Alternate Dispute Resolution: What you need to know

Alternate Dispute Resolution is an umbrella term used to describe a number of methods of dealing with legal disputes without going to court. The process is often abbreviated to ADR and is an increasingly used mechanism of conducting legal proceedings between businesses and therefore involving commercial law.

One example of a method used within ADR is mediation, with another possibility being conciliation. Both of these methods incorporate a neutral third party to facilitate and enable a solution to the dispute to be reached. The third party ultimately may influence and shape the decision made/solution reached, but do not impose it.

Making sense of ADR

The methods of ADR can involve other techniques such as arbitration and adjudication. These may sound complicated to those unfamiliar with the terms, but the best legal teams will ultimately be able to advise clients on the appropriateness of each ADR option. Mediation does tend to be the principle method of ADR, but it is important to consider others appropriate to circumstance.

  • Mediation – the third party is introduced to encourage all the parties involved to consider their commercial interests and in turn encourages a productive interaction. This can be seen as part of an effort to reach a compromise that will potentially bring gain and benefit to as many as possible. If all the parties agree to this method and agree on terms, they will have negotiated successfully and typically acknowledge this with a signature which makes it legally binding
  • Arbitration – the parties involved are bound by the decision reached not amongst themselves, but by a judge or arbitrator, when they have considered all the evidence available

Why ADR?

Typically, ADR is cheaper and quicker than opting to go through the courts.  Furthermore, as ADR typically involves disagreements in commercial law and amongst businesses, it is a particularly useful method as is confidential and thus secure.

The potentially mediating role of ADR could be seen as positive, especially in a business context, as allows a viable agreement to be reached by all involved. In many cases of civil procedure and disputes between businesses, judges often expect parties to have considered the use of ADR before they opt to go through the courts.