Alternative Dispute Resolution

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We specialise in international arbitration and construction adjudication.

We represent a broad range of clients from multinational corporations working in a global marketplace, professional partnerships and family run businesses. To individual entrepreneurs and high net worth individuals.

Alternative Dispute Resolution offers a flexible forum for the resolution of disputes. Matters referred to ADR usually conclude more cost effectively and considerably quicker than litigation through the courts. In the case of arbitration, the result is usually final and binding with limited scope for appeal. In some ADR forums, costs can be awarded in a very similar way to costs at litigation.

At RWK we have a team of award-winning lawyers specifically qualified as arbitrators and adjudicators. Our people are at the forefront of the ADR sector, with an impressive track record of successful matters. Our ADR team includes members of the Chartered Institute of Arbitrators and members of the Adjudication Society and International Bar Association.

When we talk about Alternative Dispute Resolution, we are talking about any method of resolving a dispute that does not involve litigation through the national court system. The “Alternative” is an alternative to litigation. However, not all ADR forums are the same, some are statutory, others are consensual, some are binding on the parties and others are not.

Which is the best type of ADR for you?

There really is no one size fits all. Which method of ADR you choose to use will be greatly shaped by the circumstances of the matter. In some instances, there may not be a choice, and the method of dispute resolution is set out as a term in the contract or there is a statutory entitlement to use a particular method, as in construction adjudication in the UK.

Adjudication

Adjudication provides a temporarily binding decision on the parties at first instance. The adjudication process is designed around ensuring cash flow, and the whole process from commencement to award is usually 28 days. Adjudication is known to produce fast results, but not always the right result.

The Housing Grants Construction & Regeneration Act was enacted in the UK in 1996. The Act made sweeping changes to the operation of the construction industry and how we settle disputes. The Act contains a definition of a “Construction Contract” and introduced a statutory right for parties to a construction contract to have their dispute decided at adjudication at first instance.

Most standard form contracts in the UK contain a dispute resolution clause which will detail the provisions of the adjudication process. Where the contract does not contain provisions for adjudication then secondary legislation in the Scheme for Construction Contracts applies. The contract ought to identify an Adjudicator Nominating Body. Either party can commence an adjudication by applying to the ANB for the appointment of an adjudicator to hear and decide the dispute. The ANB is usually a professional institution, often the Royal Institution of Chartered Surveyors or the Chartered Institute of Arbitrators, that maintain a panel of expert adjudicators. The selected adjudicator will be legally qualified and usually either a lawyer, Surveyor, Architect or Engineer.

The adjudication process starts when the Referring Party issues a Notice of Adjudication to the Responding Party. The Notice is a summary of the issue in dispute together with details of the redress sought. In most cases, within seven days of issuing the Notice, the Referring party must serve a detailed pleaded case, together with a supporting bundle of evidence, witness statements and precedent, to the Adjudicator and the Responding party. Within seven days of receiving the Referral, the Responding party must serve a Response as a detailed pleaded case, supported by a bundle of evidence. Within 28 days of the date of the Notice, the Adjudicator must provide the decision.

The very tight time frames for adjudication result in some very strict rules for the process. Only one dispute can be heard at a time and there is limited scope for counterclaims. The courts in the UK are very keen to uphold adjudicated decisions and enforcement of an adjudication decision can follow an expedient summary judgement process.

At adjudication the decision is only temporarily binding on the parties until the same dispute is decided using either litigation or arbitration. Most parties accept that the adjudicators decision is likely to be the same or similar to that of the court if the matter is heard for final determination. Only around 5% of adjudicated decisions flow through to litigation, and only a small percentage of those that do render a different result.

Arbitration

Arbitration provides a final and binding resolution to a dispute. In many ways a decision delivered at Arbitration is more difficult to appeal than a decision delivered via litigation.

Arbitration can be contractual, where the dispute resolution clause in the contract states that a dispute must be referred to arbitration rather than litigation. Alternatively, arbitration can be ad hoc, and agreed as the forum to resolve a dispute after the dispute has arisen. Arbitration is very similar to litigation in that it follows very formal rules and a prescribed process.

The dispute resolution term in the contract will set out the arbitrator nominating body (ANB) which is usually a professional institution which maintains a list of approved arbitrators. Either party can commence the arbitration process by applying to the ANB and requesting the appointment of an arbitrator to act as Tribunal to hear and determine the issues in dispute.

Once the arbitration has started and the Tribunal is appointed, the Referring party will serve the Tribunal and the opposition with a detailed pleading, setting out their case, supported by a bundle of evidence, witness statements and legal precedent. The Respondent party will answer the Referral by submitting a pleaded Defence together with a supporting bundle.

Once the pleadings have been submitted the Tribunal will decide whether it wants to conduct an oral hearing in the same way a matter may be heard at litigation, or whether there is to be an abbreviated hearing, to hear evidence from some, all, or just select witnesses or experts.

At arbitration the decision maker is usually an industry expert. For construction and property matters usually an Architect, Engineer or Surveyor. In order to be selected to serve on an approved panel, the arbitrator will also need to be legally qualified. Some arbitration nominating bodies also have their own institutional rules that may govern and regulate the process of arbitration. In the UK the relevant legislation that governs arbitration is the Arbitration Act 1996.

