What is ADR?

‘ADR’ is the abbreviation of ‘Alternative Dispute Resolution

What is Alternative Dispute Resolution?

 ‘Alternative Dispute Resolution’ is a different way in which parties involved in a dispute can solve their problems and settle their arguments without having to attend court.

What ways are there? 

  1. Negotiation
  2. Mediation
  3. Round Table Meeting
  4. Conciliation
  5. Arbitration

What is Negotiation?

The negotiation process is an informal approach between the parties themselves or their lawyers. This is the quickest and cheapest way of solving issues. The people involved in the dispute enter into contact directly and privately to resolve their issues. There is not a third entity controlling the affected persons’ decision.

What is Mediation?

Mediation involves a third party who is independent to the dispute and therefore neutral. It appears to help the parties in reaching an agreement. The person is called a ‘mediator’ and they are not entitled to give their personal opinion about the dispute in question, but simply to facilitate between the parties. Their main duties are helping the parties to clarify their positions. A good mediator is a person who has been trained to give assistance to the parties in the way of researching good and satisfactory solutions. Mediators do not make judgments or decide the outcome of the dispute. They ask questions that help to uncover underlying problems, assist the parties to understand the issues and help them to clarify the options for resolving their difference or dispute.

What is a Round Table Meeting?

This is similar to mediation, however lawyers assist in narrowing the issues and aid the parties in reaching a resolution.

What is Conciliation?

A step further, is the conciliation process. It is managed by the conciliator, who has similar duties to the mediator, but with a very big difference, the conciliator is entitled to suggest solutions to the case. Conciliation focuses on what you and the other party want and tries to find a way of solving the problem. Both you and the other party can put your case but one of you may have to give way more, to find the best solution to the problem.

The principles of the conciliation process are:

Voluntariness: The parties have the right to withdraw from the conciliation process at any time.

Impartiality: The conciliator is not related with any of the parties. If this compromise is breached the parties can ask for changing the conciliator.

Confidentiality: The information given by the parties in the process is unequivocally confidential, it means that only the parties and the conciliator have access to it.

Good faith: The information given by the parties must be reliable. It is important to achieve a real solution to the case.

What is Arbitration? 

According to the Arbitration Act 1996, if the parties decide to initiate an arbitration process they will have to submit to an arbitrator usually from the Chartered Institute of Arbitrators (CIArb), to a panel of arbitrators or to an arbitral institution.

This is decided and appointed by the parties themselves or, if they do not achieve a settlement, the court can be asked to select one. This system is pretty similar to the formal procedure in a court with a judge. In fact, the decision taken by an arbitrator is called an ‘award’ and it binds the parties. If they do not obey this commitment the court can force them to do it. The arbitral award can only being taken to the court if it is questioned about serious irregularity in the proceedings or on a point of law.

Arbitration is an easier way of achieving an agreement because it offers: flexibility to choose the time, place and sort of procedure; speed, and cheaper costs.

The decision the arbitrator makes is legally binding. You will not be able to go to court later if you do not agree with the outcome. It is still usually cheaper than going to court.

IN A NUTSHELLnutshell1

NEGOTIATION Parties themselves
MEDIATION Parties with help of neutral third party.
CONCILIATION Parties with help of neutral third party who plays an active role in suggesting a solution
ARBITRATION Parties agree to let third party make a binding decision

If you require any further information about ADR, please contact our friendly team at Watson Legal either by calling 01279 466910 to book your free 30 minute consultation or email info@watson-legal.com.

Are you aware of the new Debt Pre-Action Protocol?

Legal Advice

The Pre-action Protocol for debt claims came into force on 1 October 2017 and will impact on a business if it has outstanding debts due from individuals and sole traders.

The Protocol does not apply to business-to-business debts unless the debtor is a sole trader. The Protocol does not apply if the matter is covered by another pre-action protocol such as construction and engineering or mortgage arrears.

The aims of the Protocol are to:

(a) encourage early engagement and communication between the parties;

(b) enable the parties to resolve the matter without the need to start court proceedings, including agreeing a reasonable repayment plan or considering using an Alternative Dispute Resolution Procedure (ADR);

(c) encourage the parties to act in a reasonable and proportionate manner in all dealings with one another;

(d) support the efficient management of proceedings that cannot be avoided.

