Implementing an Alternative Dispute Resolution Policy

Documents with title alternative dispute resolution ADR in an office.

Designing an Effective Dispute Management System

As businesses emerge from the COVID-19 crisis, they will start to analyse lessons learned and look at ways to improve their contractual relationships to avoid, in the future, the legal issues they currently face. An important element of this review will be ensuring that they have in place a robust dispute management system.

There are a number of basic elements that one should look at when building an effective dispute management system. These include the following:

Essential elements:

  • A forensic review of traditional conflict points both internal and external to the business;
  • Drafting of model dispute clauses to cover identified conflict risks, including those now arising out of COVID-19;
  • Ensuring that contracts have collaborative means of amending essential terms (schedule, pricing, payment) when unforeseen circumstances arise;
  • Adequate training and education of employees dealing with customers, contractors and suppliers to the business around effective communication and collaborative conflict management;
  • Consideration of appropriate Alternative Dispute Resolution (“ADR”) tools to address conflict risks to the business early on and where appropriate building them into the disputes clause:
    • Structured negotiations utilising a neutral
    • Project mediation to assist with early resolution of issues arising during delivery of a programme
    • Dispute Boards for infrastructure and long term projects
    • Expert determinations, where there is the need for an expert’s review
    • Mediation prior to the use of either arbitration or litigation.
  • A systematic review of actual conflicts facing the business through a formal conflict review procedure to assess the most appropriate means for early resolution utilising ADR tools.
  • Drafting an ADR Guide for the business to use in contract negotiations and programme management outlining ADR tools to use and when to deploy them.
  • Effective use of early conflict resolution mechanisms utilising neutrals, to manage conflict and obtain an early resolution of disputes.
  • Effective use of online platforms to permit early discussion of issues and structured negotiations with a neutral to take place.

The DARP’s guide to dispute avoidance, management and resolution – Volcano Insurance, offers a proactive insight into how leaders and managers can utilise a variety of tools to minimise the risks arising from commercial disputes, giving leaders the benefit of hindsight, beforehand.

Volcano Insurance book cover