Alternate Dispute Resolution Methods – Common & Uncommon

Why Alternate Dispute Resolution?

Conventional Dispute resolution system commonly Litigation has disadvantages across the board, regardless of whether you’re a plaintiff or a defendant, and some of the ones that come immediately to mind are:

• Extremely Slow Process: The legal system is renowned for being cumbersome, lengthy, and formal.?
• Necessity of Expert Witness:?International contracts have diverse methods, processes, and cultures. Even a judge who is well-versed in the law cannot be expected to be aware of all these complex issues. As a result, experts and knowledgeable witnesses must be presented in court to demonstrate the practices, even before the evidence is proven, in order to inform the judge about them.
• Flexibility of schedule to parties:?The litigants may find it difficult to attend court at certain times or on certain days. Most cases are postponed, and during that time, even one witness might take months to complete. Even after spending a day in anticipation of the hearing, one could learn at the end of the day that the case has been postponed for two months owing to the other advocate's unavailability!
• ?Negative Public Image:?There is never a secret in court. In significant situations, the media consistently covers developments. Even decisions from the supreme court are available online. The public discussion of matters that were previously kept private until the issue was brought before a court of law can result in notoriety, a reduction in goodwill, and damage to one's image over time.
• ?Win – Lose damages Relationships:?When a matter goes to a court of law, it is immaterial which party may win as the age old established relationship, after the case is brought to litigation in a court, comes to an end with only acrimony and bitterness.
• ?Different Laws and Procedures:?International trade laws and procedures are more complicated. Litigation in foreign courts is more expensive and difficult in comparison to the domestic courts.

Common ADR and its necessity

?There are three types of dispute resolution to be considered. We have a variety of options when it comes to resolving disputes. It makes sense that disputants frequently be perplexed about which procedure to adopt in a given circumstance. This article intend to provide some of the guidelines ?

1. Negotiation
2. Mediation
3. Arbitration

?1.?????Negotiation:

Any kind of communication, whether direct or indirect, in which people with divergent interests debate potential collaborative actions to manage and ultimately settle their conflict is referred to as negotiation. Negotiations can be used to establish a future connection between two or more parties or to fix an issue that has already arisen.

It is hardly unexpected that negotiation has been referred to as the "preeminent form of conflict settlement" considering its prevalence in almost every facet of daily life, whether at the individual, institutional, national, or international levels. Every negotiation is different from the next in terms of the topic, the number of participants, and the method employed.

?Pros of Negotiation:

• Flexible:?As the most flexible and informal of the dispute resolution methods, negotiation can save the costs and time associated with more formal or assisted dispute resolution processes and might not, for instance, need to involve lawyers.
• No third Party: Since it does not involve any third parties, the parties retain full control of the discussions, and can bring them to an end at any time. Similarly, negotiation can be undertaken at any stage of a dispute, even very close to trial, without giving rise to the same risk of compromising the trial dates as more formal ADR processes.
• Highly Confidential: It is a private dispute resolution option, meaning that both the dispute itself and any settlement reached can remain confidential. Therefore, reputations and relationships can remain intact. ?
• No effect on Rights: If the negotiations do not succeed and settlement is not achieved, the parties’ rights are not prejudiced provided that discussions proceeded on a without prejudice basis.

?Cons of Negotiation:

• Deadlock: Direct negotiations between the parties to a dispute can become deadlocked, and the absence of a third party or formal process means that the deadlock can be difficult to break.
• Unequal Bargaining Power: Negotiation may be unlikely to succeed where there is a significant difference in the financial position or bargaining power of the parties, as the weaker party may be less willing to agree to settlement in the absence of a third party, or without the protection of a formal process and the confidence which this may bring.
• Low rate of Success: ?In complex or multi-party disputes, direct negotiations may have a lower prospect of success without the assistance of a neutral third party or more formal procedures.

?2.?????Mediation

?One of the most adaptable conflict resolution techniques is mediation, which is a member of the ADR mechanism family. It is often chosen by the parties as an alternative to the usual way of dispute settlement through the legal system. It is becoming more and more popular, particularly with the creation of Mediation centers, which subtly encourages ADR as a means of mediating disputes between the parties.

