A Guide to Arbitration and ADR

All types of litigation can be costly and although the small claims court is designed for low value claims, it may be that alternative dispute resolution processes are less expensive and can be resolved more quickly than going through the small claims court.

Conciliation

If your dispute is with a trader who belongs to a trade association there may be a scheme that allows you to endeavour to resolve your dispute outside the courts. Conciliation is one such option, which is a way for both parties to discuss the issue between themselves. However, the outcome is not legally binding, and if either party or both parties are dissatisfied with the result they still have the option of going to arbitration or indeed litigation.

Mediation

Eighty per cent of the disputes that go to mediation settle without requiring further discussion. A mediator is a neutral third party who may or may not be legally qualified, and who hears both sides of an argument before encouraging both parties in a dispute to come to a mutual decision. The mediator is not required to make a decision for or on behalf of the parties. Again, mediation is generally seen as a cheaper, quicker and less formal method for solving disputes.

Arbitration

Arbitration is a more formal type of alternative dispute resolution, which is overseen by an independent arbitrator. Often the proceedings are conducted purely on paper, so if you feel that your case would benefit from being argued in person, the small claims court may be a better venue for your dispute.

Advantages of Arbitration

If your dispute is of a highly technical or complicated in nature arbitration can be a good option because arbitrators are often experts in their fields and more easily understand the intricacies of a specialised dispute. Arbitration can be faster, cheaper and more quickly resolved than litigation. Hearings are generally in private, which may be preferential for business disagreements of a confidential nature.

Disadvantages of Arbitration

There is no right to challenge the decision of the arbitrator in court, if you do not agree with their decision. It is therefore very important that you give consideration to the particular circumstances of your dispute before opting for arbitration. Although it is true that arbitration is generally cheaper than litigation, it is not without cost and there may be considerable costs in the event that you lose.

Your Right to Choose Litigation Over Arbitration

If the value of your dispute is not greater than the small claims limit (£5000) you cannot be bound by a contract that states that you must choose arbitration in the event of a dispute – you have the right to choose to go to court if you wish (see Arbitration Act 1996.)

Before embarking on any form of alternative dispute resolution, ensure that you have carefully considered the cost implications of success or failure, whether the proceedings will be held in public or private, and whether your case needs a specialist in the same field to try to help to resolve the issues.