How can you use alternative dispute resolution in contract negotiation?

Time and money matters most in Construction industry.Apart from litigation ,arbitration is far better in these prospects. Can settle the disputes in less time and money. Also the relationship between the stakeholders can also be saved to some extent.

ADR is an amicable dispute resolution process which is more preferable in situations where the parties seek not to ruin their relationship. ADR is beneficial for both parties since it is mainly cheaper than arbitration and significantly more confidential than litigation. Mediation & Conciliation are two ADRs that I find very effective where a mediator or a conciliator most probably known and trusted by both parties is assigned to try bridging viewpoints and help both parties reach an agreement. In my point of view upon the occurrence of any dispute heading to ADR shall be the first decision in any contract.

In contract negotiation we can use ADR if both negotiating parties agree to use it as the dispute settlement clause. By using ADR both sides can settle the contract dispute confidentially; the process and settlement is not open to public. As a result, the ADR basically maintain the company’s reputation against its clients. It maintains the reputation of the negotiators as well. The ADR is a fast dispute settlement compared to a court. The ADR is also a cost effective settlement. And, the ADR is a professional settlement.

I have used this method and litigation. Using litigation always leaves one or two parties unhappy with the result and this can cause problems later on. Using ADR can help in bringing together all parties to a mutual agreement.

The ADR can only be used as a dispute settlement clause in an underlying contract if agreed by the negotiating parties. Effective communication and good faith between the parties become the main requirements in using the ADR. Compromise and cooperate from both sides are part of the subjects of negotiation. Settlement of dispute is not merely by using laws and regulations, but also prevailing rules of business. The enforcement of the ADR’s settlement may need the intervention from a competent court.

The most important factor for making ADR work is before even thinking about getting in to the negotiation you must prioritize what are your goals in the negotiation. What are the achievables that will still make the contract worth while. And at what point is the contract none viable. It is very easy to see the contract as the goal. No the goal is to make what you are negotiating profitable and meets the companies goals

Remember do not allow yourself to be caught up in all arbitration and mediation and forget why you are doing this. This may seem simplistic but it is much to easy to loose sight of why you are doing this negotiation.

The ADR consists of negotiation, mediation, arbitration, and could be hybrid methods. The complexity of the underlying contract, the level of relationship of the contracting parties, the interests of both sides, time constraints, the cost efficiencies, and the requirement of legally binding are the factors to be considered in choosing the most appropriate method of settlement. Negotiation is a direct dispute settlement between the disputing parties. Mediation is a settlement of dispute between the parties with the help of a mediator to mediate the disputing parties. Arbitration is a legal settlement by a panel of arbitrators or sole arbitrator on the existing dispute of the contracting parties. Its decision is final and binding.

If contracting parties have chosen arbitration as the ADR, with your lawyer write an arbitration request based on the fact of the dispute to the arbitration institution as agreed in the arbitration agreement. You mention in request the arbitrator that you selected (arbitrator with expertise in the field of disputing contract) and your goals and interests. Support your request with the transactional documents and the adequate evidence to the fact of dispute. In the arbitration process, be ready to present your case, answering questions and give clarification to the arguments raised by the other party and arbitrators, and asking questions and clarification to the other party to support your case. Finally, accept the decision of arbitration.

Just remember why you are in this negotiation. You are not negotiating to walk away without our achieving your prime goals. One last point to walk away is not defeat. It just means it's not viable for your companies goals.

Win win is the goal but cannot always be achieved. Know when to walk away. I can not stress how important this is. Because bad contracts have destroyed more companies than you would think

To use ADR effectively, both disputing parties need to act in good faith, communicate in effective ways, follow the prevailing rules of business, be ready to cooperate and compromise, and respect the other party and the provider. Looking for best interests of both parties. Maintaining the existing relationship.

I would like to put in additional insight this way. In contract negotiation it is really not correct to mention the ADR as unity (united as one) as the method of dispute resolution. To avoid misunderstanding, you need to state explicitly which method of the ADR to be negotiated. The reason is the nature of each method under the term of ADR is not the same each other. The ADR consists of the method of negotiation, mediation, arbitration, and hybrid of mediation and arbitration. Each of them basically has its own characteristic. Therefore, in practice, in real contract negotiation you need to state exactly which one of them to be negotiated as your business needs.

The Alternative Dispute Resolution (ADR) is good to choose as a method to resolve contract disputes. However, the ADR can only be used under the agreement of both contracting parties. Meaning, the use of ADR to be negotiated. When the negotiation of ADR failed to reach an agreement then the parties have no other choice other than the Litigation to settle their disputes. Using Litigation is not conditional to the agreement of the parties. And also, if the time and continuous business relation are not the primary concern then the Litigation is also a good choice to resolve the disputes. That is to say, in selecting the ADR or Litigation it is a matter of the actual condition. Cost consideration is relative.