of weaknesses associated with litigation, namely that ADR offers a cheaper, quicker and more informal resolution of issues than the more traditional approach. Given the problems of ever-increasing caseloads and spiralling legal costs, such advantages make ADR attractive to the Government in its provision of legal aid, and to private parties in disputes.
Although litigation may be thought of as the Rolls Royce of dispute resolution, in certain cases a more compact model may do just as good a job in getting you from A to B for a knock-down price. As well as arguments based on efficiency, there are those based on the effectiveness of ADR in terms of the resolution of issues.
ADR, whether in the form of a commercial arbitration or a family mediation, involves the parties' consent. In a mediation, this may mean that the parties agree on the outcome; in an arbitration or adjudication, the consent comes earlier in the process, when the parties agree to be bound by the third party's decision. An outcome, which has involved consent, is more likely to be accepted than one that has been imposed by a third party, as is the case in litigation.
Adjudication as a means of resolving building and construction disputes has become commonplace since the enactment of the Housing Grants Construction and Regeneration Act 1996. Of each of the species of ADR, adjudication is that which most closely resembles litigation. The main difference, and advantage, is the speed at which disputes are resolved by adjudication. Under the act, parties to construction contracts may agree to refer their dispute to an adjudicator, usually a solicitor, barrister or construction professional, whose decision is interim and non-binding. It is interim and non-binding in the sense that either of the parties may still pursue the dispute through litigation. In practice, however, the outcome of an adjudication is usually accepted by the parties.
It has been suggested that adjudication could also provide tangible benefits to certain types of landlord-tenant disputes, particularly those involving service charges, if the scheme was so extended. However, it has been noted that while the number of claims issued in the Technology and Construction Court has fallen since the implementation of the construction act, the total number of disputes, including adjudications, has risen significantly.
Since 1974, Acas has intervened in disputes between employers and employees offering conciliation, mediation and arbitration services. Recently, the Government introduced the Acas Arbitration Scheme (England and Wales) Order 2001, to deal with the arbitration of unfair dismissal claims. The scheme was introduced with the aim of encouraging arbitration as an alternative to dispute resolution in the employment tribunals.
Criticisms of the present tribunal system are that it has become over-legalistic, clogged and expensive. Initially, tribunals themselves had been thought of as alternative, as in alternative to the courts. Some of the arguments in favour of tribunals are identical to those now in favour of arbitration - that tribunals could provide informal, speedy and cheap dispute resolution, for example.
What appears to have happened is that, as tribunals and tribunal procedures have developed and formalised, some of the advantages have been lost. Whether the Acas scheme can avoid such a formalistic development remains to be seen.
ADR has particular advantages in cases where the parties are likely to have a continuing relationship after the dispute has been settled - hence the growth of mediation in family cases, particularly those involving children.
The now defunct Family Law Act 1996 introduced compulsory mediation for couples seeking a divorce. Mediation, particularly in the family context, is far less formal than litigation, adjudication or arbitration. While family mediators may be professional lawyers, just as adjudicators in construction disputes are, their role is to facilitate agreement between the parties rather than to impose a solution. Clearly, a non-legalistic resolution of a dispute based on compromise is to be preferred to an adversarial courtroom battle.
One area of practice that might see the introduction of ADR in the near future is medical negligence. Litigation is increasingly seen as leading to unnecessary costs for the NHS. The Centre for Effective Dispute Resolution (Cedr) has expressed the view that it sees medical claims as an area in which ADR could have significant advantages. The possibility of a no-fault compensation system has also been mooted as an alternative to medical litigation.