Disputes are an almost unavoidable part of doing business and can cause significant costs and damage to relationships. Professionals involved in dispute resolution seek to minimise the negative impact of disputes through a number of methods, including increasingly popular forms of alternative dispute resolution (ADR).
ADR refers to procedures used to settle disputes which avoid litigation, such as arbitration and mediation. Herbert Smith Freehills, a leading professional services business, notes that ADR originated in the United States in the mid–1970s in response to dissatisfaction with traditional litigation as a means of dispute resolution.
“As the volume of litigation increased dramatically, the cost, delay and uncertainty of outcome were the principal motivating factors in the development of alternative methods. ADR, and in particular mediation, is now widely embraced and encouraged across the world.”
Mediation is often the quickest and cheapest option for settling a dispute. An independent and neutral mediator works with the parties involved to reach a satisfactory agreement. The outcome of a mediation is not binding and the mediator has no power to compel the parties in any way.
Arbitration also involves bringing an external and independent party into the dispute, however in this case the arbitrator is responsible for deciding how the dispute should be resolved. This decision is binding and allows for a definite resolution.
These methods are generally less expensive and lead to a quicker resolution of the dispute in question and can help avoid revealing confidential information in court.
Discussing the results of the CPR and CEDR report Insights into Alternative Dispute Resolution, James South, managing director of CEDR, commented:
“Whilst ADR might once have been regarded as a disrupter it is now very much mainstream in the US and most of the European jurisdictions where it is used. However, when it comes to cross-border international disputes, one can see in this Insights report that confidence in ADR is not uniform; it would appear that mediation is at somewhat of a disadvantage when it comes to concerns over enforcement, presumably due to the different status of mediation across jurisdictions.”
Our Annual Dispute Resolution Practice Area Guide highlights experts in this field around the world.