Alternative Dispute Resolution

Alternative Dispute Resolution (ADR) provides a confidential and alternative method of tackling legal disputes which avoids going to court.

In a market where reputational risk, confidentiality, flexibility of process, speed of resolution and cost control play increasingly significant roles in the approach to business and decision making, Alternative Dispute Resolution (ADR) is becoming increasingly popular.

Arbitration

The current law of arbitration in Scotland - the Arbitration (Scotland) Act 2010 - is founded upon three principles: (i) the object of arbitration is to resolve disputes fairly, impartially and without unnecessary delay or expense; (ii) the parties should be free to agree how to resolve disputes, subject only to such safeguards as are necessary in the public interest; and (iii) the court should not intervene except as provided by the Act. In the absence of parties electing to be bound by specific rules, the Scottish Arbitration Rules ("the SARs") will apply. The SARs are split into mandatory rules and default rules, which apply unless the parties agree to modify or disapply those rules.

Unless the parties agree otherwise, the arbitrator's award may be registered for execution. This means that the award is treated as having equivalent effect to a court decree for payment, allowing a party to enforce an award without the need for further court procedure. Permission must be obtained before an appeal to the Court of Session will be heard. The body of case law regarding arbitration applications indicates that Scottish judges are mindful of the third principle of the 2010 Act narrated above; being slow to interfere with arbitrations.

Expert Determination

Expert determination is where contracting parties agree to instruct a third party to decide an issue between them, where he or she is to act as an expert rather than an arbitrator. Traditionally it has been the ADR of choice to resolve technical issues or matters of valuation arising during the performance of a contract. It is generally less expensive and speedier than court litigation or arbitration, avoids the rigours of the application rules of evidence and procedure and offers a finality which avoids delays, potential re-hearings and appeals. It is also particularly suitable where an expert knowledge of the subject is required and where parties have a continuing relationship.

Mediation

Mediation is a process which is voluntary, private, informal, collaborative and confidential. When parties choose to have their dispute mediated, they get to set the ground rules, including what the governing law will be and where any meetings will occur. It is not adversarial, subject to external rules or subject to appeal. At its best, mediation promotes collaborative engagement and sees a robust exploration of the perceived difficulties that each party may face at court or at arbitration. All of this before parties have started down the path of litigation. A mediated resolution of a dispute can be more effective, more flexible and more durable than an order imposed by a court or made in another ADR forum. But a party can walk away from mediation, at any time, without the risk of an adverse expenses award being made against it.

Negotiation

Negotiation can be the most effective means of resolving a dispute, in terms of time and costs. Even where a resolution is not reached, it can readily identify what the real areas of disagreement are between the parties.

Adjudication

This form of ADR is generally reserved for disputes which arise out of construction contracts. The adjudication regime has evolved over time, but remains free from the rigours of complying with the procedural and evidential rules of court. Favoured for its speed, it is generally considered to be an inexpensive way of resolving construction disputes. Adjudication decisions are binding unless and until they are revised by subsequent arbitration or litigation after practical completion, or, occasionally, by agreement between the parties.