A settlement where the parties consent freely is much better than a settlement enforced by a third party such as a judge, hearing officer, arbitrator or expert. A conflict settled by consensus is typically achieved quicker and hence cheaper than one concluded by litigation or arbitration. Since there is no winner or loser a contractual partnership is easier for the parties to recover.
With only a few exceptions, the parties to a dispute are obliged to:
- Exchange enough information on the matter to allow them to understand each other's position and to take informed settlement decisions and how to proceed;
- Make reasonable attempts to settle the matter without commencing proceedings and consider using a suitable form of ADR to do so.
When a party refuses to perform that obligation, the courts may punish non-compliance by halting the proceedings, depriving the party of any or all of the costs or interest to which it would otherwise be entitled if that party succeeds or requiring it to pay more costs or interest than it would otherwise have if it failed.
The obligation to share information requires the plaintiff ("the plaintiff") to provide specifics of the matter in writing by sending a letter prior to the claim and the person to whom that letter is addressed ("the defendant") to provide a complete written reply within a reasonable time, followed, if possible, by a written acknowledgement of the letter prior to the claim.
Practice Guideline provides clear instructions for what will be in the letter prior to argument. This is accompanied by an Intellectual Property Dispute Code of Practice for Pre-Action Actions. Starting proceedings should usually be a last resort phase and proceedings should not usually begin while a settlement is still being actively discussed.
Given the fact that ADR is not compulsory, the parties should consider whether some sort of ADR procedure could enable them to settle the matter without initiating proceedings. The court would need proof that the parties were considering some sort of ADR. Neither the Practice Direction nor the Code deals in depth with how the parties can agree to resolve a conflict, but both recommend negotiation, mediation and professional assessment and commitment. The arbitration arrangement most often involves mediation, or some other type of dispute resolution. It is, for example, a clause which is sometimes asked for:
Meticulous Scope of Consensual Dispute Resolution
Although maintaining business opportunities is an objective that parties can accomplish either consensually or by involving certain impartial third parties, saving transaction costs and reducing uncertainty depend largely on the establishment of cooperation between the parties. Consequently, consensus-oriented negotiation structures should usually produce better outcomes. Contemporary consensual conflict settlement involves several different approaches that are used differently in various areas of the law.
- Bilateral trade negotiations: The easiest method of negotiated dispute settlement is straightforward bilateral discussions between the parties, and their lawyers. One is tempted to think that bilateral negotiations are not an acceptable model to consider. In fact, though, as far as lawyers are concerned, these agreements require comprehensive behavioral opportunities that would be best considered by a regulator curious about acceptable rules of legal ethics. So long as that is not the case, there is also hardly any possibility of accepting current vulnerabilities arbitrarily, as it is only by challenging one's own legal opinion that a lawyer on the other hand has the civil protection.
- Collaborative law: The field of alternative conflict resolution has recently developed a model of negotiation that uses a self-paternalistic process to facilitate cooperative cooperation in the context of successful settlement. Collaborative law is a formal contact process between the sides and their lawyers (4-way mediation meetings). All sides abide by an agreed agreement to report related concerns and abstain from the threat of legal action. The basic essence of collaborative law is its decision to disqualify: The parties restrict the briefs of their lawyers to out-of-court negotiations: if either party takes legal action, all lawyers will be barred from further representing their clients so that the parties will have to look out for new lawyers. This contributes to what is known as the container effect:
Being mindful that the court choice has become unattractive because of the unnecessarily high costs associated with it parties, the conventional talks have shown a considerably higher commitment to the cooperative process.
- Mediation: A neutral third party, a mediator, is involved in the third type of consensus driven negotiation. Mediation is characterized as Neutral-backed negotiation. The mediator himself, however, does not discuss or determine the substance of the settlement, rather he just encourages contact between the two sides and supports when an impasse occurs. Mediation also does not automatically mean a definitive resolution – including arbitration or conciliation – but allows the parties to manage the outcome, including the risk of a negotiation breakdown without any consequence.