Taking a matter to a court of tribunal tends to be expensive in terms of both time and money – and there’s no guarantee of success!
I thought I’d take a look at the various methods of alternative dispute resolution – and the differences between the terms in which they’re described.
This is a bit of an ‘all-purpose’ term which we use to cover a host of different situations – terms of employment, salaries, suppliers’ contracts, property deals, company mergers and acquisitions – the list is endless. There’re no real rules about how negotiation should take place, and no right or wrong. Essentially, each party will have some idea of what he or she wants, and it’s a case of discussing whether and how these requirements can be accommodated. Typically, each party will be prepared to concede some but not all points, and usually where a point is conceded, either a substitute requirement will be raised or the concession will be subject to a condition. An employee seeking a pay rise for £5,000 may accept £3,000 on condition that a further review takes place within a specified time.
Typically, the initial requirements on each side will be higher than that party is prepared to ‘settle for’. Although in theory it is possible to negotiate upwards from a concession, in practice this usually doesn’t happen! It’s also quite common not to bring all the ‘bargaining counters’ to the table at once. Your success in negotiations will also depend to some extent on how powerful a position you are in relative to the other party.
This usually (although not necessarily) takes place with the assistance (and often in the presence, or telephone presence) of a third party. Although there are elements of negotiation, the principle is that each party takes up a stance, which is recognised by the other party, and an attempt is made to reach common ground. In almost any dispute, there will be some points on each side which are less important than others, and the parties may be prepared to ‘drop’ these, leaving the way open for some sort of a trade-off on the remaining points. An important feature is that neither party is being asked to change their view – this is a device for reaching a settlement which avoids further dispute. Typically conciliation is used in potentially or actual litigious situations and is a device to avoid expense. A conciliation procedure is mandatory for some types of litigation and conciliation can for example, be partial, leaving the un-conciliated points to be decided by a court or tribunal.
Mediation is again usually conducted in the presence of a third party, usually a recognised and qualified professional mediation practitioner. It is usually entered into voluntarily. The mediator will usually speak privately to each party (although a round-the-table discussion may take place at some stage if the parties are willing) and the mediator will attempt to facilitate agreement (without giving any form of ‘judgement’).
Like conciliation, the procedure does not require either party to abandon their stance. In diagrammatic form:
A _____________________________________________________ C B
A and C represent the differing viewpoints of the parties and B the mediation point. The mediation process will establish whereabouts B comes on the line A – C and not necessarily in the middle (per diagram above). In other words, what position are both A and C willing to accept? A mediation agreement will then be drawn up which is binding on both parties and, if litigation has already begun, will be forwarded to the court. Again, the objective is to avoid extensive and expensive procedures – although professional mediation comes at a cost, which is usually shared by both parties.
The arbitration procedure always involves a third party – usually, but not always, a chartered arbitrator. Arbitration can be either formal or informal.
A formal arbitration will be carried out strictly according to the regulatory regime and the arbitrator will take evidence from both sides. An informal arbitration will generally follow the same procedure, but may vary or omit some stages.
The significant difference between arbitration and the other three forms is that the arbitrator reaches the decision alone (after reviewing both the evidence of the parties and external evidence). This usually includes a decision on who shall pay the costs.
Typically arbitration clauses are found in leases, contracts and other forms of agreement, and the document itself may lay down stipulations as to the process. One variation is the decision of an independent expert – which means the chosen person gives his expert opinion and is usually free to decide how he arrives at this (subject to any stipulations in the contract between the parties), and is not obliged to listen to representations from either side.
If you don’t have a written arbitration clause, parties can still agree to go to arbitration (or indeed any of the other forms of resolution).
I hope that gives you food for thought on how to resolve disputes. It’s very much my personal view. Do let me have your comments – especially any experiences you’d like to share on dispute resolution.