Resolution in the courts is not the only method of dispute resolution. If the parties can resolve their own differences then there would be no need to use the court system which would benefit all parties being the claimant, defence and the civil justice service. Although the court service is a good and fair way of dealing with civil disputes in might not be the ideal way in getting the best result for both the parties. There are four main ways of alternative dispute resolution (ADR) they are; Negotiation, Mediation, Conciliation and Arbitration (also known as a Formal Settlement Conference or mini-trial).
Negotiation is a method whereby the two parties try to resolve their differences by sitting down together in the hope of reaching an agreement. By using this method it is cheap, private and quick. The parties can also use their solicitor or another legal representative if they fail in the negotiation process this method maybe more ideal because it will not incorporate any bad feelings or emotion which might prevent any resolution being agreed. When a dispute has being 'settled out of court' it has been resolved by negotiation and negotiation precedes the majority of cases due to be heard in the county court and also sometimes tribunals.
Negotiations are organised by the two parties or by their legal representatives on their agreed terms. Most negotiations take place in an neutral environment which could be a booked boardroom or even an office depending on the size of the parties. Each party would agree on a set time limit if deemed necessary to increase the pressure on both parties to settle in agreement without dragging on which could cause high costs. There are not set rules or guidelines for the process once it has commenced but usual fair practice would impend that the claimant first explains his or her position and the reason for the dispute.
The opposition party can then give their stance and any reasoning for the dispute. Each party can then suggest a resolution and barter for an agreement suiting both parties. Negotiation fundamentally allows both parties to get their story off their chests in a non-hostile environment in an effort to understand each others opinion. Mediation is similar to the above method of negotiation with the exception that it also involves a third person. This person is completely neutral and is called the mediator. The mediator will consult with both the parties privately at a place and time agreed by everyone.
He/she will take down all key points of both arguments and will attempt to seek 'common ground' between parties which the mediator will discuss conclusively with them together and on a agreed date. The purpose of the mediator is to give a basis to both parties from which to begin discussion to form a resolution. The mediators purpose is not suggest an overall solution to the problem being discussed, but is to develop the areas of discussion and to make sure that the full story has been heard and understood by both sides. The only way mediation can be successful is if both the parties are wanting an agreement to come out of the process.
This is because the mediator cannot at all force opinion or put pressure on the parties to make a decision; it is the actual parties who make the resolution and only they can implement it. Conciliation is very similar to mediation in that it also involves a third person. This person, called the conciliator is more active in the actual proposition of any resolution. He or she will also like an mediator; interviewing each party separately and seeking a common ground from which a suitable resolution can be found which is positive to both parties.
Conciliation is an extremely favoured method of dispute resolution within the commercial and industrial sectors alike. They favour it because it is quick, private and cheap. Another more important advantage is that unlike a lengthy court case it encourages communication between the parties meaning that if the dispute is between two previously cooperating companies that relationship could be sustained so further business could successfully take place. The potential quickness in the process also would result in business being able to return to normal without loss of revenue.
This process is very important to companies, so much so that they incorporate it into many of their contracts as an Scott v Avery Clause. It means that by which if the parties in the contract agree that if they have any dispute in relation to the contract, they will go to either conciliation or arbitration (which is explained in the next paragraph. This agreement to conciliate/arbitrate means that the courts will normally refuse to deal with any dispute; the parties must go to conciliation/arbitration.
Arbitration, again takes conciliation on step further by making his/her decision binding which is enforceable by law. Arbitration is essentially a trial held under informal procedures and surroundings. Often, these proceedings are scheduled after much of the investigation and evidence-gathering discovery has been completed, but before serious trial preparation has commenced. At the proceeding, evidence is presented, legal arguments are made and the Arbitrator issues an award in favour of the winning party.
The parties can agree in advance to be bound by the results of an arbitration proceeding, and that, of course, ends the dispute. Even in instances where the arbitration proceeding is non-binding, the experience still often leads to the resolution of the dispute. What tends to happen is that parties feel they have finally had a chance to "tell their story". " Also, the parties and their lawyers are aware that an experienced and independent neutral, having heard all aspects of the case, has arrived at a conclusion that likely will be mirrored by a trial judge or a jury.
