For many law students, the majority of the modules taught as part of their course would tend to be about substantive legal topics, such as contract law or criminal law. However, if you are looking to practice law, it is important to develop an understanding of procedural legal issues too. An example of such a procedural issue is understanding the various Dispute Resolution mechanisms available to clients.

Where there is a disagreement in a commercial context e.g. a contract for the sale and purchase of commodities, the parties will normally try to resolve their differences through informal negotiations in the first instance. If they are not able to do so, then they may need to move towards a formal Dispute resolution mechanism. The main formal dispute resolution mechanisms are litigation, arbitration and mediation. Other mechanisms do exist too, such as expert determination. 

Most members of the public would have some awareness of litigation. After all, many Court cases are reported in the media, such as in the case of the Johnny Depp v Amber Herd defamation proceedings in 2022. However, there are specific rules and stages of litigation which may not be readily apparent. In England, the principal set of guidance on the rules for civil litigation can be found in the Civil Procedure Rules (CPR). The CPR provisions need to be applied alongside the various topic-specific Practice Directions (PDs), which supplement / expand upon the CPR. Additionally, there is a commentary on the CPR, updated annually, which is called the "White Book". Of the formal dispute resolution mechanisms available, litigation is the most structured. Procedural and substantive legal issues will be determined by a judge, following submissions from the lawyers representing the relevant parties. As mentioned, Court hearings also tend to be open to the public. So, while a formal judgment may serve to resolve a dispute definitively, the parties will have relatively little control over the process and their dispute likely no longer will be confidential. However, uniquely, litigation can be commenced without the consent of the other parties involved. This is not the case with mediation or arbitration (discussed below).

In many ways, arbitration is not so different from litigation. It can be said to be a form of confidential litigation, with an arbitrator performing a similar role to a judge. In other words, it is a form of binding dispute resolution. In England, the main legislation governing arbitration is the Arbitration Act 1996 (AA 1996). Subject to certain conditions, the AA 1996 provides that, where there is a valid arbitration agreement between the relevant parties, any dispute within the scope of that agreement should be resolved through arbitration rather than litigation.  Further, where certain conditions are satisfied, the AA 1996 stipulates that any arbitral award which has been handed down may be enforced as if it were a Court judgment. In terms of procedure, the starting point is that the panel of arbitrators is entitled to determine their own process, although it common for arbitration agreements to specify that institutional rules should be applied, such as the International Chamber of Commerce arbitration rules. Sometimes, arbitration may be quicker and cheaper than litigation. However, equally, arbitration may be as lengthy as and perhaps even more expensive than litigation. For parties to a dispute, the main advantage to arbitration is confidentiality. Arbitral awards generally are not published and the media / members of the public may not attend arbitral proceedings. Additionally, arbitration does give parties relatively more control over the proceedings compared to litigation. For example, many arbitration agreements specify that the plaintiff/ claimant and defendant may each nominate one arbitrator. Their two chosen arbitrators then jointly pick a third arbitrator. The three arbitrators then constitute a three-arbitrator panel entrusted to resolve the dispute (whether unanimously or by majority vote).

Finally, another key structured dispute resolution process is mediation. Notably, mediation is not binding. Therefore, the mediator cannot force the parties to resolve their differences (and the parties may walk away at any time). Rather, mediation is a form of structured negotiation and the role of the mediator is to encourage the parties to focus on their common interests and to realistically consider on what areas they can afford to compromise. After all, even where parties are confident of the merits of their case, there are always certain risks and costs associated with going to trial. Even if the parties cannot resolve all their differences through mediation, mediation can help narrow the issues to be resolved at trial. Alternatively, even if mediation does not immediately result in a settlement agreement being signed, it may pave the way for a future resolution of the conflict. For example, at mediation, the defendant may offer to pay the plaintiff / claimant £1 million where the stated claim value is £2 million. Even if the plaintiff / claimant rejects this offer at the mediation, perhaps the parties will then engage in further informal discussions and then, ultimately, agree to a settlement sum of, say, £1.2 million. Do note that mediation is done “without prejudice” i.e. anything said by a party in mediation cannot be used against them in Court / in a way which would affect their substantive legal rights. For parties to a dispute, mediation is relatively low cost, confidential and gives them the ability to retain greater control over the overall process. Often, parties may therefore attempt mediation either prior to or in parallel with litigation or arbitration.

For lawyers advising parties to a dispute, it is important to be aware with all the main forms of dispute resolution. Ultimately, the role of a good lawyer is risk management. A large aspect of risk management is problem solving. The goal of clients is to resolve their disputes promptly and at a reasonable cost, and they should be given the chance to consider whether litigation, arbitration, mediation or some other form of dispute resolution is best for them.

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