Alternative dispute resolution (ADR) offers other way to deal with a dispute than the Courts.

Alternative dispute resolution is an umbrella term which covers many different ways to solve a dispute. Some examples include mediation or adjudication. The goal of each is to resolve a case before trial.

Adjudication involves taking your dispute to a specialist senior barrister to assess the merits and pitfalls of your claim. The barrister will be appointed from a panel. You do not have to attend court, and this process has been used for construction cases for some years. In cases of professional negligence, it has recently become more prominent because the courts have, since summer 2018, actively encouraged the use of adjudication in professional negligence claims. Following a pilot scheme the amendment to the court rules has now been permanently adopted.

This amendment requires that before you formally issue proceedings, your pre-action Letter of Claim needs to state whether you would like to refer the dispute to adjudication. If you do not, you will need to give reasons for your decision. If you do want to refer it for adjudication, then you will nominate three potential adjudicators in your letter. The need to state reasons is the significant part: if you do not consider adjudication then go on to litigate, a court may well not look on this favourably.

If you do proceed to adjudication, the decision that you receive back will be in writing and will provide reasons. It will set out why each party has lost or won and explain any compensatory sum payable (if appropriate). Despite the legislative changes, adjudication has been under-subscribed to date. However, for an appropriate case it may well be a more cost-effective way forward than litigating in court.

9 facts about adjudication

  1. It is a voluntary scheme. All parties have to agree with each other to take part.
  2. An adjudicator must be independent.
  3. The process of adjudication is private, but the decision is public unless the parties agree for it to be private as well.
  4. Both parties can agree whether the adjudicator’s decision will be open to an appeal, or whether it will be final.
  5. Both parties can agree whether the adjudicator can ask the losing party to pay the legal and adjudication costs incurred by the winning party. Alternatively, the adjudicator can split the cost in a proportion that he sees fit.
  6. The aim of adjudication is to be faster and cheaper than litigation.
  7. The adjudicator will ask both parties for evidence and written arguments.
  8. An adjudicator will provide an opinion no later than 56 days after being appointed.
  9. The adjudicator’s rules may be adapted in writing (with the agreement of both parties). Ideally, this should be done before the adjudicator is appointed.

Alternative dispute resolution in general can offers more flexible settlement options than court. A court can only order certain types of redress and, typically for professional negligence claims, this amounts to financial compensation.  The adjudication route would limit you to that remedy so be aware that other forms of alternative dispute resolution, such as mediation, allow more flexibility.  An opponent might agree to put the problem right by doing certain things within a set period rather than paying cash to compensate. In a contract dispute you might be able to agree a half price supply contract to spread the cost over a period of time and maintain a working relationship between the parties moving forward. Depending on the circumstances, alternative dispute resolution might better take into account your commercial needs, but adjudication is still a route very much worth considering.

About the author

Susan Hopcraft Partner

Susan advises on all aspects dispute resolution particularly in the financial services sector. She has extensive insurance, professional negligence and restrictive covenants experience. She deals with claims against solicitors, valuers, surveyors, brokers and accountants, fraud issues, recoveries for lenders and bank mis-selling.