Authored By: Ethan Ellison-Evans
Fulston Manor Sixth-Form
Introduction
The recent rise in the use of alternative dispute resolution (ADR) goes against the traditional status quo of commercial disputes escalating and eventually being solved through adversarial commercial litigation. Instead, it demonstrates the preference that companies are now placing on speed, efficiency, and cost-effectiveness in patching up disagreements. In the UK, ADR can be facilitated through a range of processes, including mediation, arbitration and conciliation and has shown to be highly effective in giving prompt decisions to businesses, allowing them to move past a dispute. As a whole, ADR is a crucial aspect of the commercial dispute and dispute resolution landscape. This article will explore the growth of ADR in the UK, discussing both the factors that have led to its rise as well as the impact that this growth has had on wider commercial dispute resolution.
What is ADR?
Alternative dispute resolution is defined in the UK by the government in their guidance for ADR (Feb 2023) as “any way of settling a dispute without going to a court or tribunal for a decision”. With such a broad definition, ADR encompasses a whole range of methods and techniques, for the purposes of this article, I will be focusing on mediation, arbitration, and negotiation as they are commonly used in commercial disputes.
Mediation is a process in which an independent and neutral third party, known as a mediator, is instructed by the parties to help open a dialogue, with the goal being to find a resolution. It is practically achieved through negotiation, which goes through the third party, allowing the mediator to use specialist negotiation and communication techniques to bring both parties to a point where an agreement can be made. Throughout this process, the parties are encouraged to actively participate in the process – with the mediator’s supervision, this creates a constrictive negotiation and gives the parties a chance to solve the dispute. The mediator finally offers a non-binding recommendation on the matter to the parties.
Arbitration is different in that it places the decision-making aspect on specially certified arbitrators as opposed to the companies themselves. It involves both parties submitting that they want arbitration in which case an arbitrator or panel of arbitrators evaluates all aspects of the disputes from both party’s points of view before making a binding decision on the dispute. Whilst this does take the choice away from the parties themselves, it does guarantee that a decision will be made which mediation does not.
Negotiation and mediation are very similar in that they both involve communication and negotiation between the companies in an attempt to find a solution. Negotiation differs from mediation in that it does not have a third-party facilitator and allows the parties to get in a room together to negotiate, in the hopes that a settlement can be found, and the dispute resolved. All three of the ADR methods mentioned have both strengths and drawbacks that make them the right or wrong choice for a business, and as such, they are highly scenariospecific. Now that they have been laid out, I will be exploring these strengths and drawbacks to understand why ADR has risen in popularity in the UK.
The Benefits of ADR
With ADR being the direct and only alternative to the courts in terms of commercial dispute, It comes with a very distinct benefit of staying out of the courts. Primarily, this allows for ADR to be considered fast in obtaining a resolution but also efficient in doing so – meaning that no backlogs build up – unlike the courts, which are notorious for multiple year-long waitlists, especially in the busy commercial courts. ADR is also more cost-effective when compared to traditional litigation, given that lawyers are less involved and the fees for ADR are significantly lower than those charged by the courts. The fact that lawyers and the court itself are not involved removes much of the adversarial nature that comes with a dispute, and as such, more informal ADR allows for the preservation of business relationships, allowing both parties to still have the opportunity to work together in the future. Furthermore, ADR offers a layer of public protection, allowing the parties and the details of the dispute to remain confidential and private so as not to damage their reputations or affect their business. Finally, the flexibility and control that ADR generally offers in the sense that in most cases, the parties choose the forum in which the dispute will be handled and then, apart from arbitration, will be involved in the negotiation and resolution of the issue.
The Criticisms of ADR
Whilst ADR has a complete package of benefits, there are also some criticisms which keep some disputes in court. The main criticism that commonly appears when speaking on ADR is concerns surrounding the enforceability of ADR agreements. Given that ADR agreements are not agreements signed by the courts and previous instances in which ADR agreements have been broken, businesses are rightly cautious that they are not wasting time and money seeking out a court alternative only to have to go through the courts if an agreement is unenforceable. There is also worry from companies that ADR is perceived as lacking judicial authority, and so even when a decision is given or recommended – both the other party and the public could perceive the decision as wrong or from a lower authority – allowing the dispute to continue. Finally, the bargaining power in some ADR settings could be unequal and, as such, unfair. This can be seen in instances of consumer contracts where companies will have a consumer agree to solve any disputes through ADR as opposed to the courts – In these cases, billion-dollar companies are negotiating with ordinary people – which creates a hugely unfair power balance – which could be used to obtain a more favourable agreement on the side of the company and thus taking advantage of the smaller party.
Conclusion
Both the rise and subsequent impact of ADR in the UK can be attributed to many of the same factors, initially causing the rise and growth in popularity and then, as the processes are improved, demonstrating the overall impact of ADR. These factors interestingly mirror ADR’s strengths, with speed and efficiency being a big reason for its rise and overall impact on the disputed landscape, as well as offering flexible and cost-effective solutions to what ordinarily is a drawn-out and expensive process. The impact is more subjective, although it is undeniable that ADR has had an impact. It varies from person to person as to whether this impact is positive or negative, as well as to what extent the impact has had. From my perspective, ADR’s impact on the current dispute resolution sphere is huge – for many businesses, it has proven to be a viable alternative to litigation in the courts, and its more informal approach has made it a highly attractive option. The ability to tailor solutions to the needs of the parties involved, combined with the potential for maintaining ongoing business relationships, sets ADR apart from the more rigid and often adversarial nature of court proceedings. As ADR continues to evolve and gain wider acceptance, it will undoubtedly play an even greater role in shaping the future of dispute resolution for businesses across the UK and beyond.
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