Alternative Dispute Resolutions and Mediation

Where a dispute arises between parties, there are a series of options that are available to them to assist in seeking a resolution to the matter, without having to instigate Court proceedings or that may be utilised during ongoing proceedings. These options are known as Alternative Dispute Resolution (“ADR”). In this article, we will detail the advantages and disadvantages generally before briefly examining the most popular forms of ADR and detailing their individual advantages and disadvantages.


What are the Advantages of Alternative Dispute Resolution?

The advantages of ADR can vary depending upon the type of ADR utilised and may not necessarily be applicable to some or all of the other ADR mechanisms. The use of ADR does have general advantages, which may be summarised as follows:

Time Efficient:

The litigation can often take a number of months or possibly years for some complicated cases. However, ADR can usually be arranged and facilitated on a much smaller time scale;

Cost Effective:

Following on from the above point, ADR is often a lot cheaper in reaching a resolution than opposed to doing so via the Court, which is partly due to the much smaller time scale of ADR.

Furthermore, even where parties are not required to explore ADR by virtue of a contractual or other obligation, the Court is highly likely to seek an explanation from the parties as to whether they considered/undertaken ADR in litigation. If the parties have failed to consider/undertake ADR, they expose themselves to the risk of costs and/or case management sanctions. If ADR is undertaken at an early stage in the dispute/proceedings, the risk of costs and/or sanctions being imposed at a later date are reduced;

Obtaining a More Suitable Resolution:

ADR forms offer the parties flexibility, which enables the parties to reach a resolution that may be more suitable to the dispute in question. This is opposed to a resolution following litigation, which will be on a win/lose basis only. The ability of ADR allowing the parties to save time and costs by focusing on reaching a solution rather than legal and technical arguments is a significant benefit to ADR as a process generally when compared to litigation;


ADR procedures can be confidential. Confidentiality will allow the parties to negotiate on a full and frank basis, which allows all issues to be addressed and increases the likelihood of a resolution being reached;

Ability to maintain relationships:

ADR offers the party the greater chance of maintaining a positive business relationship where a settlement is reached by consent;

Miscellaneous Benefits:

Where ADR may not result in a settlement being reached, it can have alternative benefits which can include narrowing the issues in dispute, exploring each party’s case and can lead to further negotiation which may result in settlement being reached pre-trial.

What are the Disadvantages of Alternative Dispute Resolution:

Whilst there are clear advantages to ADR as detailed above, there can also be disadvantages which should be taken into consideration before a party agrees to enter into ADR. We have summarised some of the most commonly perceived disadvantages of ADR below:

Willingness to Compromise:

As ADR involves the parties seeking to reach a resolution to the matter, there must be the willingness on both sides to accept a compromise in order to reach a settlement. Where a party is unwilling to compromise or alter their position, it is unlikely that a settlement will be reached, which would render the ADR a waste of the parties time and resources;

Time Delay and Increasing Costs:

If ADR is engaged but a settlement is not reached, this can result in a delay of time before reaching a resolution and increased costs where litigation is then commenced. In situations where ADR is undertaken at a late stage in the litigation process, there is the risk that ADR will negatively impact upon the Court process by diverting the parties time and resources to ADR and it could delay the trial. Both ADR and litigation can be conducted at the same time but the parties must take into consideration the cost implications of this, although this should be considered against the cost advantages of ADR as detailed above;

Divulging a Party’s Position:

Although most forms of ADR are undertaken on the basis that anything discussed is subject to the concept of privilege in any litigation proceedings, there is the concern that a party may expose their position/ strategy during the ADR that they may wish to use in any litigation proceedings;

Unenforceable Settlements:

It should be noted that settlement terms which are agreed through a non-binding ADR process are not enforceable. Parties may, however, agree to formalise their settlement terms by way of an enforceable contract or a Court Order. Furthermore, some forms of ADR can produce binding or interim-binding resolutions which alleviate this risk of one party breaching the resolution reached during the ADR and the other party not being in the position to enforce the terms of the settlement; and

Suitability & Limitation:

Not all forms of dispute are suitable for ADR. The unsuitability of ADR to a particular dispute may be where an urgent remedy is sought or where ADR would be excessive/disproportionate to bringing a legal claim such as a low-value claim. ADR does not prevent the passage of time for the purposes of limitation and parties will need to keep limitation in mind and possibly issue proceedings to protect their position from a limitation point. They may instigate ADR at the same time but there would be the cost implications of doing so.

