During the Covid-19 outbreak the government has taken steps to encourage the business community to exercise patience and understanding. Some of this is through general guidance but also more formal temporary changes to the law.
The “pain-sharing” concept extends to businesses, landlords, and suppliers being urged to exercise restraint regarding demands for payments from organisations whose turnover has fallen substantially.
ADR offers a way of resolving disputes without involving the Courts, examples are:
In the case of Negotiation and Mediation, a neutral person commonly helps the disputing parties work towards a joint agreement.
Adjudication is used primarily to resolve construction disputes and involves an adjudicator examining submissions made by the parties then coming to a decision.
Arbitration also comprises a neutral person, selected by the parties, deciding on the outcome of a dispute based on each sides’ presentation.
In all ADR methods, the Mediator, Adjudicator, or Arbitrator can be selected by the parties themselves. This provides an advantage in civil disputes because they can be chosen on the basis of their particular industry experience.
It is important to note that Negotiation and Mediation are non-adversarial methods of dispute resolution, meaning that parties have control over proceedings to arrive at a middle ground. Adjudication and Arbitration are viewed as more combative, meaning one side wins and the other loses.
However, both methods can still provide quicker decisions than formal litigation.
Advantages of Alternative Dispute Resolution
The benefits of ADR over litigation are extensive for all involved and include:
The ability to control costs – almost all ADR methods are less expensive than going to court. However, with respect to Arbitration used to resolve cross-border disputes it can be almost as expensive as litigation, but it still offers many advantages over conventional court proceedings.
Confidentiality – ADR proceedings are held in private, and decisions/awards are not published. For businesses, this ensures that the impact related to the dispute does not include reputational damage. With regards to Arbitration, there are no provisions in the Arbitration Act 1996 which refer to confidentiality; however, parties are under an implied duty not to disclose details about the hearing or any award. Complications can arise in international disputes, as confidentiality laws relating to arbitration differ from country to country.
Quick decisions – ADR methods are designed by their very nature to provide a fast method of resolving disputes. Adjudication can end the problems caused by long-running litigation, such as the smaller party being left unpaid whilst costly court proceedings further drained their cash-flow. Adjudication also provides for most decisions to be made within 28 days of the matter being referred to the Adjudicator.
Win/Win solutions – Methods such as Negotiation and Mediation give parties control over proceedings and encourage a win/win resolution. This is advantageous, especially if a good relationship needs to be preserved in order to complete a particular project.
Many business counterparts are working in new ways to navigate through the Covid-19 impact. While the court system remains open as a recourse, ADR can provide a way for many disputes to be settled in a quick, confidential and cost-effective manner.