Is Alternative Dispute Resolution (ADR) legally binding and what are the advantages/disadvantages?

Alternative Dispute Resolution (ADR) covers a range of methods which are used to resolve family conflict and provide an alternative to going to court. Here we discuss whether an agreement reached via the ADR process is legally binding, and its advantages and disadvantages.

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What are the advantages of ADR?

• It is generally faster than going through a court case, particularly since the system is facing huge backlogs arising from the Pandemic.
• Less formal setting
• The parties can choose their arbitrator
• The parties’ relationship can be preserved and remain amicable in a non-confrontational environment
• It tends to be a more cost effective option and much less formal
• Arguably, ADR offers more flexibility and control as the parties involved steer the process, negotiations, and outcome.

What are the disadvantages of ADR?

As discussed above, ADR can offer many benefits. It is less expensive and faster than going to court; it encourages cooperation between the parties, and compromise. But ADR is not for everyone and there are disadvantages. Below, we take a look at some of the more common issues:

• If the case is handled without the involvement of the court, the matter will not be brought before a judge until the consent order is ready to be presented. The judge may, upon looking at the consent order, decide that it is unfair to one party, or does not adequately provide for them. There are many reasons a judge could reject a consent order, and although it is not particularly prevalent, it is not unknown either.
• In mediated cases, the parties meet with the mediator without their legal representatives present. This enables them to steer the parties towards a settlement independently, even if the respective solicitors do not believe it is in their clients’ best interests.
• Parties cannot be compelled to provide outstanding financial disclosure
• There is a risk of not reaching a settlement, and therefore a waste of time and money spent on meetings. This may be especially galling if there is a recommendation for the court to step in and resolve the issues.
• The mediator does not provide legal advice and its success is largely governed by cooperation and compromise, which may be hard to come by when the relationship has recently broken down.
• Because the mediator is an outside participant, they do not have the wider knowledge of the case and its history.
• Some find the informality of the process detrimental in the sense that one party may exert undue influence or pressure on the other regarding personal matters, which can end in an inequitable settlement.

Is ADR legally binding?

Agreements reached via mediation are not legally binding and usually set out the terms in a ‘memorandum of understanding’. A family solicitor then uses it to prepare an agreed consent order, which is sent to the court with form D81 called Statement of Information for a Consent Order for approval. In collaborative law, a consent order is also submitted to court. In both instances, attendance is not usually required.

In arbitration, the arbitrator, who sits as a judge, conducts a private hearing. They review all financial documents and evidence and listen to submissions made by, or on behalf of, each party. They may also hear evidence from the parties. Decisions of arbitrators are legally binding if the parties have signed an arbitration agreement in accordance with the Arbitration Act 1996.

Attending court to resolve family disputes can be a lengthy and costly process, especially considering the backlog potentially delaying cases for up to two years. Therefore, ADR is becoming more popular for couples getting divorced.