Litigation now consists of a myriad of alternative procedures now more commonly referred to as dispute resolution. A litigator must consider all these alternatives before issuing proceedings to limit the amount of costs and adhere to potential contractual clauses, but do they work?
Arbitration is a private litigation process governed by certain rules agreed to by the parties. There are a number of bodies that provide rules to govern arbitrations, including UNCITRAL, LCIA and ICC. However, a party may instead decide to ad-hoc rules. The main advantage in using arbitration is the confidential aspect of the proceedings. There appears very little cost benefit in comparison to proceedings before the court and although it is meant to be a quicker process, inevitably like all disputes, one side is in more of a rush than the other. As a rule of thumb, disputes involving contracts of a sensitive nature are best dealt with via arbitration. From experience, matters which involve somewhat more personal disputes are not suitable for arbitration, as the relationship between the arbitral proceedings, the Arbitration act and the Commercial court, allow the proceedings to be more easily destabilised than normal court proceedings.
Adjudication is a form of dispute resolution used mainly in construction and building disputes. It was introduced by the Construction Act 1996 as a form of compulsory dispute resolution for construction disputes. It involves a distinctly fast process (usually 28 days) with each party presenting their case in the form of a referral notice and response. The contract will usually outline how the adjudicator should be chosen i.e. a certain professional body. The main advantages of adjudication is the speed and therefore cost effectiveness of the proceedings and, like arbitration, the privacy aspect, (construction contractors rely heavily upon their reputations!) It does have its drawbacks however, the lack of oral evidence and tight timescales may lead to injustice and the inability to recover costs. Both factors that need to be considered.
Mediation is now regarded as almost a necessary step in all forms of litigation. There is a requirement before a claim is allocated to consider mediation. Many judges are now implementing a need for a party to outline in a witness statement reasons as to why they have refused to agree to mediation. The purpose of mediation is to limit costs and relieve the pressure on the courts. Mediation is a simply process; both sides produce a meditation statement and attend a mediation session. There are usually three rooms; one for each party and one for the mediator. The mediator will then try and persuade both parties to come to a settlement. There are now 1000’s of mediators experienced in various aspects of the law, varying in cost. Mediation can be very successful provided it is done properly and at the right time, otherwise it can lead to delay and further unnecessary costs.
There are other forms of ADR, including expert determination, but the above three tend to be the most prominent. You will note that each comes with their own risks, however whether or not that risk is as great as litigating “the old fashioned way” depends entirely on one’s case and appetite for a fight.
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Article by Mark Edmonds, Associate, Griffin Law