?Pros of Mediation:

• Faster: One of the most fundamental advantages of mediation is that, as an ADR method, it enables the parties to avoid all the technicalities and delays associated with court procedures that result from the rigidity and complexity of procedural laws.
• Cheaper: In comparison to litigation and Arbitration processes, mediation takes substantially less time and is far less expensive.
• Privacy: It is a procedure that respects the parties' right to privacy and the secrecy of the information shared during the process. Big company corporations or dealers who don't want their management strategies and trade secrets discussed in front of a judge in open court may use this as a talking point.
• Win- Win: The parties have the chance to resolve their conflict amicably through mediation. The process itself attests to amiable behavior and discourages antagonism or resentment between the participants. Conflicts between routinely transacting businesses or family disagreements benefit from this. In contrast to a court's judgement, which is imposed on both parties, the parties to a dispute are typically more willing to accept the ultimate outcome since it was achieved via dialogue and consent between the two sides.
• Voluntary process: Since mediation is a voluntary procedure, any party to the agreement may decide at any time to reject it and pursue the matter in court or through another type of ADR.

Cons of Mediation:

• Awards are Non- Binding : Usually the parties to the dispute are not willing to choose mediation. This is because usually a litigant feel’s that he or she has a strong chance of winning the case and thus choosing to settle a dispute through mediation may lead to a lessor award than what can be granted by the court.
• Non- Procedural :?Mediation lacks the procedural and constitutional protections guaranteed by the federal and state courts.?The lack of formality in mediation could be a benefit, as noted above, or a detriment. Mediation between parties of disparate levels of sophistication and power, and who have disparate amounts of resources available, might result in an inequitable settlement as the less-well positioned party is overwhelmed and unprotected.
• Non- Disclosure of full information’s:?If one of the parties to a dispute cannot fully address the case without first receiving information from the other party, there is no way to compel disclosure of such information. The party seeking disclosure must rely instead on the other party’s good faith, which may or may not be enough.

?3.?????Arbitration:

?Arbitration is the most traditional form of private dispute resolution. Arbitration is a binding procedure. It is often "administered" by a private organization that maintains lists of available arbitrators and provide rules under which the arbitration will be conducted. Such organizations can also manage the arbitration in whole or in part. Parties often select arbitrators on the basis of substantive expertise.?

Arbitration is adjudicatory, as opposed to advisory, because of the fact that the arbitrator (usually a retired judge or attorney) renders a decision at the end of an arbitration hearing, and that decision is final and binding, subject only to a very limited court review. Arbitration is a binding, adjudicatory process.

Pros of Arbitration:

• Flexible:?In most cases, the matter will be handled significantly more quickly. A court trial date may take many years to get, but an arbitration date is typically doable within a few months. Additionally, trials must be arranged into court schedules, which are sometimes overloaded with hundreds or even thousands of cases.
• Less Complicated than Litigation: Litigation always involves a protracted process of submitting documents and motions and appearing in court for proceedings like motion hearings. In arbitration processes, the rules of evidence may not be rigidly followed, which makes it much simpler to admit evidence. Arbitration may significantly cut down on discovery, the time-consuming and expensive process that entails taking and responding to interrogatories, depositions, and demands to provide documents. Instead, the arbitrator and parties communicate over the phone to resolve the majority of issues, such as who will be summoned as a witness and which documents must be submitted.
• Privacy: Arbitration, as opposed to a court proceeding, results in a confidential conclusion, allowing for the privacy of the material discussed during the dispute and its resolution. Given that all testimony, assertions, and arguments would be kept totally secret, this may be alluring for well-known public personalities or clients in commercial disputes. On the other hand, there is a chance that some publicly accessible possibly sensitive company information may be disclosed in court, even though specific documents will not be made public.
• Un-Biased:? The parties to the dispute usually pick the arbitrator together, so the arbitrator will be someone that both sides have confidence will be impartial and unbiased.
• Cheaper than Litigation: Most of the time, but not always the case, arbitration is a lot less expensive than litigation. Arbitration is often resolved much more quickly than court proceedings, so attorney fees are reduced. Also, there are lower costs in preparing for the arbitration than there are in preparing for a jury trial.
• ?Binding:?There aren't many options for appealing a binding arbitration decision. With a trial result, which may be susceptible to appeals, new trials, and other appeals, the arbitration now has a degree of finality that is not always present. Ends the dispute

?Cons of Arbitration :

