Introduction to dispute resolution - Different options for d...

Learning Outcomes

This article outlines the core options and procedural framework for resolving civil disputes in the SQE1 context, including:

• The role of mediation, arbitration, and litigation as primary dispute resolution routes and how they interact with negotiation.
• The essential characteristics, strategic advantages, and key disadvantages of each method in terms of cost, speed, confidentiality, relationship impact, and enforceability.
• The Civil Procedure Rules requirements to consider and promote ADR at pre-action and post-issue stages, with reference to the overriding objective and case management powers.
• Factors to assess when advising clients on the most appropriate process, such as urgency, need for specialist decision-makers, existing dispute resolution clauses, and cross-border elements.
• Judicial tools used to encourage ADR, including stays of proceedings, directions to explore settlement, and use of the Small Claims Mediation Service.
• The potential costs and tactical consequences of unreasonably refusing, delaying, or ignoring ADR proposals, even where a party ultimately succeeds at trial.
• The procedural framework governing arbitral awards and court judgments, including routes to enforcement and available remedies.
• The limited grounds and mechanisms for challenging or appealing arbitral awards and court decisions, and how these affect finality and risk analysis.

SQE1 Syllabus

For SQE1, you are required to understand the main options for resolving civil disputes and the practical implications of each, with a focus on the following syllabus points:

• 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.
• The role of the overriding objective (CPR 1.1) and judicial case management in promoting settlement and ADR (CPR 1.4(2)(e)).
• Court powers to stay proceedings to enable ADR (CPR 26.4) and to give directions regarding ADR (PD 29).
• Use of the Small Claims Mediation Service (CPR 26.4A) and typical mediation procedures, including confidentiality and settlement recording.
• Arbitration basics under the Arbitration Act 1996, including enforcement of awards, and limited grounds for challenge.
• How pre-action protocols and the Practice Direction on Pre-Action Conduct require parties to exchange information and consider ADR before issuing proceedings, with potential sanctions for non-compliance.

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.

Before issuing a claim, the Practice Direction on Pre-Action Conduct and Protocols reminds parties that litigation should be the last resort and requires early information exchange and genuine consideration of ADR. The court’s overriding objective (CPR 1.1) is to deal with cases justly and at proportionate cost, and judicial case management (CPR 1.4) includes encouraging and enabling ADR where appropriate. Even after issue, courts can stay cases for ADR (CPR 26.4) and, on the fast and multi-tracks, give directions of their own initiative about ADR (PD 29). Parties are expected to cooperate and to be able to justify any refusal to engage with reasonable ADR proposals.

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.

Typical mediation involves short written position statements, a joint opening session (if suitable), and private meetings where the mediator “shuttles” between parties to explore risks, interests, and possible settlement terms. Discussions occur on a without prejudice basis, so positions and concessions cannot be used at trial if the mediation does not result in settlement. Mediation can be arranged pre-action or at any stage of a case. In county court small claims, the Small Claims Mediation Service (CPR 26.4A) provides a quick, telephone-based mediation if both parties consent.

If parties reach agreement, the terms are recorded in writing and signed—often as a settlement agreement or consent/Tomlin order. Doing so avoids disputes about what was agreed and supports enforcement. Because a mediated settlement is contractual, enforcement may require fresh proceedings if the agreement is breached, unless it is embodied in an order staying the claim on terms.

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.
• Can be organized quickly, including court-annexed small claims mediation, and revisited if circumstances change.

Advantages:

• Usually faster and less expensive than litigation.
• Preserves or improves relationships.
• Keeps disputes private.
• Parties retain control over the outcome.
• Can narrow issues and improve understanding even if no settlement is reached, paving the way for later negotiation.

Disadvantages:

• No guarantee of settlement.
• Mediator cannot impose a decision.
• Settlement agreements are contracts—enforcement requires a separate claim if breached, unless recorded in a consent/Tomlin order.
• No obligation to disclose all relevant information.
• May be ineffective if a party attends without genuine intent to engage.

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.

Under the Arbitration Act 1996, arbitration is built on party autonomy: the procedure is often tailored by agreement or institutional rules, and the parties select arbitrators (often for their technical knowledge). The tribunal will set directions, receive written evidence and submissions, and may hear witnesses, with confidentiality typically preserved. An award can be enforced as a judgment (e.g., under s.66 Arbitration Act 1996) and is recognized internationally in many jurisdictions under the New York Convention.

Courts have supportive powers (e.g., s.44 Arbitration Act) to make interim orders in aid of arbitration, such as preserving evidence or assets, but court intervention is limited. Challenges to awards are tightly constrained: a party may challenge jurisdiction (s.67), allege serious irregularity causing substantial injustice (s.68), or—if not excluded—seek permission to appeal on a point of law (s.69). Many commercial arbitration agreements exclude s.69 appeals to increase finality.