Much time and money is saved when parties forgo formal trial by resolving their dispute through arbitration. There are two main types of arbitration; Judicial Arbitration and Private Arbitration. A Judicial Arbitration is where the neutral arbitrator is an expert in the field of dispute. He acts as an judge in a judicial, impartial manner but the difference is he does not have to have any technical points explained to him as in a court hearing. This lessens the time taken to form a resolution which will be more accurate because of expertise and will also dramatically cut the cost.
Judicial Arbitration is very popular with companies because its cheaper than a court case (which can be dragged out over years some times), quicker which means that it can be rectified straight away and lastly it is conducted in a neutral area which lessens tension between the two groups so co-operation in the reached agreement is easier. Many commercial contracts include what is called a Scott v Avery clause, which is a clause in the original contract where parties agree that, in the event of a dispute arising between them, they will have that dispute resolved by arbitration rather than going to court.
Each party agrees on the arbitrator, ensuring they have the necessary level of expertise in their area and is not connected to either of them. Where points of law are involved the arbitrator may be a lawyer. Disputes may involve disagreement over the quality of goods supplied, interpretation of a trade clause or point of law, or a mixture of the two. As in a court case the arbitrators decision (called the award) is final and will be implemented. It can be appealed against though if taken to the High Court on a question of law, with the consent of all the parties, or leave from the court.
Private Arbitration is where an neutral arbitrator is picked the same as in a judicial situation except he makes conclusions for himself. This is sometimes called a 'paper' arbitration where the arbitrator makes a decision after reading the documents of the case or they may have a hearing more like a court case in which people give evidence. Both judicial and private arbitration methods are strongly endorsed by companies and the courts. The Arbitration Act 1996 aims to promote commercial arbitration, by providing a clear framework for its use.
It sets out the powers of the parties to shape the process according to their needs, and provides that they must do everything necessary to allow the arbitration to proceed properly and without delay. It also spells out the powers of arbitrators which include limiting the costs to be recoverable by either party and making orders which are equivalent to High Court injunctions if the parties agree. The Arbitration Act introduced in 1996 attempted to improve the process of arbitration because the law had become too complex.
It has significant importance in respect that it gives the parties more control on the process as long as they are in agreement. This includes how they plan to pick the arbitrators, how many of them will be present, if there are more than two will one act as an umpire. They also can agree on what powers the arbitrators will have and to what extent of jurisdiction they will have to implement their final decision (bearing in mind that they can have the power paralleled by the high court). In the possible situation that one of the parties fails to appoint an arbitrator under section 18 sub. sec.
1 of the Arbitration Act 1996 it states that if this happens then the party with an arbitrator can appoint him as the sole arbitrator of the proceedings. But only if that party gives the other party written notice and the party receiving does not react within seven days of that notice been served. All other jurisdictions are the same except for one exception. This is that in the 1996 act it gives the two parties more power collectively, for example once the arbitrator has made his decision if the two parties were in disagreement with the decision it could be overturned if they were in agreement.
They can also set in rules whatever they like as long as it is on paper beforehand. The new act allows the parties in consultation with the chosen arbitrator/ arbitrators to pick the location and time when the dispute will be settled. They are also allowed to set how the proceedings will take place and in what order, as long as both parties and the arbitrator agrees and it is on paper it is deemed correct. This was not so in the 1950 act where the proceedings had to be in a 'Judicial Manner'.
In conclusion the 1996 Arbitration Act compared with that of the 1950 one gives a lot more freedom to cooperate and act together towards a decision which will benefit both the parties. This includes giving both the parties more freedom of power collectively which it is hoped will lead to greater amounts of communication which is key to a resolution. Other areas that arbitrators may be called in to operate are those which include sensitive areas like family disputes where it could try to find an resolution on where the child/children will live in a divorce case.
Using an arbitrator it encourages both parties to speak openly in a less stressful environment compared with a court room which some times causes parents to accuse each other of not been able to take care of their children which is ultimately counterproductive. Another case where arbitration may be used might be in an unfair dismissal instead of an tribunal or court case which both don't always encourage reinstatement of the employee only damages awarded. Arbitration is such a favoured and used process in the UK that a independent body has being setup, it is called ACAS.
