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Alternative Dispute Resolution – Part Two

In recent weeks we’ve explained to our readers the new pre-action protocol for dealing with debt claims that came into force at the beginning of October. 


Part One dealt with how creditors can comply with the new Protocol and this was followed by Part Two which covered what debtors will need to do in order to avoid court proceedings.  In cases where a settlement between the debtor and the creditor cannot be reached, the Protocol recommends an Alternative Dispute Resolution (ADR) before resorting to court proceedings.  Last week, in Part One, we listed some of the benefits of using ADR and promised to follow up this week with some details on the different types of ADR, so here we go.

MEDIATION – this is the most commonly used method in ADR procedures.

EVALUATIVE MEDIATION – in this method, the intermediary gives each party a non-binding opinion to help to achieve settlement.

FACILITATIVE MEDIATION – a neutral intermediary encourages both parties to reach a settlement that can then be used as a binding and enforceable agreement.  It will focus on the interests of both parties, rather than their legal rights and can result in a win-win outcome.

NEGOTIATION – this involves direct communication between both parties with no third party involved.

CONCILIATION – A conciliator is more pro-active than a mediator and will suggest settlement terms, make recommendations and evaluate the legal merits of the case.

EARLY NEUTRAL EVALUATION – This is usually carried out through a Commercial Court where a Judge is appointed to hear the case put by each party.  The Judge may give directions on the preparatory steps the parties should take and the form this is to take.  The Judge delivers an initial evaluation with an indication of the merits of the case and the likely outcome of a trial.  This can encourage the parties to open settlement discussions.

JUDICIAL APPRAISAL – This is an early neutral evaluation where (for a fee), a retired Judge will appraise a case that is usually complex, corporate or involves insurance.  It’s based on written submissions by each party who are then free to agree on whether or not the Judge’s view is binding or merely indicative for the case.

NON-BINDING/BINDING ARBITRATION – This is informal and held in private with parties controlling the issues to be determined and deciding whether they will be bound by the arbitrator’s decision.

EXPERT DETERMINATION – The parties appoint an agreed upon expert to report on the issue in dispute and is used when the dispute is technical in nature.

EXECUTIVE TRIBUNAL/MINI-TRIAL – Each party presents their case to a panel of senior executives from each party and a neutral advisor.  Experts may be required to give their views and the tribunal then give its opinion which may lead to a successful resolution.

MED-ARB – This is a combination of mediation and arbitration which offers the benefits of both methods.  Parties initially attempt to collaborate on an agreement with the help of a mediator.  If no agreement is reached or issues remain unresolved, the parties then move on to arbitration.  The mediator may also assume the role of arbitrator (if qualified to do so) and render a swift binding decision or an arbitrator may take over the case following a consultation with the original mediator.