Author: Joshua Prior
Key Contact: Aisha Wardell
The way commercial disputes are resolved is changing. While litigation remains important, businesses are increasingly turning to arbitration and mediation as faster, more flexible, and often more cost-effective alternatives. With new legislation now in force and the courts actively encouraging alternative dispute resolution (ADR), it is vital for companies to understand what this means in practice.
Why the shift?
1. Fewer High Court claims
Recent data shows a 10% fall in commercial cases issued in the High Court last year, the lowest level for six years. Rising costs, funding restrictions following the Supreme Court’s ruling in Paccar (which determined that Litigation Funding Agreements are in fact Damages Based Agreements), and pressure on court timetables are leading many businesses to look elsewhere.
2. The Arbitration Act 2025
The Arbitration Act 2025 has modernised the UK’s arbitration framework. Key reforms include:
- Cutting down the delays by creating a simpler procedure
- Stronger enforcement measures for arbitral awards; and
- Limits on unnecessary court intervention
This makes arbitration an even more attractive option, particularly for cross-border disputes where enforcement overseas is a priority.
3. Courts pushing ADR
The courts are now taking a firmer line on mediation. In recent cases, judges have required parties to attempt ADR before continuing litigation, and those who refuse without good reason risk cost penalties. There is also discussion of creating a mediation council to set clearer standards for commercial mediation.
International developments
The UK is not alone in this shift. Globally, ADR is gaining momentum:
- The International Organization for Mediation (IOMed) launched in Hong Kong this year, offering a new framework for international and investor–state disputes.
- The Indian Supreme Court has warned against vague or poorly drafted arbitration clauses, underlining the importance of clear contract drafting.
- Technology, including artificial intelligence, is increasingly used to support research and streamline dispute resolution processes, though human judgment remains essential.
What this means for your business
For companies operating in today’s environment, ADR is no longer just a fallback. It should be part of your strategic planning. Key takeaways are:
- Review your contracts: Ensure dispute resolution clauses are clear and effective. Poorly drafted clauses can delay resolution and increase costs.
- Consider arbitration: For international or high-value disputes, arbitration offers speed, confidentiality, and enforceability across borders.
- Be ready for mediation: Courts expect parties to engage constructively with mediation. Refusal without good reason can have financial consequences.
- Embrace innovation: AI and other tools can help disputes run more efficiently, but they are no substitute for experienced legal advice.
How we can help
We advise clients on the full spectrum of dispute resolution options. From drafting robust arbitration and mediation clauses to representing businesses in proceedings, our focus is on achieving outcomes that align with your commercial objectives.