ACAS is short for Advisory, Conciliation and Arbitration Service: an independent body set up to promote the improvement of industrial relations. It does this in a number of ways as outlined below: It offers advice to employers, employer's associations, trade unions and individual employees on a wide range of matters connected with employment, and it has issued Codes of Practice giving practical guidance and suggested procedures for dealing with such matters as discipline and the investigation of grievances.
Where an employee has made a claim to an Employment Tribunal, a copy of the claim is sent to ACAS, and a conciliation officer will offer assistance in trying to resolve the dispute without the need of a full tribunal hearing. Where there is a dispute between a trade union and an employer, ACAS, if requested to do so by one of the parties, may appoint a conciliation officer. Where there is a dispute between a trade union and an employer, ACAS can, with the consent of all parties involved, refer the dispute to arbitration to try to resolve it.
Although negotiation, conciliation, mediation and arbitration come under the same heading of ADR there is a subtle difference between negotiation, conciliation and mediation and arbitration. This is because the before mentioned requires the cooperation of both parties and the willingness to reach a resolution whereas arbitration does not. Arbitration is and has been imposed by judges in the high court and any ruling that becomes of an arbitration process is binding meaning that the parties have to do it. This is not so for the other processes.
In conclusion arbitration maybe the most potent and strong method of reaching a resolution but it may not be the right method for the dispute in question. This is why all previous methods of ADR must be tried in an effort to save commercial, working or trade relationships. What must be realised by the parties involved is that ADR is literally an alternative to the courts and the courts is far by the most tested and best way to reaching a resolution in the face of dispute. Comment on the advantages of using these alternative methods of dispute resolution (ADR) rather than using the courts.
The advantages of using ADR in terms of efficiency of the english legal system is that it dramatically cuts the amount of cases seen in the civil courts. If there was no ADR the amount of cases that would be taken to court would create a massive back-log of cases to be heard. In Lord Woolfs 'Access to Justice' report, one of his main aims was to find a solution to reduce the amount of cases coming to court that could be resolved elsewhere and this was why he closely examined and suggested amendments to the process of ADR.
Specifically if there was no ADR it would clog up the civil justice pipeline stopping more serious cases coming to court. This is why there is a fundamental trend towards arbitration and conciliation in the commercial world mainly because of two reasons; money and time. In a court hearing there is the need to employ lawyers, compile a strong case, go through the court system which involves sometimes going back and forth between courts because of different circumstances and if the decision does not go their way they may wish to appeal which takes much much time.
All of this takes time which more than likely in a commercial situation makes matters worse because the problem cannot be fixed and if it involves other companies communications and cooperation in other matters maybe being cut while the case is being settled. ADR is much more suitable because it can take place within at least two weeks with an agreed arbitrator/arbitrators and can be settled with a resolution that is suited to both parties without one becoming seen as the loser as in a court case.
This is why most commercial contracts contain the Scott v Avery clause stopping other companies bound by this term going straight to court. These are the key advantages of the different ADR processes collectively: Cost; many procedures try to work without any need for legal representation and even those that do involve lawyers maybe quicker an therefore cheaper than going to court. However, concerns have been expressed that a bigger role for alternative dispute mechanisms, as suggested by Lord Woolf, could simply be a way of solving disputes cheaply, offering a form of second class justice.
Accessibility; alternative methods tend to be more informal than court procedures, without complicated rules of evidence. Speed; the delays in the civil court system are well known, and waiting for a caseto come to court may, especially in commercial cases, add considerably to the overall cost, and adversely affect business. Expertise; those who run alternative methods of dispute resolution schemes often have specialist knowledge of relevant areas, which can promote a fairer as well as quicker settlement.
Conciliation of the parties; most alternative methods of dispute resolution aim to avoid irrevocably dividing the parties, so enabling business or family relationships to be maintained. Overall the advantages weigh out the disadvantage of the costs involved in setting up a strong case involving lawyers, witnesses, company statements etc. It also lessens the queue's of the civil courts and lessens stress on both parties because of the lack of formality.