Keenan and Riches’BUSINESS LAW

Chapter 3Resolving disputes

■Factors which are relevant to deciding the question of
reasonableness include the nature of the dispute, the
merits of the case, the extent to which other settle-
ment methods have been tried, whether the costs of
ADR would be disproportionately high, whether any
delay in establishing ADR would be prejudicial, and
whether ADR has reasonable prospects of success.
■There is no presumption in favour of mediation.

The term ADR covers a wide range of techniques and
processes for resolving disputes outside the courts. It is
difficult to generalise about ADR as each type of ADR
has different characteristics and therefore different
benefits and drawbacks. Nevertheless, some of the dis-
advantages of litigation and the potential benefits of
ADR are as follows:

■Litigation is adversarial and confrontational. The par-
ties may wish to maintain a continuing relationship
after the dispute has been resolved.
■In order to pursue litigation, you will usually need a
lawyer to help prepare your case and to represent you,
particularly in the higher courts. You may not be able
to afford professional legal services or the amount at
stake does not justify incurring significant costs.
■Despite the civil procedure reforms, litigation can still
be very slow. You may need a speedy resolution to the
problem.
■Litigation in the courts can be a daunting prospect for
a lay person. ADR can be more user-friendly with
simpler procedures.
■Litigation is very stressful and the fear of mounting
costs can cause great anxiety. Some ADR techniques,
e.g. conciliation, are specifically designed to overcome
these problems.
■The remedies available to a court are quite limited,
e.g. damages, injunction or a declaration of rights.
A wider range of remedies may be available through
ADR, e.g. securing a change in the way an organisa-
tion operates or securing an explanation of what
happened.
■In most situations litigation is a public process. The
case may be reported in the press and the judgment
will be freely available to members of the public.
Through ADR your case may be dealt with in privacy
and you can avoid adverse or intrusive publicity.
■Although there is some degree of specialisation in the
judiciary, most judges are generalists. The parties may
wish to refer their dispute to someone with specialised
or expert knowledge.

■Litigation takes place at a time and location specified

by the courts and according to pre-determined Civil

Procedure Rules. ADR can operate more flexibly at

a time and place convenient to the parties and some-

times by mutually agreed rules.

In this section we explain the main types of ADR.

Arbitration

Arbitration allows the parties to present their arguments

to an independent arbitrator of their choice, in private

and at their own convenience. The arbitrator may be

legally qualified but usually he has special knowledge or

experience of the subject matter. Sometimes an arbitra-

tion panel is used. Both sides agree to be bound by the

decision of the arbitrator, which can be enforced as if it

were the judgment of a court.

A court appearance can be a very costly and public

way of resolving a dispute. Many in the commercial

world seek to avoid the possibility by agreeing at the

outset that any dispute will be referred to arbitration.

Such clauses are often contained in contracts of insur-

ance and partnership. Arbitration schemes have also

been set up by trade bodies, such as the Association of

British Travel Agents, to deal with complaints involving

their members.

The Arbitration Act 1996 now provides a com-

prehensive statutory framework for the conduct of

arbitration.

Early neutral evaluation

This is where a neutral person, who may be a lawyer or

an expert in the field, looks at each side’s case and gives

an opinion on its merits. The opinion, which is not

binding on the parties, can be used as a basis for further

negotiation or reaching an agreement.

Expert determination

The parties agree to appoint an independent expert in

the field to decide the dispute. The parties agree to be

bound by the decision.

Mediation

Another alternative to litigation in the civil courts is

mediation. This form of alternative dispute resolution

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