Alternatives to Court Action
There is always more than one option
Invariably whenever a dispute arises the first thoughts that may spring into somebody’s mind is we have no alternative but to go to court, and how much will it cost me. Although court you may feel that court action is the only resort, there are alternatives to neutralising a conflict, which we lawyers refer to as Alternative Dispute Resolution (‘ADR’).
Negotiation
This is an informal method of resolving a dispute and unlike other forms of dispute resolution there is no need for the assistance of an independent third-party.
Discussions can be conducted on a without prejudice basis, and if such discussions are conducted on a without prejudice basis they cannot be referred to until after the conclusion of proceedings.
Negotiations are seen as an attractive form of dispute resolution as the process may preserve the parties relationship and keep their reputation in-tact.
Mediation
Mediation involves a neutral third party assisting the parties in conflict to explore various options with a view to resolving the matter and reaching an agreement. This form of ADR allows the parties to be more creative and flexible in agreeing terms of settlement.
Mediation is not solely restricted to litigation and can be used in contractual negotiations.
Executive tribunal (Mini Trial)
This is a formalised version of mediation. Each party presents its case to a panel consisting of an independent chair and senior executives from each party. The executives should not have had any prior involvement in the dispute. Furthermore, the executives from each party must have the authority to settle the dispute.
Once the panel has heard the party’s case will retire to discuss the dispute. The chairperson will act as a mediator between the executors to help them negotiate a settlement, or, provide a non-binding evaluation of the case if so requested.
Conciliation
This is similar to mediation but is used when there is a particular legal dispute, whereas mediation can also be used in non-litigious matters. Conciliation is often used in employment disputes. Settlements reached in conciliation are legally binding.
Early Neutral Evaluation
The parties appoint an independent person, with specialist knowledge and skills to evaluate the case, or any issues in the case. The decision is non-binding. However, the parties can use the decision for constructive negotiations.
Expert determination
The parties appoint an expert to determine an issue which is usually of a technical nature. The expert’s decision is binding on the parties.
The benefit to the parties is that case is determined by an expert with specialist knowledge on a particular issue that may be the crux of the dispute whereas a court may not have that knowledge. .
Adjudication
This is commonly recognised in the construction industry and is used to provide a decision on disputes during the course of the contract.
Adjudicators can provide decisions that have an interim binding effect which essentially means that their decision is binding pending agreement between the parties or either party altering the effects of the decision by referring the mater to arbitration or litigation for final determination.
Dispute Review Board
A Dispute Review Board (‘DRB’) consists of a panel of three neutral individuals appointed at the start of a project. DRB is increasingly used in large construction projects. The panel would visit the site usually 3 to 4 times a year and deal with any disputes by providing an interim binding decision. The decision from the DRB can be challenged by the parties through arbitration or litigation.
Arbitration
Normally used in contractual disputes. Some contracts will have a provision that in the event there is a dispute the matter is referred to arbitration. The arbitrator, an independent third party, will make an award. Their decision will be binding.
There are limited grounds where an award can be set aside. A word of warning to those that ignore the contractual provision regarding mediation and commence court proceedings instead, the court may exercise their discretion and refer the matter to arbitration.
Med-arb
This is a hybrid process whereby if mediation were to fail, the parties may agree that they want the matter to be settled through arbitration. The parties can agree between themselves that the mediator acts as the mediator. However, the parties are free to agree between themselves that somebody else who has not been party to the mediation be appointed as the arbitrator. Any agreement reached is legally binding.
For more information please contact our Litigation Department.