Introduction to dispute resolution - Different options for dispute resolution

Learning Outcomes

After studying this article, you will be able to distinguish between the main methods of resolving civil disputes: mediation, arbitration, and litigation. You will understand the core features, advantages, and disadvantages of each, the requirements of the Civil Procedure Rules regarding ADR, and how to advise clients on the most suitable dispute resolution method for their circumstances in the context of the SQE1 exam.

SQE1 Syllabus

For SQE1, you are required to understand the main options for resolving civil disputes and the practical implications of each. As you revise this article, focus on:

• The essential characteristics of mediation, arbitration, and litigation as dispute resolution methods.
• The advantages and disadvantages of each method, including when each is most appropriate.
• The requirements of the Civil Procedure Rules (CPR) regarding consideration of Alternative Dispute Resolution (ADR).
• The potential costs consequences of unreasonably refusing to engage in ADR.
• Advising clients on the most suitable dispute resolution process for their needs.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Which dispute resolution method involves a neutral third party who facilitates negotiation but does not impose a binding decision?
2. Under the Civil Procedure Rules, what can happen if a party unreasonably refuses to consider mediation?
3. True or false? Arbitration always results in a binding decision that can be enforced like a court judgment.
4. Which of the following is generally the slowest and most expensive method of resolving a civil dispute: mediation, arbitration, or litigation?

Introduction

When a client faces a civil dispute, you must be able to explain the main options for resolving it. Litigation through the courts is not the only route. The Civil Procedure Rules (CPR) require parties to consider Alternative Dispute Resolution (ADR) before and during proceedings. Understanding the features, benefits, and drawbacks of mediation, arbitration, and litigation is essential for SQE1 and for advising clients effectively.

Key Term: Alternative Dispute Resolution (ADR)
Methods of resolving disputes outside the formal court process, including mediation and arbitration.

Key Term: Civil Procedure Rules (CPR)
The rules governing the conduct of civil litigation in England and Wales.

Mediation

Mediation is a voluntary, confidential process where a neutral mediator helps parties negotiate a settlement. The mediator does not decide the outcome but assists communication and helps identify solutions.

Key Term: Mediation
A process where a neutral third party helps disputing parties reach a negotiated agreement.

Key features:

• Voluntary—parties can withdraw at any time.
• Confidential—discussions cannot be referred to in court if mediation fails.
• Flexible—parties control the outcome and can agree creative solutions.
• Non-binding unless a settlement is reached and recorded in writing.

Advantages:

• Usually faster and less expensive than litigation.
• Preserves or improves relationships.
• Keeps disputes private.
• Parties retain control over the outcome.

Disadvantages:

• No guarantee of settlement.
• Mediator cannot impose a decision.
• Settlement agreements are contracts—enforcement requires a separate claim if breached.
• No obligation to disclose all relevant information.

Worked Example 1.1

A supplier and a retailer have a dispute over a late delivery. They wish to continue doing business together. What dispute resolution method is likely to be most suitable?

Answer: Mediation is likely to be most suitable, as it is confidential, preserves relationships, and allows the parties to reach a mutually acceptable solution.

Arbitration

Arbitration is a private process where parties agree to submit their dispute to one or more arbitrators for a binding decision (the award). It is more formal than mediation but less so than litigation.

Key Term: Arbitration
A process where a neutral arbitrator makes a binding decision on a dispute, usually in private.

Key features:

• Based on an agreement (often a contract clause).
• Arbitrator(s) are chosen for specialized knowledge or neutrality.
• Proceedings are confidential.
• The award is binding and enforceable in court.
• Limited grounds for appeal.

Advantages:

• Parties can choose an arbitrator with relevant experience.
• Confidentiality protects sensitive information.
• Awards are enforceable internationally (e.g., under the New York Convention).
• More flexible procedures than court.

Disadvantages:

• Can be expensive (arbitrator’s fees, venue costs).
• Limited powers to compel evidence or witnesses.
• Limited rights of appeal.
• Not always faster than litigation.

Key Term: Award
The binding decision made by an arbitrator in arbitration proceedings.

Litigation

Litigation is the formal process of resolving disputes through the courts, governed by the CPR. It is adversarial, public, and results in a binding judgment.

Key Term: Litigation
The process of resolving disputes through the courts, resulting in a binding judgment.

Key features:

• Strict procedural rules and timetables.
• Public hearings and judgments.
• Binding decisions enforceable by law.
• Full disclosure and evidence requirements.
• Right of appeal (with permission).

Advantages:

• Court can compel parties to participate and disclose evidence.
• Binding, enforceable judgment.
• Precedent can clarify the law.
• Suitable for urgent remedies (e.g., injunctions).

Disadvantages:

• Often slow and expensive.
• Public—can damage reputation or reveal confidential information.
• Adversarial—may destroy relationships.
• Limited remedies compared to negotiated settlements.

Exam Warning

The CPR require parties to consider ADR at all stages. Unreasonable refusal to engage in ADR (such as mediation) can result in costs penalties, even for the successful party.

Worked Example 1.2

A business owner wants to prevent a former employee from using confidential information and needs an urgent order to stop them. Which method is most appropriate?

Answer: Litigation is most appropriate, as only the court can grant an urgent injunction to prevent further misuse of confidential information.

Choosing the Right Method

The best method depends on the dispute and the client’s objectives. Consider:

• Is a binding decision required?
• Is confidentiality important?
• Is speed or cost a priority?
• Is the relationship worth preserving?
• Is specialist knowledge needed?
• Is international enforcement necessary?

Revision Tip

When advising clients, always check for any contractual dispute resolution clauses. These may require arbitration or mediation before litigation.

Summary

Key Point Checklist

This article has covered the following key knowledge points:

• The main dispute resolution options are mediation, arbitration, and litigation.
• Mediation is voluntary, confidential, and non-binding unless agreement is reached.
• Arbitration is private, binding, and based on party agreement.
• Litigation is formal, public, and governed by the CPR.
• The CPR require parties to consider ADR; unreasonable refusal can lead to costs sanctions.
• The choice of method depends on the dispute, client objectives, and any contractual clauses.

Key Terms and Concepts

• Alternative Dispute Resolution (ADR)
• Civil Procedure Rules (CPR)
• Mediation
• Arbitration
• Award
• Litigation