Charity Disputes – The Alternative Dispute Resolution Options Available

Kevin Modiri
Collaborative Law Mediation

Alternative Dispute Resolution (ADR) comes in many different forms and accordingly, the purpose of this blog is to discuss what ADR options are available to charities involved in a dispute and the pros and cons of each.

All ADR has the advantage that it is confidential and cannot be used for a collateral purpose, such as going to the press, a factor which is obviously at the forefront of charitable trustees’ considerations.

The various ADR options available to resolve disputes involving charities

Negotiation in correspondence

The most commonly used form of ADR is negotiations between the parties in correspondence. Essentially this involves the exchange of offers of settlement in writing between the parties.

From past experience, this tends to only be an effective means of resolving the dispute if:

  • The offer made is extremely reasonable;
  • The other side are aware of some flaw in their case that you are unaware of; and/or
  • There is some other underlying reason, such as the other side being afraid of giving evidence at trial.

It tends to be quite a time consuming means of resolving a dispute as it involves the exchange of sequential offers, which as they are made in correspondence often tend to be several weeks apart, even in cases where the parties are motivated to settle. As a result, this means that resolution can generally result in significant legal fees being run up whilst the parties comply with a Court timetable as they edge towards settlement.

Without prejudice meeting

This is a far more effective way of resolving disputes that negotiation in correspondence. It involves a meeting of the parties, with or without their lawyers, to discuss whether a resolution can be reached on all or part of a dispute. It can be very useful in ironing out any misconceptions parties have about the other party’s case.

The main negatives in respect of without prejudice meetings revolve around the fact that there is direct contact in person between the claimant side and the defendant side. This is obviously not suitable where there is a particularly nervous opponent/client or where emotions are running high between the parties. An example of where such emotions may run extremely high is in respect of a dispute involving a deceased’s relative’s estate.

Mediation

Where a without prejudice meeting is not suitable for the reasons set out above, an alternative that neutralises the issues of high running emotions is mediation. Mediation is very similar to a without prejudice meeting but with one key difference – the parties are in their own separate rooms and an independent mediator ferries between the rooms with a view to edging each side closer to a settlement.

The primary disadvantage of this form of ADR over a without prejudice meeting is that the parties have to fund the cost of the mediator.

This form of ADR is, however, my personal favourite and I can report that every case that I have been instructed on that I have mediated has either settled at mediation or shortly thereafter.

Arbitration

Whilst technically this is a form of ADR as it does not involve a Court, the process is very similar to the Court process and does result in a binding decision.

The primary advantage of this over Court proceedings is that the proceedings and the award remain confidential between the parties. This could be a valuable tool for preservation of a charity’s reputation but it does have its downsides. The negatives of this form of ADR are set out below:

  1. In Court proceedings, you only have to pay set Court fees. The cost of the arbitrator is funded by the parties on an hourly rate basis. This makes it dramatically more expensive than Court proceedings.
  2. Sometimes an arbitrator gets appointed due to having relevant expertise in a specific field. If the case however ventures into another area that the arbitrator is unfamiliar with, the decisions given can be unpredictable or wrong in law.
  3. Arbitration requires both parties to agree to the use of arbitration, either at the time or in a previously executed document, such as an arbitration clause in a historic document.

For the above reasons, arbitrations should really be avoided in most disputes but if there is an arbitration clause in a contract, it may be unavoidable.

Expert determination

This procedure is where the parties appoint an expert to make a determination in a dispute in place of the Courts. This also allows the parties to maintain confidentiality.

This process is, however, only likely to be useful in straightforward disputes or to resolve a single issue in a claim, as otherwise it is likely that oral evidence will be need to be tried in front of the expert, which again has the same downside in respect of cost as the arbitration.

The primary advantage of this form of ADR however is that the expert is likely to have very specialist knowledge about the matters in dispute and accordingly may be more likely to reach a decision based on all of the relevant knowledge in a specific field as opposed to a Judge who is likely to decide based on reading brief reports from experts instructed in the case.

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Kevin Modiri is a Partner in our expert Dispute Resolution team, specialising in charity law, civil disputes, insolvency, inheritance disputes, data breach claims and defamation claims.

If you have any questions concerning the subjects discussed in this article, please do not hesitate to contact Kevin or another member of the team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online enquiry form.

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