Any method of resolving disputes without going to court is referred to as alternative dispute resolution (ADR). ADR brings together all methods and procedures for resolving disputes that take place independently of any governing body. Mediation, arbitration, conciliation, negotiation, and transaction are the most well-known ADR techniques.
The ability of the parties to resolve their disputes outside of customary legal / court processes is a common feature of all ADR techniques, but they are all subject to a different set of rules. For instance, unlike in mediation and conciliation, where the third party's role is to encourage an amicable agreement between the parties, in negotiation, there isn't a third party who steps in to help the parties resolve. An arbitrator or panel of arbitrators will play a significant role in the arbitration process because they will produce the arbitration award, which is binding on the parties. In contrast, there are no binding decisions made by the third party during conciliation or mediation.
Since the parties typically combine the use of these various ADRs, it is inappropriate to compare and contrast all ADR techniques if they are all distinct from one another. For instance, the parties may agree in their contracts that they will first try to resolve a dispute amicably (through conciliation or mediation), and only if that fails, will they turn to a judicial method of resolution, such as arbitration or turning to the state justice system.
The speed, confidentiality, and flexibility of ADR are its main benefits.
Public courts may be asked to examine the legality of ADR procedures, but they rarely reverse ADR judgements and awards if the parties to the dispute have a legally binding agreement to abide by them.
Types of ADR methods
Negotiation - The best method of resolving disputes is through negotiation. Although the two most popular ADR methods are arbitration and mediation, negotiation is almost always used to settle disputes first. Through negotiation, a dispute can be resolved by getting the parties together. The main benefit of this method of dispute resolution is that it gives the parties themselves the ability to direct the course of action and the resolution. Compared to other forms of ADR, negotiation is much less formal and offers a lot of flexibility.
Mediation - A less formal option to litigation is mediation. A mediator is a person with negotiation experience who brings two parties together to try and reach a settlement or agreement that both parties can accept or reject. Mediation is not legally binding. The use of mediation to settle conflicts between investors and their stock brokers has grown significantly.
Arbitration - Without a legally binding arbitration agreement in place before a dispute arises, the arbitration process is impossible. In this method of dispute resolution, the parties designate one or more arbitrators to hear their cases. The arbitrator's decision, known as the "Award," is binding on the parties. Getting a fair settlement of a dispute outside of court without needless expense or delay is the goal of arbitration. Any party to a contract that contains an arbitration clause may invoke it either directly or through their authorised agent, who will then submit the dispute for arbitration following the terms of the arbitration clause. Here, the term "arbitration clause" refers to a clause that specifies the process, language, number of arbitrators, and location where the arbitration will be held if a dispute arises between the parties.
Conciliation - Although conciliation is a type of arbitration, it is less formal. Through a conciliator who meets with each party separately to resolve the conflict, it is possible to facilitate an amicable resolution between the parties. The conciliator meets separately with each party to ease tension, enhance communication, and interpret the dispute to facilitate negotiation. Prior consent is not required, and parties who are not interested in conciliation cannot be forced to participate.
Benefits of alternative dispute resolution
Alternative dispute resolution has several benefits. It is frequently recommended as the best method for resolving disputes. It enjoys widespread support from judges, attorneys, and academics for its capacity to reach agreements without detracting from the overburdened judicial system. Using alternative dispute resolution over traditional litigation has several benefits, such as:
Saving Time: The process of litigation can take a long time. A case may take months or even years to fully resolve, depending on the nature of the disagreement and the issues raised. The majority of alternative dispute resolution techniques, if not all of them, can be finished in a few months, if not sooner.
Saving Money: People frequently spend less money on the process because alternative dispute resolution takes much less time. The parties will save money on attorneys' fees as a result of the time saved, even though arbitration or mediation may have higher fees than the court system. Most procedures, except arbitration, won't require as much discovery as a trial would, which will also result in significant financial savings.
Avoids Hostility: Even when the initial disagreement was not detrimental to the parties' relationship, the adversarial nature of the legal process frequently leads to hostility between the parties. The adversarial nature of the legal process is frequently removed by alternative dispute resolution, which instead encourages the parties to cooperate in settling their differences. Even if it doesn't completely mend the relationship, doing this can still prevent it from ending completely.
Reality check: For some parties, the longer they dwell on a disagreement, the more likely it is that they will come to believe that they are in the right. A party may as a result fail to recognise the reality of their situation and cling to a fictitious sense of their rights. Alternative dispute resolution can frequently assist the parties in acknowledging the other party's position and recognising some potential strengths to aid in better decision-making.
Remains Confidential: The court proceedings are typically public records that anyone can access. Alternative dispute resolution is typically private, so the conflict only affects the parties and the mediator and hence the information remains confidential.
ADR procedures are informal: Alternative dispute resolution in practice is much quicker and less formal than the litigation process. The rules of evidence and other court regulations won't usually be a concern for the parties.
Experience is Allowed: Unlike litigation, the parties may select the person who they feel is neutral based on that person's familiarity with the subject matter. As a result, the parties will frequently avoid having to explain specifics of the issue to the neutral because they will already have a better understanding of it.
A great way to settle conflicts quickly is through alternative dispute resolution. However, not every dispute calls for it. Parties can choose the best course of action to settle their disputes by understanding why it may or may not be a good fit.