Can I use Alternative Dispute Resolution in a Commercial Dispute?

There are a number of methods you can use to resolve a commercial dispute. The first option is trying to resolve the dispute by talking about it with the other party. This may be successful, but will more likely fail, particularly if the dispute has been going on for some time and involves sums of money. Your second option is Alternative Dispute Resolution, also known as ADR and your final option is to simply go to court.

There are positives to each of the these resolution methods, however we are going to look at how Alternative Dispute Resolution can be used to resolve your commercial dispute, and the positives and negatives of using ADR.
Alternative Dispute Resolution is a suite of methods used to resolve many different kinds of disputes and is a very real alternative to simply litigating to resolve a dispute. ADR is made up of the following items:

Negotiation
Mediation
Adjudication
Arbitration

These tools can be used in any dispute, but someone are better suited to some types of disputes than others. Let’s look at each one in turn:

Negotiation

Negotiation is used the least out of all the ADR tools. Many people forget that the resolution of many disputes just involves negotiation. This can be completed on the phone, by email or in letters. This can be one of the most problematic though, as there is no third party and one or both parties will have to concede something at some point in
negotiations.

Mediation

Mediation is used the most in personal disputes such as family law issues. This is an effective way of finding a resolution to a problem. A mediator will hear from both sides and then make a decision about the outcome of the disputes. Sometimes though, the decision is not legally binding and can therefore result in no change to the outcome of the dispute.

Adjudication

Adjudication is normally to resolve consumer disputes.

Arbitration

Arbitration is regularly used in commercial disputes. An arbitrator will set a date where both parties give evidence about their dispute. The arbitrator will then decide the outcome of the dispute, which cannot be challenged in court. You can see that arbitration is the favoured option in ADR for commercial disputes. There are a number of reasons for this. The first is the arbitration can be used in international disputes and takes away any jurisdictional issues that you would have to contend with if litigating.

In addition, arbitration is carried out behind closed doors, unlike a court case. This means that none of your competitors can gain advantage and your customers are unlikely to know that you are in dispute as it is completely confidential.

The other reason is that the arbitrator’s decision is legally binding and cannot be challenged in court. The use of arbitration instead of litigation is being written into commercial contracts, which shows the value it has in commercial disputes.

If you are facing a commercial disputes, speak to a specialist commercial law solicitor who can talk you through the pros and cons of all your options so you can decide what will work best for you.
We can help you if you need advice. Talk to our commercial law team on 020 7490 5861 or email info@vlcw.co.uk and we’ll be in touch.