Choosing the Right ADR Method: Litigation vs. Alternative Dispute Resolution
Why choose ADR over Litigation?
Alternative Dispute Resolution (ADR) refers to methods of resolving a dispute which do not involve litigation i.e. settling a dispute by going to court.
Using a method of ADR will almost always be more cost-effective and time-efficient than undergoing the court process. The ADR process is also more likely to be sensitive to your business relationships and can be completely confidential, helping to preserve your relationships with the parties to your dispute and your professional reputation. Being a quicker process, going through a form of ADR is less likely to disrupt the running of your business’ day-to-day activities. This allows for the best chance for business continuity throughout the process of resolving a dispute, a notable advantage for a startup.
Which ADR method is best suited for your business?
The type of ADR method you choose for your business dispute will likely depend on the outcome you want to see or any pre-agreed conditions. When thinking about which ADR method to use to settle your business dispute, ask yourself the following questions:
Do I have a contract in place that binds me to using a certain ADR method?
If you have agreed in your contract on a specific ADR method to use in the event of a dispute, then it is compulsory that you use that method. If you’re unsure, read your contract over to make sure there is or isn’t a prescribed process agreed upon to deal with disputes.
Do you want to maintain a relationship with the other party?
If you want to preserve a relationship with the other party or if you have an ongoing relationship with your opponent, (for instance, your opponent is your business partner, or if your dispute is a commercial dispute, parties will commonly want to keep good relations with other commercial entities), your dispute would be fit for some kind of consentual ADR process, such as negotiation or mediation. This allows parties to a dispute to communicate, raise issues and solve problems in an effort to mitigate for further disputes. These processes may facilitate certain things that you might prioritise when engaging in a dispute, including better communication, a shift in someone’s attitudes or actions, an expression of regret, empathy, or the planning of a new system to settle future issues.
This sentiment is in contrast with disputes that are raised as a result of some personal injury or property damage claim, for instance, as the parties to the dispute will usually have no past or future relationships. In these kinds of disputes, where preservation of a relationship is not one’s priority, parties might rather be looking for a formal and enforceable outcome in writing, a legal precedent and a rights-based determination. Resultingly, a formal process, such as adjudication, or a more evaluative kind of mediation, where a mediator is to provide a final and binding outcome to the dispute, are appropriate options.
How much control do you want over the outcome of the dispute? Do you want a final and binding determination to end the dispute?
If you are looking for an advisory form of dispute resolution, in which the final outcome of the dispute is necessarily non-binding nor final, but rather counts as a proposed solution for how to settle a dispute, then you may benefit from consentual forms of ADR including negotiation, mediation and early neutral evaluation. With these forms of ADR, you have certain control over the given proposals, and are allowed to support or refuse proposals.
However, forms of ADR that are non-binding and don’t result in final determination will not guarantee a strict and clear result to your dispute. This may make your efforts to resolve the dispute seem like a waste of time and energy.
On the other hand, parties to a dispute are without any control over the final determination in a more formally structured process like adjudication, but can rest assured throughout the process that the dispute will be resolved with a final outcome, whether that outcome count to their side or not.
How formal or flexible do I want the process to be? Is cost an important factor to consider in your choice of an ADR process?
If you are generally looking for a more flexible ADR process to resolve your dispute, consentual dispute resolution processes are likely to be most suitable, as they don’t appeal to any rules or fixed procedures throughout the process. With consentual forms of ADR, such as negotiation and mediation, relative to formally structured ADR or litigation, parties are likely to have a less stressful experience, as they often reach a solution much quicker and find that they spend much less money in the process.
Do I need an expert opinion, i.e. expert legal/technical/IT/medical etc. advice in order to resolve the dispute?
If you think that your dispute would benefit from an expert’s advice, then an ADR method such as expert determination or early neutral evaluation may be appropriate. If your dispute rests on some technical matters, such as on legal, IT or medical technicalities, for instance, you might feel that you would benefit from the consideration of a third party with some expertise or specific technical knowledge. Moreover, getting a professional or expert perspective on the issue could shed some light onto how to arrange a settlement given specific details, and can give you an insight into how a technical point might cash out in an arbitration.
- Author: Gaia Freydefont
- Author: Gaia Freydefont
DISCLAIMER
This article has been written by law students for the sole purpose of providing informative insight. The information in this article is intended for educational purposes only and does not constitute legal advice, nor should the information be used for the purpose of advising clients. You should seek independent legal advice before relying on any of the information provided in this article.
Sources
Harper james llp, 'Which ADR method is best for you?' (Types of alternative dispute resolution methods: choosing the best one for your business, 12 April 2021) <https://harperjames.co.uk/article/choosing-types-of-alternative-dispute-resolution-adr/#section-9> accessed 1 November 2022
Blaney mcmurtry llp, 'Selecting The Most Appropriate Process' (ALTERNATIVE DISPUTE RESOLUTION, -) <https://www.blaney.com/sites/default/files/other/adr_selecting_process.pdf> accessed 1 November 2022
Resolution systems institute, 'CHAPTER 7: DECIDE WHICH ADR PROCESS TO USE' (-, -) <https://www.aboutrsi.org/dme/decide-which-adr-process-to-use> accessed 1 November 2022
Brodies llp, 'Factors to consider when selecting a commercial dispute resolution method' (-, 25 November 2021) <https://brodies.com/insights/litigation/factors-to-consider-when-selecting-a-commercial-dispute-resolution-method/> accessed 1 November 2022
