Solve your Energy Disputes using Alternative Dispute Resolution (ADR)

Using Alternative Dispute Resolution (ADR) to resolve energy disputes is the better way, so says the report by the ENERGY ADR FORUM which was established by “The Centre for the Advancement of Energy Markets”. The ENERGY ADR FORUM report urges the expanded use of ADR and suggests why that expansion is critical.

ADR includes a spectrum of techniques involving various combinations of negotiation, facilitation/mediation, and evaluation processes to resolve issues in place of traditional forms of adjudication – litigation and administrative processes.  ADR generally involves a third-party neutral who assists the disputing parties in designing and conducting a process to find mutually acceptable solutions to their disputes, provides advice, or directly resolves the dispute, depending on the type of ADR.

ADR Techniques are worth knowing not just to resolve disputes but also to avoid them. The stakeholders in the energy market need quicker and better decisions without the long lengthy litigation and other adversarial processes to take their course. The players in the energy sector are demanding improvements in the manner energy disputes are resolved. A fast track solution in an equally fast changing world is preferred in resolving disputes for business efficacy and building better business relationships as parties need to work with each other.

The Energy Forum recommends ADR for the following reasons:

1. It promotes creative solutions as it improves information flow between parties to reach objectives not available through traditional litigation, so that ADR provides the parties greater control over the outcome that can be achieved.
2. It promotes efficient decision making by regulatory agencies, it focuses on consensus-based policies that are created instead of the win-lose options. It also builds cooperative relations between industry and regulators.
3. It preserves relationships, it fosters a “solution-oriented” atmosphere to maintain positive relations. It reduces future litigation and it instils greater long-term trust between the parties.
4. It promotes good business as it minimizes disruption; it can keep the matter confidential, limiting public notoriety and reduce uncertainty which may result in lower capital costs and greater profitability.
5. It saves time and money, minimizes costs passed on to customers and minimizes operational delays.
6. It provides benefits even without full settlements, for greater understanding of each other’s positions and interests.

ADR should be the first port of call during a dispute, which can take the form of mediation, expert evaluation or adjudication. If one or all of these steps do not work in resolving the dispute, then the parties can always take it further to arbitration or litigation. You may lose some time in this two-step process if the matter is not resolved at the first stage but it may be worth taking this risk.  

As ADR leads to better and often quicker decisions, enhanced certainty, more procedural flexibility, potential cost savings, and other efficiencies, ADR steps should however be undertaken in a timely manner to avoid costly prolongation of a dispute and as the saying goes “a stitch in time saves nine”. To know and learn more about ADR, check-out PetroKnowledge’s training course on Dispute Management & Avoidance in the Energy Sector scheduled from 16 – 20 October 2017 in London.