ADR and Arbitration

1) Advantages and disadvantages

Mediation v Litigation

Advantages of mediation over litigation

1) Cost if settlement is actually reached

2) Speed if settlement is actually reached

3) More flexibility / informality which gives party a sense of ownership

4) Non-adversarial and therefore conducive to good business relationships

5) More likely to produce a commercial solution as not focusing on the law

6) Outcome cannot normally be appealed as both parties agreed the outcome

7) Privacy as mediation is held in private and both parties normally agree confidentiality

8) Mediator is normally an expert in the field

9) Even if unsuccessful, you will have reality tested your dispute

10 Court actively encourages ADR and if you do no reasonably attempt to mediate there may be adverse cost consequences

Disadvantages of mediation over litigation

1) Cost if no settlement is agreed

2) Speed if no settlement is agreed

3) Only facilitates agreement, it does not guarantee one whereas litigation does

4) The process is not binding so either party can walk away at any time

5) It is hard to predict the outcome of mediation

6) The resolution is unlikely to be legally correct but instead a 'happy medium'

7) Mediation has no precedent value

8) If no proceedings have been commenced, the part can only enforce a mediation agreement as a contract

Arbitration v Litigation

Advantages of arbitration over litigation

1) You can choose your arbitrator whereas in litigation you can't choose a judge

2) You may not have to wait so long for a hearing in an arbitration

3) You can choose where (which country) the arbitration takes place

4) Arbitration hearings are in private and therefore confidential

5) Parties can have input into the procedures to be adopted in arbitration

6) An arbitration award is often easier to enforce internationally due to the New York convention

Disadvantages of arbitration over litigation

1) You have to pay for the arbitrator and the premises for the hearings

2) You cannot join third parties in the dispute if they are not parties to the arbitration agreement

3) An arbitration tribunal might have more limited powers than a court

4) If the court has to get involved, it means more costs

5) Arbitration has limited / no precedent value

6) It is often harder for arbitration proceedings to be decided summarily (by summary judgement)

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