In this article I look at some of the alternatives to court litigation which are available in the UK for UK business dispute resolution. Known as "ADR" (alternative dispute resolution), these methods offer privacy, flexible procedures over which the parties involved can have some control, and the potential for a quicker outcome.
First some caveats. This article is not intended to be advice and should not be relied on as such. I have written it in an English law context only, and as a non-lawyer based on my training and experience as a UK ADR practitioner. The position may be different in other jurisdictions. Also there are significant differences between the ADR methods themselves and suitability is a consideration. Accordingly parties contemplating an ADR procedure may wish consider obtaining suitably qualified legal advice.
Essentially, ADR methods in the UK require the consent of the disputing parties to have effect and produce a binding and enforceable result. They offer privacy, the prospect of a relatively quicker outcome than litigation, a less costly process, and through ring-fencing of the problem, the possibility of preserving perhaps an otherwise effective working relationship between the parties.
So what are these UK ADR methods? Probably the three main ones are: arbitration, expert determination, and mediation. There are variations and combinations of these, and other methods, but we can leave that for another time. The use of arbitration and other ADR in the resolution of international cross border disputes is also a matter for separate comment and is left for now.
In summary, UK arbitration involves an appointed neutral tribunal of one or more persons deciding the dispute, and the parties agreeing that the decision of the tribunal is binding on them. Its scope is similar to litigation and a range of enforceable court-like remedies are available. Ordinarily arbitration's in England (and Wales and Northern Ireland) are supported by the English Arbitration Act 1996, subject to which, and amongst other things, the parties can choose their arbitrator, the hearing venue, if there is to be a hearing, and otherwise how the matter is to be dealt with.
Expert determination in the UK is a contractually based process and usually less formal than arbitration - there is no supporting and supervisory Act of Parliament. It is commonly used when a valuation is required or an expert opinion is needed on a technical matter. Although there are significant differences, like UK arbitration the parties ordinarily agree that the decision of the expert is binding on them.
Mediation in the UK has similar attributes to the above UK ADR methods but is otherwise entirely different. The role of the appointed mediator is to assist the parties in reaching their own binding settlement and the matter could be concluded within one day.
Of course, each of these methods involves the appointment of a third-party to resolve or assist in the resolution of the dispute. If the parties can resolve their dispute themselves by direct negotiation, it probably goes without saying that this would seem the preferred option.
In certain circumstances court litigation may be the only appropriate option in the UK. Generally, however, as ADR alternatives are available for the resolution of business disputes, disputing parties in the UK may wish to consider all of their options.
Daniel Djanogly is Principal of Daniel Djanogly, Forensic Accountants & Chartered Arbitrators based in London, England. For more information on our services visit our forensic accounting and dispute resolution ADR web site locations.
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