- Published: October 14, 2022
- Updated: October 14, 2022
- University / College: Brown University
- Language: English
- Downloads: 22
The ADR processes attempt to reconcile the differences that arise between commercial corporations. The services of a third party, which are in general voluntary, are employed for this purpose. This third party promotes negotiations, assists in resolving differences and formulates agreements that are agreeable to both the disputing parties. Arbitration and mediation constitute the principal tools of ADR (Alternative Dispute Resolution Overview ).
There are a number of advantages of resorting to the ADR mechanism. Some of these are that the cost is much less in comparison to the judicial system.
In addition, ADR brings about a rapprochement between the disputing parties, which generally improves their relations. This is due to the fact that the ADR process concentrates on the requirements of the parties, unlike a formal judicial process that focuses on the legal position of the parties. Moreover, in the mediation process, the agreement is made by the parties themselves, which ensures greater commitment than a court order and the agreement is comparatively more accommodative. Further, adoption of the ADR process does not preclude the right to resort to the traditional legal procedures (Alternative Dispute Resolution Overview ).
In the mediation process a third party that is neutral and adequately trained helps the parties to resolve their dispute. The aim of this third party is to shift the focus from legal positions to the actual interests, which are affected of the parties. The mediation process is bereft of rules of evidence and lawyers. The atmosphere is informal and conducive to dispute resolution. In addition, this process is absolutely confidential and there are no records of the meetings, moreover any notes taken down by the mediators during the process are destroyed.
Furthermore, the process is speedy and inexpensive. This process is ideal if time available with the parties is limited, because resolution, in general, is achieved within a couple of sessions (Alternative Dispute Resolution Overview ). In the world of adjudication, the arbitration rules of London Court of International Arbitration, the London Maritime Arbitrator’s Association Terms, the UNCITRAL and the ICC are well known. The alternative dispute resolution or ADR process suffers from the disadvantage that its decisions cannot be made sufficiently binding from the legal perspective.
Such international agreements cannot be enforced by the authorities in the absence of a court decision, which would be disproportionate to the amount involved. This promotes repudiation of contracts by unscrupulous parties, because the cost of enforcing the contract would be exorbitant (Redfern & Hunter, 1999. Pp. 3 – 4). Conservative estimates of litigation costs in the US legal system estimate them to be around a hundred billion dollars per annum, whereas others consider this amount to be more than three times this estimated amount.
Some of the direct expenses that constitute this huge amount are legal fees, awards to the jury, expenditure incurred in copying and organizing, fees to be paid to expert witnesses. There are also a number of indirect expenses like loss of reputation that corporations have to endure and loss due to management having to curtail its business activities, in order to concentrate on the litigation. This has made ADR a very attractive alternative for many corporations in the US.
If the participants in the process of the ADR approach their differences in a positive and fair manner, then this process can bring about dispute resolution that improves their commercial relations. However, if such an attitude is lacking, then the ADR process can prove to be no less time consuming and expensive in comparison to the usual judicial process for resolving commercial disputes (Netzley, December, 2001). American companies that perform in other countries generally resort to arbitration, in order to settle commercial disputes, because of the uncertainty associated with the legal systems extant in those countries.
The bestenvironmentfor arbitration to succeed transpires when there are only two parties that are absolutely clear about their legal status. Arbitration agreements are enforced in totality by the courts. However, the rules pertaining to evidence are not strictly adhered to in such proceedings (Sido, Dec2005 ). Although, arbitration and litigation are expensive processes, the former is more expeditious, involves less expenditure and has the added advantage of confidentiality. However, arbitration involves charges for filing that are ever on the increase and there is no scope for appealing against an arbitral decision.
Mediation on the other hand is extremely flexible and much more attractive in comparison to the arbitration process, because in an arbitration process it not clear as to which party would emerge victorious. There are no losers in a mediation process; there are only parties who have agreed to resolve their differences in an amicable manner (Sido, Dec2005 ). Arbitration is akin to the traditional litigation process in many respects, whereas mediation has the advantage of being confidential and informal.
Moreover, in mediation there is no compulsion to adhere to a disagreeable decision (Packer, 2004). A number of US corporations have resorted to ADR inrespectof disputes, because of the prolonged and expensive procedures of the normal court and international tribunal procedures. However, in the ADR process, arbitration process is not that attractive, because it entails decisions that cannot be appealed against and in addition it is quite similar to the regular court or tribunal process.
The most popular process is that of mediation, because it is more of a consultative process and the principal objective is to arrive at an agreement that takes into account, the viewpoints and interests of the parties to the dispute. Moreover, there is no compulsion to implicitly follow the decision arrived at in this process. In addition, the cost involved is also comparatively much less. References Alternative Dispute Resolution Overview . (n. d. ). Retrieved November 8, 2007, from CADR: http://www. dot. gov/ost/ogc/CADR/overview. html Netzley, M. (December, 2001).
Alternative Dispute Resolution: A Business (and)CommunicationStrategy . Business Communication Quarterly , Vol. 64, No. 4, Pp. 83 – 89. Packer, A. J. (2004). Aninterviewwith Bill Carter. Retrieved November 8, 2007, from Oregon State Bar. Elder Law Newsletter: http://www. osbar. org/_docs/sections/elder/newsletters/elder_spring04. pdf Redfern, A. , & Hunter, M. (1999. Pp. 3 – 4). Law and Practice of International Commercial Arbitration . London: 3rd ed, Sweet & Maxwell. Sido, K. (Dec2005 ). Avoiding the Courtroom Through Mediation or Arbitration . Consulting-Specifying Engineer , Vol. 38, Iss. 6, Pp. 65-66.