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 or challenge (jurisdiction, serious irregularity, or, where permitted, point of law).

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, with potential for expedited timetables.
• Finality—limited court interference and tightly constrained challenges.

Disadvantages:

• Can be expensive (arbitrator’s fees, venue costs).
• Tribunal’s coercive powers (e.g., for disclosure/witnesses) typically require court support.
• Limited rights of appeal.
• Not always faster than litigation, especially in complex multi-party cases.
• Joinder of third parties is difficult unless consent and agreement permit.

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

Worked Example 1.2

A supply contract contains an arbitration clause requiring disputes to be referred to arbitration seated in London. The buyer nevertheless issues court proceedings in the County Court. What is the appropriate procedural response for the seller?

Answer:
File an acknowledgment of service indicating intention to contest jurisdiction (CPR 11) and apply for a stay under s.9 Arbitration Act 1996, exhibiting the arbitration agreement. If granted, the court claim will be stayed and the dispute referred to arbitration per the clause.

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.

The litigation framework emphasizes proportionate, efficient resolution. The overriding objective (CPR 1.1) requires the court to manage cases actively: setting timetables, narrowing issues, and encouraging cooperation and settlement (CPR 1.4(2)(a), (e), (f)). Pre-action protocols require parties to exchange sufficient information to understand each other’s position and to consider ADR. Post-issue, courts can stay claims to enable ADR (CPR 26.4), and on the fast/multi-tracks can give directions promoting ADR (PD 29). In small claims, HMCTS may refer suitable cases to the Small Claims Mediation Service (CPR 26.4A).

Substantive and procedural tools include summary judgment (Part 24), interim remedies (Part 25) such as injunctions and interim payments, and Part 36 offers to settle, which carry significant costs consequences. At trial, evidence is presented through statements and, where appropriate, experts; judgments are enforceable using various methods (e.g., taking control of goods, third-party debt orders, charging orders, attachment of earnings).

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), limited to review and subject to specific routes.

Advantages:

• Court can compel parties to participate and disclose evidence.
• Binding, enforceable judgment with a wide range of remedies (including injunctions).
• Precedent can clarify the law.
• Suitable for urgent remedies (e.g., freezing orders or interim injunctions).

Disadvantages:

• Often slow and expensive.
• Public—can damage reputation or reveal confidential information.
• Adversarial—may destroy relationships.
• Binary outcomes and limited scope for creative solutions 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. Courts may also stay proceedings and direct parties to attempt ADR where proportionate and fair. Silence in the face of a reasonable ADR proposal is particularly risky, and parties should be prepared to justify any refusal.

Worked Example 1.3

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.

Worked Example 1.4

During fast-track proceedings, the defendant twice rejects a reasonable proposal to mediate and fails to respond to a later renewed invitation. The claimant ultimately loses at trial. What costs order might the court make regarding the defendant’s conduct?

Answer:
The court may penalize the defendant in costs despite overall success, for unreasonably refusing/silently ignoring ADR. This could include ordering the defendant to bear a proportion of their own costs or a percentage of the claimant’s costs from the date of the refusal, reflecting the duty to consider ADR.

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?
• Is there an existing dispute resolution clause (e.g., arbitration or mediation) in the contract, and must it be followed?
• Are urgent remedies (e.g., injunctions) required that only courts can grant?
• Are multiple parties or third-party issues involved that may not be easily accommodated in arbitration?
• What are the likely costs consequences if ADR is refused without good reason?

Negotiation should run in parallel with any chosen process. Part 36 offers and court-managed settlement initiatives often complement ADR and can significantly affect costs and interest.

Revision Tip

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

Summary

Mediation offers party control and confidentiality but no guarantee of outcome; arbitration provides binding, private resolution with limited challenge routes and international enforceability; litigation ensures formal, enforceable judgments with access to the full range of court remedies but often at higher cost and greater delay.

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; small claims may be referred to the HMCTS mediation service by consent.
• Arbitration is private, binding, and based on party agreement, with limited grounds for challenge under the Arbitration Act 1996.
• Litigation is formal, public, and governed by the CPR, with active case management to support proportionate resolution and ADR.
• The CPR require parties to consider ADR; unreasonable refusal or silence can lead to costs sanctions, even for a successful party.
• Courts can stay proceedings for ADR (CPR 26.4) and give directions about ADR (PD 29); ADR is also required to be considered in pre-action protocols.
• The choice of method depends on client objectives, urgency, confidentiality, enforceability, specialist knowledge, and any contractual ADR clauses.
• Settlement terms should be recorded in writing; in litigation, consent/Tomlin orders can secure enforcement without fresh proceedings.

Key Terms and Concepts

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