If your business is experiencing problems with another party, you may be wondering if there’s another way to sort the issue out without having to go through costly court proceedings. Alternative Dispute Resolution (ADR) is commonly used as an alternative to asking a judge or arbitrator to settle a dispute. There are several different types of ADR, and your choice of which method to use will depend on several factors. In this article, we will look at the general benefits of using ADR, as well as the different types of ADR available to you.
It’s important to be aware that the courts now expect you to have considered ADR in almost all situations. There are also situations where it is compulsory to use ADR to try to resolve your dispute before starting court action.
What Are The Benefits Of Using Alternative Dispute Resolution?
- Save time – you don’t need to wait for an available court date, because you can agree to a meeting at a convenient time when both parties are available.
- Save money – ADR is typically cheaper than the court process, and it’s not always necessary to instruct a solicitor.
- Flexible – you can agree to a solution which suits both parties moving forward (for example, a re-negotiated contract with a different payment schedule), whereas the court has a limited number of outcomes which tend to adversely affect business relationships.
- Confidential – proceedings are held in private and are normally on a ‘without prejudice’ basis, meaning that anything you say can’t be used against you if you do end up going to court.
- No negative reputation – if you go to court, your company may face negative media coverage.
Are There Any Disadvantages To Using ADR?
There are a few disadvantages to using ADR that you should be aware of, including:
- There is no certainty of a binding outcome.
- ADR is not always suitable; for example, in a case where emergency relief is necessary, or the opposing party is simply not prepared to engage in the process.
- If ADR fails, you may consider it to have been a waste of time and money.
You should be aware that if you do use a method of ADR, you must consider any limitation periods in bringing your claim to court. Using ADR does not add time to the limitation period.
It’s also possible for a ‘standstill agreement’ to be drafted, which can prevent the time period for limitation continuing to run – but this needs to be addressed and you should get legal advice from a business disputes solicitor to make sure that any such agreement is effective.
What Are The Types Of Alternative Dispute Resolution?
- Mediation (evaluative or facilitative)
- Expert Determination
- Early Neutral Evaluation
- Executive Tribunal
It’s crucial to get the right advice at the outset if a dispute with another business is brewing so that you’re fully aware of all your options. Our team of specialist lawyers are experts at providing bespoke, tailored advice to start-ups in multiple sectors, and have a wealth of experience in dealing with all types of ADR.