What is Alternative Dispute Resolution? Arbitration is a private court hearing where parties agree to be bound by the decision of the mediator.
It is an alternative method to pursuing more formal litigation, which is commonly used to resolve disputes.
Benefits of Alternative Dispute Resolution
The main objectives of arbitration include:
- Confidentiality – the parties are subject to the duties of confidentiality
- Flexibility – the tribunal must tailor the procedure to the dispute in question
- Choice – the parties can choose the tribunal which suits their needs
- Neutrality – this refers to the neutrality of law, procedure, language, and place of arbitration
- Binding nature of the award – the nature of arbitration does not permit parties to challenge the final decision.
Arbitration vs Litigation
With arbitration, there is an element of certainty, as long as the clause is drafted well to reflect the needs of the parties should a dispute arise.
Litigation can be a costly method in disputes compared with arbitration, and it can also be time-consuming.
There is a great amount of flexibility within arbitration in reaching a decision, which you will not find in court proceedings.
Alternative Dispute Resolution (ADR)
ADR is a method used to resolve disputes that would otherwise require court processes. In ADR, no statutory references are used.
ADR also includes mediation, which is the most common form of dispute resolution.
A request for ADR must not be ignored by parties as they will be doing so at their own peril. Choosing to ignore it may lead to costs penalties. The outcome of the decision states that it is binding rather than a neutral decision that could be accepted or rejected by the parties at that point.
Mediation/ arbitration process
It is the process by which parties agree to appoint an expert who will make a binding decision. If that fails meaning no settlement can be agreed upon, then the arbitration will take place. The result of this will be binding on both parties.
– The third-party arbitrator will agree to the settlement offer taking place.
– A major attraction to using arbitration is it resolves disputes privately without the need of a courtroom.
– Arbitration can also take place in England and Wales to resolve a dispute where neither party has a connection to this country.
Mediation and PGMBM
The recent British Airways Data Breach Settlement, in which PGMBM were the lead solicitors, was resolved on confidential terms. In this claim, we used mediation techniques to reach a settlement agreement.
The settlement provided redress to those affected by the data breach in 2018 who signed up for the claim.
You can read more on the settlement decision on the PGMBM website.
Sources: Practical Law UK; Commercial Dispute Resolution in 2021
Author: Salma Khatun, Paralegal.