ADR Disadvantages

a) There is no guaranteed resolution.

The alternative resolution process does not always lead to a resolution. This means that the parties could invest time and money in trying to resolve the dispute out of court and still end up having to proceed with litigation and trial before a judge and jury.

 b) Decisions are final.

With few exceptions such as fraud, the decision of a neutral arbitration cannot be appealed against. On the other hand, decisions of a court usually can be appealed on a variety of legal grounds.

 c) Limit on Awards.

There is no equivalent of s.66 of the Arbitration Act 1996 (which provides that an award made by the tribunal pursuant to an arbitration agreement may be enforced in the same manner as a judgment or order of the court to the same effect) enabling ADR awards to be enforced as if they were court judgment. However, the awards are not so easily enforceable. Arbitrations mostly resolve disputes that involve money. They cannot issue orders compelling one party to do something, or refrain from doing something hence, they cannot give injunctions.

 d) Facts may not be fully disclosed.

Because there is no equivalent of disclosure in arbitration as in litigation, there is a risk that the parties may resolve a dispute without knowing all the facts, which may lead to a wrong decision. For example most businessmen, however, believed that a quick decision is better than wasting time and money on a dispute in order to get a correct decision.

 e) ADR is not for all cases.

Alternative dispute resolution is not appropriate where a client needs an injunction, where there is no dispute to resolve and where the client needs a ruling on a point of law.

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