Parties can forge their own practical solution to create a viable commercial resolution rather than being limited to the strict legal remedies available via the Court or Arbitration Tribunal. There are endless solutions e.g. involving discussion and commutation of other unconnected contracts which may be adopted to incorporate commercial factors outside the strict confines of the one contract in dispute. This very flexibility is in our opinion, one of the strongest factors in support of the ADR process. Because ADR is a consensual as opposed to adversarial process it may help to preserve existing business relationships and goodwill. This is particularly important in the world of insurance and reinsurance where there may be ongoing commercial relationships between the parties which may be soured by adversarial procedures such as litigation or arbitration.
Arbitration is a contractual right available only to the signatories to the contract.
Whilst the Arbitration Act 1996 attempted to address this our experience remains that despite judicial observations to the contrary one of the most important parties to any insurance or reinsurance dispute, the broker, remains more often than not on the sidelines and not directly involved in the Arbitration process. Certainly not a party against which the Tribunal can make an Award. It is likely that brokers would more readily co-operate with a quicker, cheaper and less adversarial process. ADR is a quicker and potentially cheaper method of resolving disputes. Cost savings may potentially be made both in terms of management time and resources and in lesser costs than Court or arbitration.