What are the different types of Alternative Dispute Resolution?

Below we will briefly detail the main types of ADR used and detail both the advantages and disadvantages of those particular forms of ADR.


Mediation is a form of ADR which involves a neutral third party, the mediator, who will assist the parties in seeking to identify the issues in dispute and to reach a resolution to the same. The main form of mediation used in the UK is known as facilitative mediation. Facilitative mediation requires the mediator to facilitate an agreement between the parties as opposed to actually making a decision themselves in the way that a judge or arbitrator would. Evaluative mediation involves the mediator making an evaluation on the claim, issue or the strengths and weaknesses of a case in order to assist the parties who may then be guided towards reaching a resolution by virtue of the particular evaluation made by the mediator.

What are the advantages of mediation?

  • It is non-binding, which permits flexibility and ongoing relationships;
  • It is private;
  • As the parties themselves reach the resolution, they are at liberty to decide upon what terms to settle upon which provides more flexibility than a decision reached by the Court or arbitration;
  • The use of a neutral third party as the mediator may assist in the parties viewing the position from a different perspective and increasing the possibility of a settlement being reached, subject to the parties being agreeable to reaching a compromise;
  • Mediation can be a fast and cost-efficient form of ADR;
  • If settlement is not reached during the mediation, it can increase the possibility of settlement being reached after as settlement negotiations can be ongoing with the view to reaching a resolution on any outstanding issues; and
  • Medication can enable business relationships to continue after as any settlement reached has been agreed by the parties themselves as opposed to being handed down by a Judge or arbitrator.

What are the disadvantages of mediation?

  • It is non-binding, which prevents enforceability unless the parties formalise their settlement terms by way of a contract or Court Order;
  • As mediation focuses on the parties reaching a settlement and does not have the same procedural requirement for parties to provide evidence and documents in order to seek the actual truth of the matter, settlement will be less likely where a party is arguing a particular point of principle and/or feel the other party is not acting in good faith. As previously detailed, if a party is unwilling to compromise on their position or a particular issue, possibly due to a point of principle, this is likely to detrimentally impact upon the possibility of a settlement being reached;
  • Where there has been a complete breakdown of relationship between the parties, even with the assistance of a neutral third party, mediation may be unsuitable as the parties are unlikely to be able to reach a settlement between themselves;
  • If a party requires the certainty that a settlement will be reached on the day, mediation will be unsuitable as this form of ADR does not offer that guarantee. It may be that despite engaging in mediation, a settlement is not reached between the parties; and
  • The cost of mediation can be disproportionate to lower-value claims, particularly as there is not a guarantee that a resolution will be reached on the day of mediation. Thus mediation could be pursued in a lower value claim, increasing costs significantly in comparison to the principal claim amount and without reaching a resolution.

What is Conciliation?

This form of ADR is similar to mediation and as such, the advantages and disadvantages of mediation apply to conciliation and shall not be repeated here.

The difference between mediation and conciliation is that in conciliation, the neutral third party will actively seek to assist the parties to settle the dispute as opposed to the more passive role of a mediator. The more proactive role of the neutral third party in conciliation could be the suggestion of settlement options for the parties to consider. A distinctive advantage to conciliation is that the parties may prefer the pro-active role of the neutral third party in directing the parties towards reaching a settlement.

What is Adjudication?

This form of ADR is been commonly used in construction disputes. The Housing Grants, Construction and Regeneration Act 1996 has made it a statutory right for parties under certain contracts to refer their disputes to adjudication. Where a contract does not attract the statutory scheme requiring adjudication, it is common for the contract themselves to provide the right for disputes to be subject to adjudication.

Unlike in mediation and conciliation, an adjudicator will provide a decision on disputes that arise. The decision of the adjudication has an interim-binding effect. This means that the decision is binding pending the agreement of the parties, which will alter its effect or the referral of the dispute to arbitration or litigation for a final decision to be made. Thus, the decision becomes fully binding once agreed by the parties, or if the parties are not in agreement, the dispute will be referred to arbitration or litigation and a final decision will be made. If the final decision is in line with the adjudicator’s decision, that decision becomes binding accordingly.

What are the Advantages of adjudication?

