Do you still want to go down the route of litigation? The role of the lawyer is also to advise the client accurately on the effectiveness of litigation and whether an alternative dispute resolution is preferable to litigation to resolve the dispute.

Mediation and arbitration are alternatives to litigation and it is highly recommended to explore their effectiveness with the clients.

Mediation is “Without Prejudice” commercial negotiation to settle a dispute and is an unformal procedure between the parties to the dispute. “Without Prejudice” means that the content of the negotiation is not disclosable to the judge should the matter proceed to litigation at a later stage as the parties can walk away at any time. As opposed to Mediation, Arbitration is a private court hearing where the parties agree to be legally bound by the decision of an appointed arbitrator or a panel of three arbitrators.

If the parties decide that they want to go down the route of Mediation, a neutral third party who is an expert in their field is appointed to find an agreement between the parties. The mediator does not decide the dispute but they attempt to facilitate an agreement between the parties. In general, where litigation can be a lengthy and costly process, Mediation can be undertaken within days and thus save time and money to the parties. The parties take control and they decide whether they want the decision reached to be legally binding. Where litigation is generally public, Mediation offers high level of confidentiality to allow the parties to present their case openly to the mediator.

Another interesting aspect of mediation is the commercial aspect. In fact, Mediation increases the likelihood of preserving the commercial relationship between the parties if they are able to reach an agreement. Mediation encourages a settlement between the parties, however if an agreement is not found and the parties wish to proceed to litigation, it will add time and costs to the dispute. It is a risk that the parties may want or may not want to take, but the advantages of Mediation outweigh the disadvantages in terms of procedural rigidity (such as in litigation). If the mediation is successful, there is no winning or losing party, there is a settlement which can be convenient to both.

Another Alternative Dispute Resolution the parties should consider is Arbitration. An independent Arbitrator (or a panel of three Arbitrators) makes a final binding decision to settle a dispute between the parties. Again, this is an independent procedure which does not involve the traditional courts. Arbitrators are experts in their field and the process is faster as opposed to litigation. Where a judge in a traditional court room does not have the necessary knowledge to decide a dispute, an expert is generally chosen to compile a report to help the judge to make a decision, in Arbitration, the Arbitrator(s) has already the expertise to deliver a legally binding decision. Again, Arbitration is much faster than litigation and offers more flexibility to the parties. The Arbitrator makes a final Arbitration award which is nonpublic and enforceable in-country and easier to enforce in foreign jurisdictions. In the construction industry, the contract between a developer, contractor and subcontractor does contain a clause which stipulate the preferred way of dispute resolution and generally the parties chose arbitration to resolve any disputes that may arise. The advantage is that the Arbitrator is an expert in the field of construction and no third party is required. In a way, it cuts the costs and speed up the process. Not only it is convenient in time and costs, but the parties can also choose the location of the Arbitration proceedings and cannot deviate from the final Arbitration award which a legally binding decision.

Alternative Dispute Resolution is highly encouraged by the Courts in different jurisdictions and it is essential for a lawyer to advise the instructing client on the merits of the different paths available as alternatives to litigation.

For further information, please contact our specialised team.