Alternative Dispute Resolution (ADR)

Published: 29/05/2015

ADRs are used when you have a dispute over the supply of goods and services and you want to avoid taking court action. These schemes use an arbitrator or ombudsman to help both parties reach agreement. Usually before using an ADR you will have to complete the supplier’s own internal complaints procedure.

There is a fee for using the scheme which is usually refunded if you are successful. If your claim is for less than £10,000 you should weigh up carefully the pros and cons of ADR versus small claims actions and decide which would be best for you.

ADRs are used when you have a dispute over the supply of goods and services and you want to avoid taking court action. These schemes use an arbitrator or ombudsman to help both parties reach agreement. Usually before using an ADR you will have to complete the supplier’s own internal complaints procedure.

There is a fee for using the scheme which is usually refunded if you are successful. If your claim is for less than £10,000 you should weigh up carefully the pros and cons of ADR versus small claims actions and decide which would be best for you.

In weighing this up compare the costs of the arbitrator / mediator fee against court costs and whether you’d want to go through a hearing in court, although you may have to enforce the arbitrators’ decision through the courts.

ADRs may cost less than proceeding through the courts and the procedure is less formal than going to court. However some schemes are legally binding which would mean you couldn’t take action through the court later if you were unsatisfied with the outcome through ADR.

There are three main types of ADR and these are usually provided by Trade Associations. Ask your supplier if they are a member of a Trade Association or check on their website (if they have one). Then contact the Trade Association to find out whether / what they offer regarding ADR.

Conciliation is the first stage in the arbitration process – both you and your supplier will be asked to give written details of the complaint including any evidence. The conciliator will then give their opinion on the best solution. Any decision is not binding and if you are unsatisfied you can proceed to arbitration or consider suing in court. Conciliation is usually free.

Arbitration is used to settle disputes and the decision of the arbitrator is usually legally binding which means that you can’t take court action – except to enforce the award if the supplier doesn’t pay up. Arbitrators often act independently from Trade Associations. They make their decision based on written evidence and their decision is confidential and cannot be disclosed without the supplier’s agreement. When you take up arbitration you have to pay a registration fee but this may be refunded if you are successful.

Mediation is used to help you and the supplier negotiate an agreement which is mutually acceptable. Both you and the supplier give details of your dispute, including copies of any evidence, and sign a mediation agreement which gives a framework for how the mediation will be conducted. If agreement is reached then the mediator meets with you and the supplier to draft the settlement terms. The settlement will be legally binding (unless you state otherwise) and will prevent you from taking court action except to enforce the award.

Ombudsman Schemes

Many services have an Ombudsman scheme – which is a free service. You can only refer your issue to an Ombudsman after you have completed the supplier’s own complaints procedure. You will need to give written details of your complaint together with copies of any of your evidence. The Ombudsman will make a recommendation or ruling which is usually accepted by the supplier but isn’t legally binding so you can still take court action if you aren’t satisfied with the Ombudsman’s decision, although the court will take the Ombudsman’s ruling into account.

Find out more

Check if your supplier is a member of a Trade Association. The Chartered Institute of Arbitrators may help you find an arbitrator. The Law Society has established a Civil and Commercial Mediation Panel which will help you find qualified solicitor mediators.

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