2026
DISPUTE RESOLUTION
SQE 1 Assessment specification: Different options for dispute resolution
Characteristics of arbitration, mediation and litigation which make them an appropriate
mechanism to resolve a dispute:
Litigation should always be last resort. Sanctions can be imposed by courts for parties who refuse to
consider ADR (collective term for settling disputes outside litigation/court process).
If clients are willing to engage with ADR – should be used unless it is obvs inappropriate i.e. an
injunction is required or opposition is unlikely to co-operate in the process or opposition cannot be
trusted to comply with the award.
- No point in proceeding with ADR if it will inevitably fail.
- But parties should be made aware of the penalties that may be imposed for failure – unless
the stance is justified.
- Failure to respond to proposal to attempt settlement by ADR will have impact on order of
costs (Civil Procedures Rules 1998).
- Burden is on the other party to show that refusal to engage in ADR is unreasonable.
- During court proceedings, parties usually complete a directions questionnaire, solicitors are
required to explain to client the need to try to settle, options available, and possibility of
cost sanctions if they refuse to attempt to settle.
Clients should always consider ADR and engage in the process unless there are convincing reasons,
even then, need to prepared to justify this decision before a judge if necessary.
Alternative DR options:
- Negotiation
- Mediation
- Arbitration
Negotiation – can be either formal or in correspondence happens throughout the litigation
process. Key element for settling claims.
Mediation – resolve disputes with assistance of an independent third party (essential feature, clients
will be more open in their discussion and less likely to be aggressive, prospects of reaching
settlement is higher) who will help parties reach a conclusion but will not impose a solution. Should
have the appropriate industry and commercial knowledge but will be trained to act as a neutral.
- Voluntary and confidential.
- Mediation usually proposed by letter to the opponent.
- Mediator will be sent written statements from both parties and
will then discuss the case on a ‘without prejudice’ basis.
- Advantages: cost and speed; flexibility; privacy; preserving a
business relationship; commercial reality; and ability to withdraw
- Disadvantages: limited disclosure; privacy; ability to withdraw;
enforcement is not automatic.
- Enforcement = decision/agreement reached will not automatically
be binding as it cannot be enforced like a court judgement.
However, if (i) parties agree to terms suggested (ii) have entered
1
, 2026
into a contract, can be sued for breach. Or Parties can enter into a
Consent Order or a Tomlin order.
Court will not be made aware of mediation meeting until after the judge has dealt with issues of
liability and awarded damages.
- Parties can withdraw at any time.
- If parties don’t like the solution – don’t have to accept.
Arbitration – parallel dispute resolution. Substitute for litigation and once parties have agreed to be
subject to it – cannot take advantage of the normal court process.
- May rise in 2 ways:
1. Parties contractually bound to arbitration i.e. business contracts may contain a clause.
Common in industries such as shipping and construction
2. Parties may agree to arbitration – may choose their own arbitrator with the relevant
expertise.
- Arbitration is governed by the Arbitration Act 1996 but only
applies if the agreement to arbitrate is in writing.
- Process is less formal than a court procedure. Once a decision has
been reached by the 3rd party, this will be binding on both parties
to the dispute. Parties can enter into a Consent Order or a Tomlin
order.
- Advantages: likely to be quicker than going to court and may be
cheaper; procedure is less formal; decision made by an impartial,
expert 3rd party; takes place in private thus retaining
confidentiality; solutions that are reached are reached more
practical than those which a court would order; decision is binding
on parties (most important distinction compared to mediation)
with limited rights to appeal.
- Disadvantages: dispute may not receive depth of investigation it
would receive in the courts; remedies such as injunction are not
available; sometimes may be expensive if arbitration expert or
panel will be need to be paid and parties will also want to be
represented.
- Enforcement = winning party to arbitration can apply to High
Court under s 66 of Arbitration Act 1996 for permission to enforce
the arbitration award as if it were court judgement.
Litigation – only alternative if parties cannot or will not engage in ADR. Neither party can
withdraw without paying the opponents costs.
- Main advantage of litigation – breaks deadlock between the
parties at a cost, as courts will impose a solution that will be
enforced by the successful party.
- Litigation governed by Civil Procedure Rules 1998 – dictate
procedures must be adopted when pursuing a claim through the
courts – regularly updated and amended.
- CPR consists of 89 parts each of which deal with one aspect of civil procedure.
- Aim of CPR – provide a user-friendly system if resolving dispute
due to increase of litigants who represent themselves.