• Less Power: It requires good faith and agreement between the parties. A court has wide powers under the Civil Procedure rules to punish litigants who are obstructive or dilatory in their conduct of the proceedings. An arbitrator’s powers are not as strong as to find someone in contempt of court.
• Lack of transparency: Arbitration hearings are generally held in private which may be a positive to many. However, it is possible that this lack of transparency makes the process more likely to be biased, which may be problematic because arbitration decisions are also infrequently reviewed by the courts.
• Limitation of Appeal: There is limited scope to challenge the decision of an arbitrator. An aggrieved party would have to show that:
• The tribunal lacked substantive jurisdiction.
• ?there was a serious irregularity in the proceedings which would justify the setting aside of the award;
• The arbitrator erred on a specific point of law.
• Unpredictability:? As was previously stated, formal norms of process and evidence used in a courtroom trial are not always followed in arbitration. Arbitrators are not subject to the limitations imposed by the rules of evidence, which may preclude some evidence from being examined by a judge or jury. Therefore, an arbitrator's ruling can be supported by information that a judge or jury at trial wouldn't examine, which could be detrimental to your case. On the other hand, there is no chance to question a witness in cross-examination if specific information from that witness is included in the papers that are provided.

Uncommon ADR methodologies

1. ?Ethics Hotline
2. Open Door policy
3. Ombudsmen
4. Mediation Arbitration
5. Mini Trial
6. Summary Jury Trial
7. Private Judging

?Ethics Hotline

Only certain categories of people, such members of a certain organization, have access to certain ADR processes or programmes. The fact that reporting parties typically, but not always, maintain their anonymity is a significant advantage. The corporation has time to handle issues that, if left unattended to, might result in disputes of far higher proportions.

For instance, some businesses, like Boeing, establish a hotline for internal ethics. Employees can call this hotline to report any alleged ethical transgressions they may have seen. Employee inquiries are addressed by ethics advisers, who also look into complaints that require more research.

?Open-Door Policy

?An internal programme known as a "open-door policy" enables workers of a corporation to address any level of management directly with a complaint or grievance without fear of facing consequences. Theoretically, this approach dismantles the boundaries of class between different employee groups and fosters a culture of openness and trust. Many workers, meanwhile, might not feel confident enough to voice their displeasure with a manager's choice. Furthermore, managers could feel uncomfortable if their staff members approach them directly for concerns. Although open-door policies seem ideal in principle, they might not be as effective in practice.

?Ombudsman

Another type of in-house program is an ombudsman’s office.?These stations generally hear complaints from stakeholders, such as employees or customers.

Ombudsmen try to troubleshoot these complaints by investigating and attempting to resolve the issues before they escalate into more formal complaints.

Mediation-Arbitration

Mediation-arbitration (med-arb), which is simply a mediation followed by an arbitration, is one of the most formal forms of ADR. The parties agree to arbitrate if mediation does not result in an acceptable resolution. If the conflict-resolution procedure goes that far, the impartial person mediating the disagreement also acts as the arbitrator.

With a few significant exceptions, med-arb has the same advantages and disadvantages as mediation and arbitration alone. For instance, participants to a medical arbitration are aware that their disagreement will be settled. This contrasts with mediation by itself, where parties may leave if they feel the mediation is not serving their interests.

Additionally, much as in mediation, med-arb gives the parties a chance to come to a win-win resolution. But if they are unable to come to a suitable

Mini-Trial

A mini-trial is a procedure that allows the parties to present their case to decision makers on both sides of the dispute, following discovery.?This is a private affair.

After the cases are presented, the parties enter mediation or negotiation to resolve their dispute.

Summary Jury Trail

A summary jury trial is a mock trial presented to a jury whose verdict is non-binding.?The presentation is brief and succinct, and it follows a discovery period.?The jury does not know that its verdict will be advisory only.

This process allows parties to measure the strengths and weaknesses of their cases prior to engaging in litigation, which presumably saves both time and money.?After the mini-trial, parties are in a better position to negotiate or mediate an outcome that fairly represents their positions.

Private Judging

The parties who can afford to pay for this service have a substantial benefit in not having to wait to have their cases heard in the public court.?

The private trial is also private rather than public, which may be important to parties who require confidentiality.?

In states where statutes permit hiring a judge for such matters, the parties’ ability to appeal is often preserved.?

?#arbitration #ADR #alternativedisputeresolution #negotiation #mediation #contractsmanagement #EPC #internationalcontracts #constructionclaims

?Authors??Ilam Parithi & Vijayarengan Chockalingam

Feel free to contact us for free consultancy

Copyright ? 2022 Pragmatic Project Consilium (www.pragmaticpc.com)