Ever heard of Alternative Dispute Resolution (ADR)? The chances are that you have, as it’s getting increasingly popular across the UK as a quick, cost-effective alternative to court!
But one question often comes up: is ADR legally binding?
Here’s the short answer: Yes, sometimes.
Whether an ADR outcome is legally binding depends on the type of ADR used, the rules of the relevant ADR scheme, and whether the parties have agreed to be bound by the outcome.
Don’t worry, all will be explained in this article!
If you’re curious about the ADR schemes we operate, check them out below!
> CommsADR
What is Alternative Dispute Resolution?
Alternative Dispute Resolution (ADR) is a catchall term that refers to processes that allow disputes to be resolved between parties without needing to go to court.
There are many different types of ADR, and it can take many different forms – covering all kinds of sectors, from air-travel to utility bills!
Below are some common examples of types of ADR:
- Adjudication
- Arbitration
- Mediation
Whether or not the outcome of an ADR process is legally binding will depend on the specific type of ADR being used, as well as the specific ADR scheme’s own Scheme Rules.
At CDRL, all 5 of our ADR schemes can result in legally binding resolutions!
For more information on what ADR is, please see our dedicated article on the topic:
> What is Alternative Dispute Resolution (ADR)?
Is ADR legally binding?
There is no single answer here, because ADR comes in many different forms, under many different schemes – each with different processes, and outcomes. Some will be legally binding, others not necessarily.
So let’s go over those most common types of ADR we mentioned before, and give you a general overview!
REMEMBER:
- At CDRL, we currently only operate Adjudication and Arbitration ADR schemes
- Many more types of ADR exist – you should make sure to check the specific rules of the scheme you’re using for a definitive answer on whether it’s legally binding or not!
Is Adjudication legally binding?
During Adjudication, an impartial third-party (the ‘Adjudicator’) listens to both sides and makes a decision based on all the facts and evidence.
The outcome of Adjudication is usually only legally binding if the consumer chooses to accept it.
For example, at CDRL, we give consumers a 14-day window to either accept or reject the outcomes of our 4 free Adjudication ADR schemes.
This gives consumers the freedom to pursue their complaint elsewhere (such as in court) if they disagree with our decision.
Is Arbitration legally binding?
Arbitration is generally one of the most formal types of ADR.
During Arbitration, an impartial third-party (the Arbitrator) listens to both sides and makes a decision based on all the facts and evidence before issuing an Arbitral Award.
Arbitration is almost always legally binding on both parties under the Arbitration Act 1996, and you cannot normally challenge the outcome unless there are exceptional circumstances.
This is exactly how our own Consumer Arbitration scheme works!
Is Mediation legally binding?
Mediation itself does not impose a decision on the parties.
During Mediation, the role of a Mediator is primarily to act as a Facilitator, and help the parties negotiate and reach an agreement between themselves.
If the parties do reach a settlement, the terms can then be recorded in a Written Settlement Agreement. The legal effect depends on what the parties agree and how that agreement is formalised.
Unlike Adjudication or Arbitration, simply partaking in Mediation does not automatically create a legally binding outcome.
What happens if someone does not follow a binding ADR decision?
If an ADR outcome is legally binding, both parties are expected to comply with it.
The consequences of failing to comply will depend on:
- The type of ADR
- The relevant scheme’s rules
- The legal status of the decision
This is one reason it’s important to establish whether an ADR decision is binding before entering the process and to understand what happens if either party does not comply!
At CDRL, we ask consumers to reach out to us if a Participating Member trader has not fulfilled the terms of our Determination, as persistent non-compliance may lead to their termination or suspension from our schemes.
Does ADR prevent you from going to court?
Not necessarily – this depends on the type of ADR and scheme in question!
As aforementioned, many types of ADR allow you to decide whether or not you want the outcome to become legally binding – such as Adjudication, where the Determination is usually only legally binding if you, as the consumer, choose to accept it.
If your ADR outcome is not legally binding, then you’re free to pursue your complaint in court if you wish to.
Furthermore, in some cases, proving you’ve used ADR can actually help strengthen your court case!
For most consumer disputes, the courts generally like to see evidence that both sides previously tried to amicably resolve the matter via Alternative Dispute Resolution before resorting to court action.
So… especially for Adjudication ADR schemes like those we run at CDRL, it’s a win-win situation for consumers;
- They’re FREE to use!
- Whether or not the outcome is legally binding is up to you
For more information on the ADR schemes we run, please see our dedicated webpage:
> Who are you complaining about?
How do I get started with ADR at CDRL?
If your complaint is within the aviation, retail, non-regulated utility or communications sectors, you can start the process with us today via any of our relevant schemes below:
> CommsADR
Make sure to read through our sites carefully to understand the process, the requirements, and next steps. You’ll be an expert on ADR in no time!
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