2
DISPUTE RESOLUTION
SQE 1 Assessment specification: Different options for dispute resolution
Characteristics of arbitration, mediation and litigation which make them an appropriate
mechanism to resolve a dispute:
Litigation should always be last resort. Sanctions can be imposed by courts for parties who refuse to
consider ADR (collective term for settling disputes outside litigation/court process).
If clients are willing to engage with ADR – should be used unless it is obvs inappropriate i.e. an
injunction is required or opposition is unlikely to co-operate in the process or opposition cannot be
trusted to comply with the award.
- No point in proceeding with ADR if it will inevitably fail.
- But parties should be made aware of the penalties that may be imposed for failure – unless
the stance is justified.
- Failure to respond to proposal to attempt settlement by ADR will have impact on order of
costs (Civil Procedures Rules 1998).
- Burden is on the other party to show that refusal to engage in ADR is unreasonable.
- During court proceedings, parties usually complete a directions questionnaire, solicitors are
required to explain to client the need to try to settle, options available, and possibility of
cost sanctions if they refuse to attempt to settle.
Clients should always consider ADR and engage in the process unless there are convincing reasons,
even then, need to prepared to justify this decision before a judge if necessary.
Alternative DR options:
- Negotiation
- Mediation
- Arbitration
Negotiation – can be either formal or in correspondence happens throughout the litigation
process. Key element for settling claims.
Mediation – resolve disputes with assistance of an independent third party (essential feature, clients
will be more open in their discussion and less likely to be aggressive, prospects of reaching
settlement is higher) who will help parties reach a conclusion but will not impose a solution. Should
have the appropriate industry and commercial knowledge but will be trained to act as a neutral.
- Voluntary and confidential.
- Mediation usually proposed by letter to the opponent.
- Mediator will be sent written statements from both parties and
will then discuss the case on a ‘without prejudice’ basis.
- Advantages: cost and speed; flexibility; privacy; preserving a
business relationship; commercial reality; and ability to withdraw
- Disadvantages: limited disclosure; privacy; ability to withdraw;
enforcement is not automatic.
- Enforcement = decision/agreement reached will not automatically
be binding as it cannot be enforced like a court judgement.
However, if (i) parties agree to terms suggested (ii) have entered
1
, 2026
into a contract, can be sued for breach. Or Parties can enter into a
Consent Order or a Tomlin order.
Court will not be made aware of mediation meeting until after the judge has dealt with issues of
liability and awarded damages.
- Parties can withdraw at any time.
- If parties don’t like the solution – don’t have to accept.
Arbitration – parallel dispute resolution. Substitute for litigation and once parties have agreed to be
subject to it – cannot take advantage of the normal court process.
- May rise in 2 ways:
1. Parties contractually bound to arbitration i.e. business contracts may contain a clause.
Common in industries such as shipping and construction
2. Parties may agree to arbitration – may choose their own arbitrator with the relevant
expertise.
- Arbitration is governed by the Arbitration Act 1996 but only
applies if the agreement to arbitrate is in writing.
- Process is less formal than a court procedure. Once a decision has
been reached by the 3rd party, this will be binding on both parties
to the dispute. Parties can enter into a Consent Order or a Tomlin
order.
- Advantages: likely to be quicker than going to court and may be
cheaper; procedure is less formal; decision made by an impartial,
expert 3rd party; takes place in private thus retaining
confidentiality; solutions that are reached are reached more
practical than those which a court would order; decision is binding
on parties (most important distinction compared to mediation)
with limited rights to appeal.
- Disadvantages: dispute may not receive depth of investigation it
would receive in the courts; remedies such as injunction are not
available; sometimes may be expensive if arbitration expert or
panel will be need to be paid and parties will also want to be
represented.
- Enforcement = winning party to arbitration can apply to High
Court under s 66 of Arbitration Act 1996 for permission to enforce
the arbitration award as if it were court judgement.
Litigation – only alternative if parties cannot or will not engage in ADR. Neither party can
withdraw without paying the opponents costs.
- Main advantage of litigation – breaks deadlock between the
parties at a cost, as courts will impose a solution that will be
enforced by the successful party.
- Litigation governed by Civil Procedure Rules 1998 – dictate
procedures must be adopted when pursuing a claim through the
courts – regularly updated and amended.
- CPR consists of 89 parts each of which deal with one aspect of civil procedure.
- Aim of CPR – provide a user-friendly system if resolving dispute
due to increase of litigants who represent themselves.
2
