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Alternative dispute resolution (ADR)

1. What is ADR

ADR is a general term used for the various processes which can resolve disputes as an alternative to litigation or arbitration. The main types of ADR are:

  • Mediation
  • Expert Determination
  • "Mini Trials"
  • "Early Neutral Evaluation"

Some of these methods are like litigation or arbitration in that they involve a third party imposing a resolution. However, most involve the parties attempting to agree one for themselves, in which case they may be tried in tandem with on-going litigation or arbitration in an attempt to settle it.  

2. Mediation

Mediation is by far the most common form of ADR. It often runs alongside litigation or arbitration. An appointed mediator cannot impose a decision on the parties; he can only facilitate the parties reaching agreement between themselves.

The mediator is jointly appointed by the parties and will normally call them and their advisors together for a meeting to identify the areas of dispute. The mediator will often separate the parties and then engage in shuttle diplomacy between them. The parties can speak to the mediator in confidence on the basis that what they tell him or her is not passed on to the other side. The mediator may be able to identify common interests outside the strict boundaries of the dispute which can be used to form the basis of a settlement.

Please see our separate guide [link] for further details.

3. Expert Determination

As the title suggests, expert determination is the process where an expert in a particular field is appointed to give a decision on the issues in dispute. It is like arbitration in that the parties have opted out of the Courts in favour of a binding decision by someone chosen by them. However, as the expert is not acting as an arbitrator there is no statutory framework (the Arbitration Act does not apply) and the process can be faster and less formal so less likely to sour relations further. The expert is not a lawyer, and does not have to apply the law like a Judge or arbitrator. He has leeway to decide the case according to his expertise, so the scope to appeal or set aside a determination is very limited.

Expert determination can be used as part of the process of litigation or arbitration. There may be a particular issue in dispute which if determined by an expert will reduce the scope of the trial, reducing the overall costs

4. Mini Trial and Early Neutral Evaluation

In mini trials, the parties are allowed a short period of time to present their case to a neutral third party who will usually have sitting with him senior management of the parties to the dispute. The third party can then lead negotiations and point the parties towards agreement. As with mediation, there is no binding decision imposed. Resolution of the dispute will only be achieved with all the parties’ agreement.

Early neutral evaluations are like mini trials, but involve the third party saying how he would decide the case if he were the Judge or arbitrator. This differs from expert determination in that it is a non-binding view intended to spur an agreed settlement. As with expert determination, it can be limited to a particular issue and, if the parties agree to accept the evaluation, the issue is resolved without the need to decide it at trial.

5. Med/Arb

This is where the parties first submit their dispute to mediation and, if that fails, the mediator becomes an arbitrator.

The advantage is that the dispute is certain to be resolved, and relatively cheaply; especially where the arbitrator makes his decision solely on the basis of what he has heard during mediation. A problem is that, if the parties have one eye on the mediator’s possible role as an arbitrator, they may be reluctant to be candid with him or show movement in negotiation. Also, the mediator may become aware of confidential information which compromises his neutrality as arbitrator.

6. “Baseball” (or “Final Offer”) Arbitration

First devised to settle the salaries of Major League baseball players, this arbitration may be used where the dispute is limited to how much money one party should pay the other. The parties each submit their proposed settlement to the arbitrator, who chooses the one he believes to be fairest. The aim is to encourage the parties to make reasonable offers in the hope that their offer will be selected. “Night baseball” is where the arbitrator sets his own figure before looking at the offers, and then chooses the offer closest to it.

Additional information