The UK has commenced its ground-breaking roll out of vaccinations for Covid-19 today marking the “beginning of the end” of the global pandemic. Despite this hugely positive development, the full tremors of the pandemic have yet to be felt by our economy. Businesses are operating in extremely precarious and difficult times and unfortunately the economic experts believe that the worst has yet to come.
Economic hardship provides a fertile breeding ground for disputes. However presently, unlike in previous times of economic difficulty, due to our court system going into effective “lockdown” in March 2020, there is a substantial backlog in court business causing inevitable delays in the administration of justice. Businesses, when faced with disputes, will understandably be hesitant to embark on litigation that is likely to rumble on for months or even years.
The good news is that there are a variety of alternative, and in most cases, equally as effective procedures available to try to resolve commercial disputes. These options are often a significantly cheaper and speedier alternative to traditional court proceedings and are collectively referred to by practitioners as Alternative Dispute Resolution (‘ADR’). These are confidential procedures outside of a court of law. While ADR can still be facilitated in person, ADR can also be conducted via telephone or online which may be beneficial in the current circumstances.
Below is a summary of the three most common forms of ADR:
- Mediation
Mediation involves the appointment of an agreed, independent, third party (the ‘Mediator’) who seeks to assist both sides in reaching a mutually acceptable resolution of their dispute. The Mediator is typically an experienced barrister or solicitor. While there is a degree of formality to the structure of the process, the Mediation day is intended to be fluid, with the Meditator acting as a go-between to the parties. The Mediator cannot impose a settlement upon the parties and therefore the parties are ultimately in control of the process.
Outcomes are more flexible in Mediation than in traditional court litigation because any settlement that is reached is not primarily concerned with the enforcement of legal rights but with a mutually acceptable resolution of the parties’ dispute. This may mean that parties to a Mediation can obtain items in settlement which might not be possible in litigation such as an apology. Therefore Mediation should be considered when the parties have a relationship they want to preserve.
- Early Neutral Evaluation
Early Neutral Evaluation is a form of ADR whereby the parties invite a neutral third party (the ‘Evaluator’) to give an opinion on the merits of their case or particular aspects of the case. The Evaluator will generally be a lawyer or an expert in the relevant field. The Evaluator will usually be more interventionist than a Mediator. Instead of acting as a go-between to the parties, the Evaluator will state more or less categorically what they think the correct answer is. Early Neutral Evaluation is effective where the subject matter of the dispute requires an expert in the field. The Evaluator’s opinion is often used as a basis for subsequent negotiations between the parties.
- Arbitration
Arbitration is the most formal of the ADR procedures. The parties enter into an agreement under which they appoint a suitably qualified person (an ‘Arbitrator’) to adjudicate their dispute and make an award. The appointed Arbitrator acts in a quasi-judicial manner and hears the arguments and evidence from each party. The Arbitrator then decides the outcome of the dispute. The result of an arbitration is, usually, an arbitral award, which is a final, binding and enforceable decision on the dispute submitted for determination (akin to a court judgment). Unlike other forms of ADR, the award is often supported by a reasoned opinion.
Arbitration is less formal than a trial and the rules of evidence are usually relaxed. Each party can present evidence and arguments at the hearing. One factor that differentiates Arbitration from court litigation and often attracts parties to Arbitration is the ability to keep proceedings private and confidential.
Emma-Rose Rooney is an Associate Director in Tughans’ Dispute Resolution Team. Please feel free to get in touch with Emma-Rose via email emma-rose.rooney@tughans.com for advice and assistance in relation to your commercial dispute.
While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.
