ADR

Formal court-based adjudication is not the only method of resolving disputes and, in many instances, alternatives are seen as preferable. This page looks at some of the alternatives.

Dispute Resolution Services or Alternative dispute resolution (ADR) is the collective term for the various ways by which parties can settle civil disputes with the help of an independent third party and without the need for a formal court hearing.

● in a business context, dispute resolution without destroying the underlying business relationship

● identification of all appropriate options rather than a court deciding between opposing versions

Arbitration is consensual since the parties agree to submit disputes to an arbitrator.

An impartial and independent third party hears both sides to a dispute and makes a decision (often referred to as an “award”) to resolve it. Generally, the arbitrator’s decision is legally binding and it is difficult to take subsequent court proceedings to challenge the award. Arbitrators are frequently experts in a particular field.

Arbitration is used widely for international disputes, disputes between major corporations, employment rights disputes, and consumer disputes. It is governed by the Arbitration Act 1996, which applies to disputes in England and Wales and in Northern Ireland.

The House of Lords stated that, where there is an arbitration clause, it has to be assumed that commercial parties intended any dispute to be referred to arbitration. Very clear words are required to avoid this assumption – e.g. very clear words to state which disputes are to be arbitrated and which not.

The Arbitration Act 1996 s.7 maintains a principle of “separability”. The arbitration agreement has to be treated as a distinct agreement and can only be regarded as void on grounds which relate to directly to the arbitration agreement as opposed to the main agreement between the parties.

An independent third party (the mediator) helps parties who are in dispute to try to reach an agreement. The people with the dispute, not the mediator, decide whether they can resolve things, and what the outcome should be.

Agreements reached by mediation are not automatically legally binding. However, if the parties have agreed an outcome to their dispute then they are usually more likely to adhere to the terms of the agreement. It is possible to turn an agreement reached by mediation into a legally binding agreement if that is what the parties desire. This can be done by entering into a signed agreement (in effect a formal contract) or by turning the mediation agreement into a court order which is then enforceable through court procedures.

Mediation is more than just negotiation – it has a carefully staged process. All types of mediation have the following in common:

Mediation is the most wide-ranging ADR process and is used in many areas of dispute, including:

There are various styles of mediation. Sometimes mediation is used and, if unsuccessful, the matter is then referred to arbitration.

Where there is a strict time limit for lodging a claim in a court or tribunal (e.g. in employment and disability discrimination disputes) it is important to get independent expert legal advice on whether or not to use mediation. The time taken over mediation could risk a legal claim being ruled "out of time".

The word “Ombudsman” is Swedish but has been adopted in the UK. The first “Ombudsman” was the Parliamentary Commissioner for Administration created by the Parliamentary Commissioner Act 1967. Today the office combines the roles of Parliamentary Commissioner and Health Service Commissioner – see Parliamentary and Health Service Ombudsman.

The Parliamentary Commissioner may only be approached via a Member of Parliament. This is because the Parliamentary scheme builds upon the role of Members of Parliament in relation to matters raised with them by their constituents. The M.P. decides whether to refer a matter to the Parliamentary Commissioner.

The Commissioner is authorised to investigate written complaints where an individual has suffered injustice in consequence of “maladministration” in dealings with a government department or agency listed in the legislation. There are several matters which may not be investigated – e.g. action taken relating to the investigation of crime.

The Regulatory Reform (Collaboration etc. between Ombudsmen) Order 2007 enables the Parliamentary Ombudsman, the Local Government Ombudsman for England, and the Health Service Ombudsman for England to work together more effectively. The three Ombudsmen may work together collaboratively on cases and issues that are relevant to more than one of their individual jurisdictions. This includes undertaking joint investigations where this is appropriate, and issuing joint reports.

An “Ombudsman Scheme” was created by the Financial Services and Markets Act 2000 (which also set up the Financial Services Authority). This is essentially a scheme for settling disputes between providers of financial services and their customers – see Financial Ombudsman.

The ADR Now website offers a useful overview of the various forms of Ombudsman.