Mediation & other forms of ADR — practical guidance for resolving disputes outside of court

Seeking a determination of a legal dispute via lengthy court proceedings concluding in a trial before a judge isn’t the only option for parties seeking to resolve disagreements. For many businesses and individuals, the traditional path of litigation can feel costly or rigid and can be damaging to what would otherwise be productive commercial relationships. Alternative dispute resolution (ADR) plays a key role in resolving disputes sensibly and effectively without the need for final determination by a judge.

ADR covers a wide range of processes, from informal negotiations through to binding mechanisms like arbitration or expert determination. Choosing the right approach depends on the nature of the dispute, the parties involved and what they’re ultimately trying to achieve. In the context of commercial disputes, mediation is one of the most common forms of ADR adopted. 

Here, Helen Otty and Chris King discuss what mediation and other forms of ADR are, the benefits that they offer, when they’re most effective and how the courts view parties who refuse to engage in them.

What is ADR?

ADR is a collective term for the different mechanisms that parties can use to resolve a dispute without taking it all the way to a final determination by way of a court hearing before a judge.

Instead of asking the court to impose a decision, ADR allows parties to explore other processes that can help them to reach an outcome more flexibly and — in many cases — more collaboratively. ADR isn’t a single process but a spectrum of options that can be tailored to the dispute and the parties involved.

Why consider ADR?

The benefits of ADR are numerous and wide‑ranging.

One of the most significant advantages is cost. ADR often leads to substantial cost savings compared to litigation, particularly if a dispute can be resolved at an early stage.

ADR can also give parties greater flexibility and control over the process. Rather than being bound by court timetables and formal procedures, parties can shape how and when discussions take place. Confidentiality is often another major benefit, allowing disputes to be addressed without the risks associated with public court proceedings.

Finally, ADR can help to preserve existing business or personal relationships. Disputes can put significant strain on relationships and ADR often provides a more constructive environment for resolving issues before those relationships are damaged beyond repair.

Non‑binding & binding forms of ADR

ADR can broadly be divided into non‑binding and binding processes.

Non‑binding ADR

At the informal end of the scale, parties may engage in straightforward negotiations, dealing directly with each other to try and reach an agreement. More structured non‑binding options include mediation and early neutral evaluation.

In these processes, the outcome remains in the hands of the parties. If agreement can’t be reached, they’re not bound by the discussions and can still pursue determination of the dispute through litigation.

Binding ADR

Binding ADR includes processes such as arbitration, adjudication and expert determination. In these cases, the parties agree to be bound by the decision of a third party rather than a judge at a court hearing.

These options are agreed in advance of any dispute arising and set out in contracts governing the parties’ relationship. The agreed form of binding ADR can offer a more private, controlled alternative to court proceedings, while still producing a final and enforceable outcome.

Can the court force parties to use ADR?

The court has the power to order parties to engage in ADR using its case management powers. This can include directing parties to take part in a specific form of ADR such as mediation and staying court proceedings to allow that process to take place.

Courts have long encouraged the use of mediation in particular and can impose cost sanctions on parties who unreasonably refuse to consider ADR. Even if a party is ultimately successful in the dispute, refusing to engage in ADR without good reason can still lead to adverse cost consequences.

Inside the mediation process

What is mediation?

Mediation involves the appointment of a neutral individual, agreed by the parties, to act as a mediator.

The mediator’s role isn’t to decide who’s right or wrong or to impose a solution. Instead, they act as a facilitator, helping the parties to explore common ground and consider options for settling the dispute.

Mediators are typically legally qualified and often have extensive experience as solicitors or barristers. The process is confidential and anything said during mediation can’t be used to prejudice a party’s position if settlement isn’t reached.

Which cases are suitable for mediation?

Most disputes should at least be considered as potentially suitable for mediation. Where a settlement would benefit the parties, mediation is often worth exploring.

There are exceptions. For example, in cases where a party requires an injunction or where a legal precedent is needed, mediation may not be appropriate. However, for the majority of disputes where a negotiated outcome is possible, mediation is frequently a sensible option.

Does mediation work?

In practice, mediation has a strong track record of success. The majority of cases referred to mediation result in a settlement, either on the day itself or shortly afterwards.

Even where agreement isn’t reached immediately, mediation often helps to narrow the issues and bring parties closer together, making settlement more likely in the days or weeks that follow.

Getting the most out of mediation

Preparation is key to a successful mediation. Parties should arrive well prepared, with a clear understanding of both their legal position and their broader objectives.

Mediation can be a lengthy process, often lasting a full day — so patience is important. Solutions reached at mediation can be creative and don’t have to be limited to the legal issues in dispute. They may include future business relationships or address other outstanding matters beyond the scope of any ongoing litigation.

A good mediator is often someone who can offer creative perspectives or approaches the parties haven’t previously considered.

When is the right time to mediate?

There’s no single right time for mediation, as it depends on the facts of each case.

In general, mediation should be considered early, once the parties are able to understand their case and their opponent’s case and before legal costs escalate and become a potential bar to settlement. However, in some cases parties may feel unable to mediate until they’ve had the chance to consider all of the other side’s evidence. In such cases, mediation may not take place until shortly before trial.

What’s important is that ADR — including mediation — is considered from the outset and kept under review as the dispute progresses.

Other ADR options in practice

Early neutral evaluation

Early neutral evaluation is a court‑based process offered in some cases, particularly in the county court. A judge reviews the papers early in the case and provides an initial view on a without‑prejudice basis.

This early indication can be highly influential and often leads to immediate settlement, particularly where one party has been reluctant to engage in negotiations.

Arbitration

Arbitration is a binding process usually agreed contractually in advance. It gives parties greater control over the procedure for determining the dispute and offers confidentiality, which is particularly attractive in high‑value or sensitive disputes.

While arbitration can be more cost‑effective than litigation depending on the procedure used, it places the decision/determination of the dispute firmly in the hands of the arbitrator(s).

Adjudication & expert determination

Adjudication is commonly used in construction disputes but can also apply in commercial contexts. It involves a third‑party adjudicator issuing a binding decision, often with cost efficiencies compared to litigation.

Expert determination focuses on narrow technical issues like asset valuation and involves an independent expert making a binding decision. It’s particularly effective where there’s no wider factual or legal dispute and can result in significant cost savings.

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Our high-profile and award-winning litigation team — one of the largest in the North of England — is made up of over 50 specialist litigators. We're experts in settling disputes in the most effective manner — whether through the courts, arbitration, mediation or other alternative forms of dispute resolution.

If you’re looking for advice, talk to our commercial litigators today by calling 0333 004 4488, emailing hello@brabners.com or completing our contact form.