Just like at Litigation, the decision maker can make a costs award where the successful party will recover most, or sometimes all of their legal costs from the unsuccessful party. Unlike litigation, at arbitration the Tribunal can decide to conduct a site visit and view the issues for themselves. Arbitration is not always cheaper than litigation, but it is usually quicker, and the parties involved have more control over the conduct of the process.

International Arbitration

One of the greatest benefits of arbitration as a dispute resolution forum is flexibility. An arbitration agreement is usually drafted as a series of terms contained within a larger overarching contract. However, the arbitration agreement is protected by the doctrine of separability. This means that even if the larger contract is rendered defective and void, the arbitration agreement lives on, and basically has a life of its own, separate and distinct to the contract in which it was contained.

This separability gives the parties the ability to decide which set of laws will apply to the arbitration process in the event of a dispute. There is no requirement for the law of the arbitration agreement to be the same as the law of the contract. In addition, the parties can also choose a “Seat” for the arbitration. The Seat is not necessarily the place where a hearing will be conducted, but is to identify the national court system the parties will use in the event the process needs some form of judicial support. The jurisdiction of the Seat can be different to the jurisdiction of the law. Although rare, you could in theory have an arbitration under say, the Arbitration Act 1996 from the UK (law), being supported by the courts in say, France (Seat).

The parties can also choose which language the arbitration proceedings should use, which could be different to those of the Seat. The parties can also decide if they would prefer an arbitrator from a particular cultural or religious background, that perhaps aligns with that of the parties. International arbitration gives the parties far more scope and flexibility to control the proceedings than they might have at litigation.

Another great benefit of arbitration is enforceability. Over 168 countries have signed an international agreement, called the New York Convention, on the recognition and enforceability of arbitral awards. This means that an arbitration award delivered in one signatory country is as enforceable as a domestic decision made in another signatory country. This results in international arbitration being far quicker, cheaper and easier to enforce internationally, than decisions at litigation using a national court system.

Mediation

In the process of modern litigation, parties are encouraged to engage in ADR to settle their dispute before referring to the Court. Mediation is the most popular ADR forum parties attempt before launching into litigation. Mediation may be set out in a contract as the first step the parties must take to remedy a dispute, or it can be something the parties agree to undertake after the dispute has crystalised.

Where mediation is set out as a contract term, the contract is likely to contain the identity of an appointing body. In the event of a dispute either party is free to commence mediation by making an application to the appointing body for the appointment of a mediator. The appointing body is often a professional institution that maintains a specialist panel of mediators.

Once the mediator is appointed, both parties make out a written Position Statement accompanied by a bundle of evidence to support their position. The Position Statement and bundle is served to the mediator and the opposing party. The mediator then calls both parties to a conference where they discuss their respective positions.

The purpose of mediation is to reach a compromise. Each party is encouraged to consider the weakness in their own position and the strength of the opponent’s case. The mediator’s job is to act as an informal referee to guide each party through the process. To do that the mediator is constantly looking for the middle ground. Figuratively speaking, if one party wants to steer the matter North, and the other party wants to steer West, the mediator is always looking to steer the dispute North West.

Mediation is usually scheduled for a half day or a day. If by the end of the prescribed time a settlement has not been achieved, the parties leave the mediation. Where the parties do reach a compromise, the mediator will draft the agreement with the parties present as a settlement agreement, and both parties will sign up to the settlement before they leave.

Mediation is very successful as an ADR forum and around 80% of disputes that are referred to mediation either settle on the day, or soon after. At mediation each party is expected to meet their own legal costs and share the cost of the mediator.

Non-binding ADR

There are several ways in which a dispute can be settled without the necessity of having it decided. In the event of a dispute, some contractual arrangements will place the parties under an obligation to meet and negotiate before either can commence a claim against the other. Very often these types of contractual obligations are designed to make parties stop and take stock before launching into what could be a time consuming and expensive dispute.

Negotiation

This is very often the quickest and most cost-effective way to resolve a dispute. Negotiation involves trying to come to terms with the opposing party by agreeing terms of settlement for a dispute, usually by way of privileged correspondence which cannot be considered by a Court. A negotiation can be as simple as a straightforward offer of money or a more complicated drafted settlement agreement. Sometimes people feel more comfortable having an experienced lawyer guide them through or even taking the lead in such negotiations.

The choice to commence a negotiation is sometimes driven by a contract term or by a desire to achieve a quick settlement. The parties each make their position to each other and each argue the strength of their own case while considering that of the otherside. There is no obligation to reach a negotiated settlement and very often unsuccessful negotiation is the first step to a dispute maturing.

Early Neutral Evaluation.

ENE is similar to a negotiation, except rather than the Parties making out their position to one another, they choose to make positions out to an independent expert. At an early stage in the dispute the parties agree to jointly instruct a neutral expert to give his or her opinion on which of the parties may succeed if the case is to go to trial. The opinion is non-binding and will not usually be referred to in court. This gives the parties an idea of where litigation may lead them and therefore allows them to make a choice on whether to settle or fight on.

In either negotiation or in early neutral evaluation, each party is expected to meet their own legal costs where they use lawyers, and to share the cost of the neutral. It is unusual to have hearing or joint meeting for non-binding ADR, and matters are usually discussed on documents alone.

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