First Stage

A creditor (the Claimant) will have to correspond with the debtor by way of a Letter of Claim. The Letter of Claim should contain the amount of the debt, whether interest or other charges are continuing, where the debt arises from and attach evidence

  • if regular instalments are currently being offered by or on behalf of the debtor, or are being paid, an explanation of why the offer is not acceptable and why a court claim is still being considered
  • details of how the debt can be paid (for example, the method of and address for payment) and details of how to proceed if the debtor wishes to discuss payment options and
  • the address to which the completed reply form should be sent.

With the Letter of Claim the following should be included:

  1. enclose an up-to-date statement of account for the debt, which should include details of any interest and administrative or other charges added or
  2. enclose the most recent statement of account for the debt and state in the letter of claim the amount of interest incurred and any administrative or other charges imposed since that statement of account was issued, sufficient to bring it up to date or
  3. where no statements have been provided for the debt, state in the letter of claim the amount of interest incurred and any administrative or other charges imposed since the debt was incurred
  4. enclose a copy of the information sheet and the reply form in the form annexed to the protocol and
  5. enclose a financial statement form as annexed to the protocol

If the debtor does not reply to the letter before claim within 30 days, the creditor may commence court proceedings.

The debtor should use the reply form for its response. The debtor should request copies of any documents it wishes to see and enclose copies of any documents it considers relevant, such as details of payments made but not taken into account in the creditor’s letter of claim.

If the debtor indicates that it is seeking debt advice, the creditor has to allow the debtor a reasonable period for the advice to be obtained and should not commence court proceedings less than 30 days from receipt of the completed reply form or 30 days from the creditor providing any documents requested by the debtor, whichever is the later.

The creditor should also allow reasonable extra time for the debtor to obtain that advice where it would be reasonable to do so in the circumstances.

If the debtor requires time to pay, the protocol requires the creditor and debtor to try and reach an agreement for the debt to be paid by instalments, based on the debtor’s income and expenditure. If the creditor does not agree to a proposal for repayment of the debt, it should say why in writing.

If the debtor fails to fully complete a reply form the onus is on the creditor to contact the debtor to discuss and obtain any further information needed to properly understand the debtor’s position.

If the debt is disputed the parties should exchange information and disclose documents sufficient to enable them to understand each other’s position and the creditor must provide any document or information requested or explain why the document or information is unavailable within 30 days of receipt of the request.

If settlement still cannot be reached the parties are obliged to take appropriate steps to resolve the dispute without commencing court proceedings and, in particular, should consider the use of alternative dispute resolution (ADR).

If an agreement still cannot be reached, the creditor should give the debtor a minimum of 14 days’ notice of its intention to commence court proceedings (unless, for example, the limitation period is about to expire).

What does all this mean for creditors?

Without doubt, the process of recovery of debts will be more cumbersome for creditors:

  1. Creditors are required to provide more documentation to debtors in specific formats
  2. There is increased scope for delaying collection by intransigent debtors who can delay payment by up to 90 days
  3. Creditors will need to be more pro-active when engaging with debtors to ensure information is properly exchanged and time periods met
  4. Additional costs and delays could be incurred particularly if ADR is triggered and
  5. A review of existing recovery processes and changes may be necessary

Failure to comply with the Pre-action Protocol

Failure to comply with the Protocol may result in:

  1. Further delay in collection of debts if any legal proceedings are stayed to remedy failures to comply with the Protocol
  2. Additional costs sanctions in terms of payment of the debtor’s legal costs or a failure to recover costs and
  3. Inability to recover interest from a debtor or recovery at a reduced rate.

None of these options are good news for creditors and Businesses are now faced with implementing the Protocol and for many they will need to reconsider their process in relation to Debt Recovery.


For businesses dealing predominantly with consumers or sole traders, the new Protocol requires a considerable degree of greater patience when collecting outstanding debts. The new Protocol prevents Creditors applying pressure on a debtor by the prospect of imminent court proceedings.

If you require any further information about reviewing your credit control processes in the light of the recent changes or require any assistance with debt recovery, please contact the team at Watson Legal either by calling 01279 466910 to book your free 30 minute consultation or email info@watson-legal.com