ADR

Court proceedings are increasingly seen as the last resort in dispute resolution, as parties and courts seek to reduce time spent and costs incurred determining and enforcing legal rights. Alternative dispute resolution (“ADR”) methods are directed towards resolving a legal dispute without resorting to court litigation. They can be as simple as the informal meeting of parties’ representatives to hammer out a settlement, or take a more structured approach involving the assistance of a third party.

The most well known ADR method is perhaps mediation, which involves a neutral third party facilitating discussions between the parties so that they can reach their own commercial solution to a dispute. Any settlement achieved will be enforceable directly if there are current court proceedings or where it complies with the requirements of the Directive of the European Parliament and of the Council on certain aspects of mediation in civil and commercial matters (the “European Mediation Directive”). Otherwise, a settlement is embodied in, and enforceable as, a commercial contract.

UK construction contracts will usually provide for adjudication, while technical disputes will often be referred to expert determination. Other forms of ADR which might be considered include referring disputes to senior representatives. Market practice is moving towards inclusion of ADR as a precursor to litigation or arbitration in most long-term commercial contracts. Of course, parties will need to be satisfied that any proposed ADR provision will work as intended both as a matter of the governing law of the relevant contract, and before their ultimate dispute resolution mechanism (of arbitration or litigation) - provision for which parties using an ADR clause must also not forget to include in their contract (see here for a list of the general differences between arbitration and litigation).

Linklaters has published a comparative review of mediation practice across 21 jurisdictions