Alternative Dispute Resolution

Discuss the processes available in alternative dispute resolution and explain its advantages and disadvantages

Alternative Dispute Resolution

Alternative Dispute Resolution (ADR) includes methods of processes and techniques that are used to resolve disputes or disagreements outside the jurisdiction of the law. As explained by Paul Latimer (p 51 of the Australian Business Law CCH Handbook 2006) The Alternative Dispute Resolution Association of Australia has defined ADR as meaning ÐŽ§dispute resolution by processes:

a) which encourage disputants to reach their own solution and

b) in which the primary role of the third party neutral is to facilitate the disputants to do so.ЎЁ

The main purpose for an alternative dispute resolution is to provide various methods of dispute management to litigation that are in place today . The main processes available are mediation, conciliation (though it can be used interchangeably with mediation as itÐŽ¦s considered a form of mediation), independent expert appraisal or evaluation, arbitration (though technically is not included as ADR and will be discussed further under ЎҐArbitrationÐŽ¦) and mini trials . There are many advantages and disadvantages for these methods. Most commonly referred to advantages are:

„X Majority of cases are resolved at a significantly lower cost than litigation.

„X Majority of cases are resolved at a significantly lower percentage of time involved in litigation.

„X Less formal and quicker than court proceedings.

„X Many cases are dealt with in privacy, and public or media interest is strictly prohibited.

Disadvantages include:

„X Incompetence or bias on the part of the intermediary could lead to wrong settlement of negotiations (mediation)

„X Wrong decisions can be made or a denial of natural justice (arbitration)

„X Also, common occurrences in both mediation and arbitration is the incorrect application of legal principles (Partly due to reason of technical experts who donÐŽ¦t have the experience or independence that lawyers have)

In addition, it can be said from opinion that lawyers could act as better arbitrators than technical experts due to that very reason of experience and independence.

Specific disadvantages for each particular method will be discussed in further detail under its relevant heading.

Processes in ADR

Most parties resolve disputes through direct negotiation and is a commonly used strategy for informally settling these disputes. On a further note, majority of commercial disputes are resolved by negotiation between the parties.

If there is a failure in resolving disputes through direct negotiation, the parties can settle the issue by seeking assistance from an independent third party facilitator. Two main techniques through the use of a facilitator are mediation and conciliation.

Mediation and Conciliation

Mediation is a structured negotiation process with a neutral, independent third party to help the parties reach their own solution by agreement . Conciliation has similar attributes to mediation; however, the facilitator can bring to the negotiations expert experience in the area of the subject of dispute .

As outlined in Wikipedia (http://en.wikipedia.org/wiki/Mediation#Mediation_and_conciliation):

One significant difference between conciliation and mediation lies in the fact that conciliators possess expert knowledge of the domain in which they conciliate. The conciliator can make suggestions for settlement terms and can give advice on the subject-matter

The important analysis here for both mediation and conciliation is that the resulting agreement is determined by the parties themselves rather than the facilitator imposing the judgement. They cannot enforce such a judgement; this is where the comparison with arbitration lies.

Also, in Terry & Guigni, Business, Society and the Law (2003), the authors do not discuss the critical disadvantages of the system but rather its facts. Since one particular disadvantage of mediation and conciliation is wrong settlement of negotiations due to biased opinion, the question may be asked, ЎҐIs this process relevant and beneficial to parties for fairness and true justice?ÐŽ¦

Arbitration

Arbitration is the determination of a dispute between two or more parties through the binding decision of a third party facilitator . It is regulated by the Commercial Arbitration Acts on a state and international level. Parties resolve through arbitration when negotiation, mediation or conciliation fail to provide the desired agreement or when a referral by a judge is made.

The aim of an arbitration is to get finality and an enforceable award.

Some key advantages for arbitration is the avoidance of publicity (for reason of proceedings conducted in privacy); avoidance of delay in having the dispute settled; and for technical disputes, technical experts can be appointed with the right qualifications to handle matters with higher levels of complexity.

Arbitration is generally viewed outside of the definition of ADR as its decisions are binding and regulated by legislation. The government has created many facilities to lower legal costs (itÐŽ¦s most notable advantage over litigation) and can be viewed as a positive attribute to the modern legal system.

The discussion of the commercial arbitration is evident with many authors in their writings. In particular, Terry & Guigni, Business, Society and the Law (2003) outline the critical views on its purpose and how the promise has been compromised. Negativity does flow through due to ever increasing costs and disputes being complicated as it would be for a litigation process.

Also, arbitration may be suitable where direct negotiation or mediation have failed and the parties would want a quick result, rather than having to go through the litigation process.

Independent Expert Appraisal

Expert appraisal is a process that provides for an independent