ALTERNATIVE DISPUTE RESOLUTION (ADR)

Article by Nickolaus Ng

What is alternative dispute resolution (ADR)?

- ADR refers to the various methods of resolving civil disputes other than via normal court processes and litigation.[1]

- Increasingly being used in commercial and civil cases.

- More expeditious and cheaper process than litigation which is known to be long, cumbersome, and costly for parties involved.

- Litigation may be a necessary component of a dispute resolution strategy, but it is only one of the problem-solving tools we apply to resolve disputes. (Dentons)

- ADR offers lawyers a better way to practice law, presenting opportunities for problem solving, peace-making, and responsiveness to clients' needs and interests that do not exist in traditional legal practice. [2]

Litigation:

- Litigation is a process for handling disputes in the court system. [3]

- A judge may make the final decisions for the parties unless the parties settle before trial.

- Settlement can happen at any point during the process.

- During the litigation process, there may be a series of hearings and temporary orders (e.g. temporary custody and support), culminating in the final orders.

- Final orders regarding the real issues in the case (e.g. custody, support, division of assets) are usually entered only after there has been a trial with witnesses.

Advantages and disadvantages of litigation:

Advantages:

- Procedural certainty for parties

- Decisions by the court are still subject to appeal if outcome is deemed unsatisfactory by parties

- More firm outcomes (e.g. injunction imposed on parties)

- The courts are often able to resolve multi-party disputes

- Court proceedings are governed by strict evidence rules and any evidence put before them will be rigorously tested

Disadvantages:

- Options for tribunals, procedure, place, and language are limited

- Costly (VERY costly if the matter drags on)

- Time consuming and tedious as it may take a long time for the court to arrive at a decision (especially where there are a lot of issues involved)

- No confidentiality (open to media scrutiny especially where the case is a big one)

- The judges may lack technical expertise or requisite knowledge on certain subject matter unlike specialist arbitrators

Arbitration:

- To allow parties to resolve disputes in the presence of a neutral third party.

- “Arbitration is consensual, depending on the parties’ agreement” (Lord Hoffmann in Premium Nafta Products Ltd v Fili Shipping Company Ltd [2007] UKHL 40)

- Arbitration Act 1996à further expanded the concept that courts should not intervene unless:

1) The arbitration process fails to reach a just settlement.

2) Where professional legal assistance is required.

Advantages and disadvantages of arbitration:

Advantages:

- Generally quicker and cheaper settlement of disputes unlike litigation.

- Arbitrators may be specialists in a specific legal area, and can apply expertise in dispute resolution.

- Arbitration is usually cheaper than litigation in courts, and thus may be the preferred way of resolution.

- Arbitration outcomes are generally final and binding on the parties, providing certainty.

- Arbitration is private and inaccessible by third parties (particularly attractive for companies who want to keep their legal issues away from media scrutiny).

Disadvantages:

- Arbitration decision is decided by arbitrators, whose decision will be binding and the parties cannot do anything about the decision even if they are eventually disappointed with it.

- In ADR the rules on evidence are not so clear. This means that the outcome of arbitration could rest on information, or speculation, that would not otherwise be permissible in court.

- Arbitration outcomes cannot be appealed unlike in litigation proceedings where rulings are still subject to appeal if the parties want to.

- Arbitration results in more compromise awards between parties, which some parties may deem as unfair.

- Arbitration may be slow when there are multiple parties, multiple arbitrators, and complicated disputes.

Mediation:

- A mediator assists parties in achieving a mutually acceptable resolution.

- Cases should attempt to mediate, even if just to better understand the others’ position. (Francis J in Yates and Gard v Great Ormond Street Hospital [2017] EWCA Civ 410)

- The scope of mediation stretches across different civil areas but is ultimately used the most in divorce cases.

- Family Law Act 1996à couples should attempt to reach a mediated settlement to avoid imposition by courts.

- “Skilled mediators may be able to achieve results beyond the power of lawyers and courts.” (Brooke LJ in Dunnett v Railtrack plc [2002] EWCA Civ 303)

Advantages and Disadvantages of Mediation:

Advantages:

- Certainty of results, parties involved in decision can structure practical settlement to their needs

- Remedies available are much broader than traditional legal remedies

- Privacy and confidentiality of proceedings and of results

- Much cheaper than litigation

- Preserves or allows continuing relationships between the parties

Disadvantages:

- Uncooperative parties cannot be compelled to participate in mediation proceedings, except when ordered by the courts.

- The cost of mediation will be added to the cost of going to court if negotiations break down.

- If one has been accused of something publicly, then he/she may prefer the public vindication that comes with litigation.

- If parties are unable to come together on an agreement, they can still bring the matter to court, incurring further costs.

- The mediator that is hired is an outside party that, although impartial, has no previous knowledge of the case and the parties involved.

Conciliation:

- Allows a third-party conciliator to suggest a non-binding settlement which parties may agree upon without formal legal standings, compensation or damages.

E.g.) The Advisory Conciliation and Arbitration Service (Acas) provides conciliation services for employment disputes. It complies to the Employment Rights (Dispute Resolution) Act 1998 to try to resolve such disputes.

Advantages and disadvantages of conciliation:

Advantages:

- Cheaper option than litigation

- Non-binding, amicable settlement that does not involve legal standings, compensation, or damages.

- Avoids confrontational and potentially hostile scenarios from developing

- This process can be very effective at providing an objective and realistic assessment.

- The unstructured nature of Conciliation and absence of any rigid rules results in Conciliation being a highly flexible and informal process dictated by the parties.

Disadvantages:

- Conciliator has absolute authority, but some parties may prefer the conciliator to have a less active role.

- Post-conciliation, parties may go back on agreements as there are no legal consequences due to the agreement being non-binding.

- There is a possibility that one or both parties may choose not to disclose all or some of the information in relation to the dispute, distorting the perceived positions formed by the Conciliator and result in disproportionate agreements or outcomes.

- The role of the Conciliator as the ‘go between’ has the potential for mixed or incorrect messages to be sent and received by the respective parties.

- Inappropriate where parties have distinct weaknesses that the other party should not be privy to.

[1] Jonathan Law, A Dictionary of Law, (8th edn, Oxford University Press 2015) [2] Janet Reno, ‘Lawyers as Problem-Solvers: Keynote Address to the AALS’ (1999) 49 J. LEGAL EDUC. 5 [3] American Bar Association, ‘Litigation’ (ABA, 2020) <https://www.americanbar.org/groups/dispute_resolution/resources/DisputeResolutionProcesses/litigation/>