For the past three decades or more, there has been a trend toward Alternative Dispute Resolution (ADR) as a means of settling civil disagreements. The use of mediation (where both parties aim for a mutual agreement with the help of a facilitator) or arbitration (where a settlement is imposed by a quasi-judicial body) has become commonplace in commercial disputes.
Why is this happening? Because it’s being encouraged by increasingly cash-strapped courts & Tribunals Service seeking to reduce their workload.
It’s important to note, however, that while judges have been known to use costs awards to penalise litigants who have not fully explored the possibility of ADR, there is no obligation to engage in mediation before going to court.
A 2018 report by the UK’s Civil Justice Council stopped short of recommending compulsory mediation.
ADR undoubtedly has its uses, particularly in cases where an ongoing commercial relationship is desirable to both parties. There are, however, real advantages to resolving disputes via the courts, six of which are summarised below.
When you engage in litigation through the courts you get a result. You may not always like that result, and it may only reach finality after going to appeal, but it will be a result.
With ADR there is no such guarantee. It’s possible to go through months of mediation, incurring significant solicitors’ and mediators’ fees, only for discussions to break down and both parties to end up in court anyway.
ADR is usually presented as a more cost-effective option than litigation. If, however, it fails to resolve the issue you will be faced with the costs of ADR and those of going to court afterwards.
A court judgment sets a legal precedent, effectively clarifying the law for future cases. This means litigants can point to previous rulings in similar cases and use that precedent to bolster their own arguments.
If you can identify a similar previous case it could boost your chances of success in the courts.
Similarly, if you believe you may face other similar disputes in future then having a favourable court judgment in your current case could prove helpful later.
It would be inaccurate to say the results of arbitration have no value as precedent but they are much more limited than those provided by a legal judgment.
3. Public record
Litigation is conducted through the courts and becomes part of the public record. This might be seen as a disadvantage by some litigants who are tempted by the confidentiality offered by many forms of ADR.
However, there are two clear advantages to having a judgment on the public record:
The first is that the facts of the case will be put on record, limiting the scope for damaging, inaccurate rumours to enter circulation. This can be particularly useful in countering or containing speculation on social media.
The second advantage is that being seen to have pursued your interests through the courts demonstrates publicly that you are not to be trifled with, potentially discouraging other parties from initiating future disputes.
The term “notoriously litigious” is often used pejoratively but it is difficult to see a downside in business to having a reputation for vigorously enforcing your legal rights.
4. It takes two to tango
For ADR to succeed both parties must be fully committed to compromising on a resolution that is mutually beneficial, and be willing to prioritise commercial sense over “justice”.
If not, the process will eventually collapse, leaving everyone back at square one. ADR can work well if both parties approach the process in good faith.
If, however, you do not believe the other party to be interested in a resolution that respects your interests as well as their own, or if you cannot honestly say the same about yourself, then court is probably the most appropriate forum in which to resolve your differences.
It is also important to note the courts are often able to resolve multi-party disputes in ways that arbitration and mediation may struggle with.
court proceedings are governed by strict rules about what constitutes evidence, and rigorously test any evidence put before them. If you have a strong legal case this provides a clear advantage over ADR.
In ADR the rules on evidence are not so clear. This means, for example, the outcome of arbitration could rest on information, or speculation, that would not have been permissible in court.
6. David vs Goliath
The rule of law is designed, at its heart, to treat everyone equally, which may not happen in ADR if there is a significant imbalance of power or wealth.
Judges are not perfect but they ought to take into account such imbalances and ensure each party to a dispute has an equivalent opportunity to make their case.
In ADR, particularly mediation, the party who has greater resources, or the whip hand commercially over the other party, is in a much stronger position. It is often in David’s best interests to go to court rather than try to sit down for a friendly discussion with Goliath.
Sign up to our newsletter to get the latest from Business Advice.