  • The adjudication process is fast as it has a 28-day procedure;
  • Disputes can be referred at any time and allows a party to reach a resolution to a dispute quickly that may have otherwise detrimentally affected their ability to perform the contract;
  • Work under the contract in question can often continue whilst the adjudication process takes place due to its short time frame and ability to be referred at any time;
  • Adjudication is usually a cost-effective method as it is usually less expensive than arbitration or litigation and each party bears their own costs;
  • The cost-effectiveness of the method is aimed to promote fairness and provide a fast, cost-efficient method for parties to a contract that could face financial difficulties if the dispute went unresolved until the determination by litigation, as well as incurring the time and costs of the same;
  • Subject to the adjudicator’s decision having to be enforced, adjudication proceedings are primarily private;
  • Adjudication allows a party to choose who will adjudicate this dispute. This will enable the appointment of an adjudicator who may have a particular expertise that will be pertinent to the dispute in question, which will assist in a more suitable resolution being reached for the parties; and
  • There are a number of adjudication procedures available and the parties are free to choose which adjudication procedure they wish to follow. However, it should be noted that some contracts may specify a particular adjudication procedure which has to be followed when a dispute arises.

What are the Disadvantages of adjudication?

  • The 28-day procedure for adjudication requires the parties to prepare and put their case forward in this time limit. Due to the tight time limit of the 28-day procedure, a party wishing to commence adjudication may have to make the decision whether to wait to do so in order to fully prepare their case or, commence without fully preparing their case having a possibly weaker position in order to achieve a decision much quicker;
  • Further to the above, the 28-day procedure for adjudication can mean that an adjudicator could be rushed into making a decision on an issue which involves complicated legal or factual issues. This could mean that the decision is fundamentally incorrect and may require legal proceedings to be instigated to correct the decision, which would increase the time and costs incurred by the parties;
  • The costs of adjudication are not usually recoverable in adjudication or in any follow-up litigation;
  • Litigation has set pre-action requirements that a party must comply with. However, adjudication does not have any pre-requisite steps and this can lead to a party being taken by surprise by the referral of adjudication proceedings. Such a surprise could have a detrimental impact upon the parties business relationship;
  • There is the risk in adjudication in the situation where a responding party pays money to a referring party as required by an adjudicator’s decision but the decision is subsequently reversed and the paying party may be unable to recover the money originally paid due to the referring party becoming insolvent or going into administration in the interim period; and
  • The adjudicator can only award interest in limited circumstances.

What is Arbitration?

Arbitration is governed by the Arbitration Act 1996 and is an alternative to litigation. Arbitration requires that all parties must agree to submit the dispute to arbitration and is often a contractual agreement.

Under arbitration, an independent arbitrator makes an award to reach a resolution to a dispute. Arbitration is private and the arbitrator acts in a judicial manner focusing on the factual and legal issues presented to them by the parties and their decision is final and binding on the parties. In order to maintain their independence, the arbitrator cannot meet with either party in private.

What are the Advantages of Arbitration?

  • Proceedings are held in private and the parties are subject to confidentiality;
  • Arbitration offers flexibility as the process must be tailored by the tribunal to be suitable to the dispute in question;
  • The parties have the ability to agree on procedures for arbitration that are more efficient and fast;
  • The parties may choose a tribunal that has expertise that is pertinent to the dispute in question;
  • The award given by the tribunal is binding with very limited options for challenging the decision made;
  • The award may be easily enforced domestically and abroad subject to the country in which enforcement is sought being a party to the relevant enforcement convention (please see our article on enforcement of foreign judgments for further information on this topic); and
  • Arbitration is usually faster and cheaper than litigation.

What are the Disadvantages of Arbitration?

  • As the options for challenging an award made are extremely limited, this is a disadvantage where a party feels that the award made has been made incorrectly;
  • The flexibility of arbitration can result in a lack of certainty, which can result in increasing the time and costs of arbitration;
  • Arbitration tribunals can be less willing to determine claims and defences summarily than the Court. Arbitration may not be suitable for claims that are more simple and involving only one defendant;
  • Arbitration awards are persuasive but do not create any binding precedent. Litigation is, therefore, more appropriate where reliance upon a binding ruling is required;
  • The tribunal and administration fees can result in arbitration being equivalent to or more expensive than litigation; and
  • Arbitration may not always be faster than the litigation process due to a number of factors such as busy arbitrators.