What is dispute resolution?

Dispute resolution is the process of resolving disagreements or conflicts between different parties.

There are a number of scenarios where dispute resolution is required. For example, a consumer may have a dispute with a company they’ve purchased faulty goods from. Other conflicts can arise between:

• Neighbours
• Friends
• Family members 
• Ex-partners
• Employers and staff
• Businesses and suppliers or customers
• Tradespeople and clients

Typically, dispute resolution is sought with the aim of being awarded financial compensation for damages, or receiving goods or services as initially purchased or agreed. The resolution could also determine next steps for the relevant parties, or prevent future actions from happening.

Dispute resolution methods range from the very formal – civil litigation – to more informal, alternative dispute resolution (ADR) methods, which are used by parties that want to resolve a dispute without legal proceedings or the need to go to court. ADR methods are confidential, and typically cheaper as well as more flexible, with a wider range of potential outcomes – and a better chance of salvaging the relationship between the involved parties. They are also preferred by the UK government, particularly for consumer disputes.

Traditional dispute resolution

Civil litigation

Civil litigation is the most traditional form of dispute resolution. It involves going to court to settle disputes or legal issues. In the United Kingdom, this usually happens in the jurisdictions of a county court or the high court, depending on the monetary value of the dispute. 

The civil litigation process typically involves hiring a civil litigation solicitor who provides legal advice and legal advocacy, files a civil claim, and works with the other party’s solicitor to reach a resolution.

Proceedings are laid out in the Civil Procedure Rules, which help ensure that cases are dealt with justly within the courts and legal system. Law firms, solicitors, barristers, and so on, must all follow these rules.

At any time prior to a trial, the parties can reach a settlement out of court. If not, the standard process includes three stages:

1. Pre-litigation, which happens before court proceedings are issued.
2. Litigation, which is the stage where the court is involved. A trial is the final stage of this stage.
3. Post-litigation, which occurs only if one of the involved parties has an issue with the outcome of the case, and wants to appeal the court’s decision.

Court-based litigation is typically most appropriate for disputes where:

• The issue is time-sensitive, requiring urgent court action.
• The outcome needs to be legally binding.
• One of the parties is unwilling to participate in an alternative form of dispute resolution.

Alternative forms of dispute resolution

Negotiation

Negotiation is typically the first step towards dispute resolution outside of court. Both parties work together and attempt to find common ground, see the dispute from one another’s perspectives, and reach a compromise.

What is the process of negotiation?

Negotiation is an informal, flexible dispute resolution process that can be tailored to suit the individuals and dispute in question. 

The relevant parties meet together, agree on the specifics of the dispute or conflict, and then work towards a solution that everyone is satisfied with.

Mediation

Mediation brings together both parties within a dispute. Together, they work with an independent, impartial third party – a mediator – who helps guide everyone toward a mutually agreeable resolution. 

A mediator won’t make a decision themselves, but rather will help both sides of a dispute (or all sides, if there are more than two) come to a resolution that everyone is comfortable with. This resolution is then drafted into what’s called a settlement agreement.

What are the advantages and disadvantages of mediation?

As with any method of dispute resolution, there are advantages and disadvantages. Mediation is typically cheaper than other forms of dispute resolution, such as arbitration or litigation, and one of the most informal and flexible methods. Proceedings can also move quickly, particularly using remote technology made increasingly popular during the coronavirus pandemic.

However, its settlement agreements are not legally binding unless a signed mediated agreement is made.

Arbitration

Arbitration is essentially the middle ground between litigation and mediation. It’s cheaper and more flexible than litigation, with no court-imposed deadlines, but more formal than mediation, with decisions that are usually legally binding and can be enforced much like court judgments. They also can’t be appealed in cases where a party is unhappy with the outcome.

During an arbitration process, all parties within a dispute will provide personal data, papers, and evidence about the issue to an independent arbitrator who is tasked with making a decision about the dispute, much like a judge would. This arbitrator will usually be from the Chartered Institute of Arbitrators (CIArb). The process may include in-person meetings with the arbitrator, but not always.

What is the difference between a binding and non-binding arbitration?

Most resolutions through arbitration in the UK are legally binding. Non-binding arbitration, where an arbitrator recommends a resolution that is not legally binding or enforceable, is more common in North America. 

Conciliation

Conciliation blends the mediation and arbitration methods to offer people a confidential, flexible dispute resolution option. Facilitated by a neutral third party – a conciliator – this method is commonly used during employment disputes, or conflicts between consumers and traders.

The conciliator will work to understand all sides of a dispute, assess the situation and the different points of view, and then offer an opinion or proposal to help guide the parties towards an agreement. While the conciliator’s proposal is non-binding, it can be made so through a formal written agreement after conciliation. 

Adjudication

Similar to arbitration, adjudication requires a third party to review all sides of a conflict and then make an enforceable decision. This third party is typically someone who has working knowledge on the topic of the dispute or can be considered a subject-matter expert in the related field. For example, if the dispute occurs within a particular area, such as environmental, social, and corporate governance (ESG), then the adjudicator will have experience with that area.

Ombudsmen and other regulatory bodies

Disputes with services and traders can sometimes be referred to a relevant ombudsman. They cover sectors including:

• Estate agents
• Retail services
• Banks, building societies, insurance companies, and pension providers
• Energy, phone, and internet providers

If an appropriate dispute is referred to an ombudsman, it can be investigated. The ombudsman will look at all of the available evidence before making a recommendation or ruling – and this may or may not be legally binding. 

Ombudsmen are often brought in when a trader’s in-house dispute resolution services, or dispute resolution team, has been unsuccessful in resolving an issue. It might also be asked to intervene during insolvency disputes.