Dispute Resolution Schemes

Benefits of ADR:

ADR, and arbitration in particular, has existed for thousands of years. However, apart from in international commercial and domestic contractual disputes, it is a relatively new method of resolving disputes outside of the court - or outside of litigation.

There are many reasons why a consumer, an organisation, a trade body or a governmental body might wish to use ADR. The main reasons are:

Litigation limits your options. For example, if you go to court then your dispute will be settled by a judge (or several different judges), who, whilst being independent, may have limited knowledge of your sector and therefore need advise from expensive counsel (barristers). In ADR, in the majority of cases, a single neutral will be appropriate. In heavy or complex arbitration disputes it may be desirable to have a arbitrator appointed by each party with an independent Chair. The single or nominated arbitrator (or mediator) will almost certainly come from a specialist panel so that they will not only be trained to act as a neutral, but will also have all of the necessary industry knowledge required.
 

In litigation there are strict rules as to where civil proceedings can be commenced, and, as a party to the dispute you will have little control over the location. In arbitration, disputes will be resolved, where possible, by documents-only, so you do not face the upheaval of attending court, nor the stress of giving evidence in front of a judge, the press, and the other party in a court room. If a hearing is required for the arbitration, or you are involved in mediation (in which case a mediation hearing is usually essential), the parties and the neutral agree a venue and time as convenient as possible to all concerned. The process is always in private which means that any sensitive knowledge and market reputation is preserved.
 

In litigation there are rules of procedure laid down by the court which both parties must follow. In ADR there are also rules, but they are very flexible and the parties and the neutral can mutually agree to change them as the process matures.
 

What of a timetable to ensure a swift resolution of the dispute? Well, in litigation there will be a timetable, but it is usually designed to suit the needs of the court and not the parties and is not short. However, in ADR timetables are specified in the agreed rules that the parties have signed up to, and can be made more flexible with the agreement of the parties and the neutral.
 

What happens if one of the parties does not stick to the timetable? The courts do have powers to ensure that parties stick to the timetable, but they often do not seem inclined to use them and a party can delay matters for years before the court will strike out the claim or defence. On the other hand, the court can be inclined to enforce the rules without any regard to the personal circumstances of the parties, and therefore can strike out cases too early. In ADR, because the procedures can be tailored to meet the demands of the parties and the neutral, they take in to account the personal circumstances of the parties and therefore allow greater flexibility. This means that the neutral has powers which have been agreed by the parties and can therefore deal with delays in the appropriate manner.
 

Will the hearing take place on the agreed date? In litigation you may arrive at the court to find that more business has been listed for the judge than he can cope with that day. You may then be put off to another day, several weeks or months later. In ADR if there is a hearing or meeting of the parties and the neutral, the hearing date is set by the neutral after close liaison with the parties, to ensure that everyone is available and therefore limit the possibility of cancellations.
 

Who pays the costs? In litigation there is discretion on costs, although they normally follow the event. Therefore, the loser generally pays the winner. In ADR the issue of costs is dealt with as a preliminary matter and more often than not the parties know in advance the likely range of costs and who will be liable to pay. Experience shows that in a well-managed ADR procedure costs are almost invariably substantially lower than for litigation.
 

ADR is a great balancer of power between parties. For example, ADR allows a small business supplying software to a major global buyer an opportunity to have a dispute resolved quickly, cost-effectively and privately rather than suffering from an imbalance in representation leading to an expensive and public mauling in the courts. The same goes for consumers who are in dispute with large travel operators, mortgage providers, mobile telephone companies and so on.
 

The advent of online dispute resolution, at which the Chartered Institute is continually breaking new ground, makes private dispute resolution ideal for resolving cross-border disputes, quickly, privately, independently and cost-effectively.

For the trader, ADR reduces litigation costs and saves valuable management time, and is a powerful and effective PR tool, especially when a scheme developed by the Chartered Institute is used to resolve the dispute. Under a scheme parties can avoid the expense, delay, stress and divergence of time in bringing case to court, and schemes helps traders preserve their business relationships and market reputation.
 

ADR definitions

Benefits of ADR