Alternative Dispute Resolution in Contracting, Research Paper Example
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Alternative dispute resolution is a notion which encompasses increasingly popular techniques and methods of conflict resolution beyond the government judicial practice.
The routes of the development and popularity of alternative dispute resolution are quite obvious. First, the conflicting parties often find themselves eager to have their disputes resolved without the time-consuming formalities of courts. The idea of saving time by not taking some cases to court appeared long ago and the practice of what we know call alternative dispute resolution has long existed in the form of arbitration which was made an extensive use of in England since the Middle Ages and was first codified in 1698. The essence of arbitration was hearing a dispute between two or more parties in a judicial manner and referring it for determination to a person or persons separate from a competent judicial institution.
Other reasons for the attractiveness of alternative dispute resolution include its presumed inexpensiveness as compared to public court procedures, possibility of remaining confidential, and more opportunities to choose the person or people who are to investigate and decide the dispute. Many parties regard lawyers as natural rivals who do their best to win the litigation using every legal technique. It often happens at the expense of the parties’ time and money. Moreover, enduring litigations divert the attention of business executives from their primary activities like designing business strategies and seeking successful management solutions into courtroom procedures. In effect, many businesspeople find commercial litigations more exhausting for their enterprises than even the most challenging business problems. It is not surprising, consequentially, that they try to find ways out of their conflicts that would be legal, effective, and less problematic at the same time.
In general, public courts also came to view alternative dispute resolution as preferable because it helps to decrease the caseload under which traditional courts are now working. Many courts even encourage some parties to try ADR first (especially mediation) before taking their disputes to court. The cases not eligible for ADR include a those which require an establishment of a principle, public vindication, or infringement of a legal right.
Alternative dispute resolution is presented in a number of forms. As it has been mentioned, the basic approach is inviting the third party to make a decision, which is called arbitration and lies at the heart of dispute resolution. Usually parties resort to arbitration on voluntary basis. In contracting, arbitration is often agreed on as a means of resolving possible future disputes at the point of drawing up the contract by adding a so-called ‘Scott Avery Clause’ to it. Courts have been paying increasing attention to the enforceability of arbitration clauses, especially in case of consumer contracts like credit card agreements. Any arbitration outcome may be appealed to court, but in recent years such appeals tend to mean ensuing detailed review.
The most powerful arguments for arbitration are as follows:
- Arbitration allows quick hearing of the matter;
- The evidence remains private.
- The award remains private.
- The parties can choose the decision maker on their owns.
- The rules may be developed by consent of the parties; there is no specific set of rules to be imposed.
Arbitration also has its weak points. First and foremost, it is rather expensive, although not as expensive as the court trial.
Another popular form of alternative dispute resolution is negotiation. Like in the case of arbitration, resorting to negotiation is voluntary. However, no third party is involved to determine the decision or control the dispute resolution process. It should be noted that a third party in the person of a chaplain, an organizational ombudsperson, a social worker or a skilled friend may help one or both of the parties to prepare for negotiation. This process is called ‘Helping People Help Themselves’. For example, the third party may assist with writing a letter to a party which is to be accused of violation of the contract and should be called for negotiation.
Mediation is the third basic element of alternative dispute resolution. Mediation involves a third party in the role of a mediator who is to facilitate the process of resolution and may optionally suggest a decision (which is known as a ‘mediator’s proposal’). Unlike an arbitrator, a mediator does not impose a resolution on the conflicting parties.
In comparison to adversarial litigation process, mediation does not focus on searching for truth concerning the legal and factual aspects of the case. It concentrates primarily on the search for a final solution to a conflict. The success of a mediation depends not only on a trustworthy mediator but also on the willingness of both parties to compromise and find a solution.
The candidate of a mediator is central in the process. In choosing a mediator, the parties are advised to decide whether they need a rights-based mediator or an interest-based one (depending on the nature of the case). A mediator may also be evaluative or stay quite neutral. His / her style should be adequate to the case. A competent mediator may optionally counsel parties on the possible outcome of their case at the courtroom. Parties can also expect a mediator to have either practical or technical experience in the area of dispute.
Parties which resort to mediation are widely recommended to pay special attention to preparation because it is a client who plays the major role in mediation. When preparing for the mediation, parties are challenged to view their case from the side of a conflicting party as well as their own. Correspondingly, when the mediation is in process, it is very important for all the participants to be active listeners. Parties should decide on who should attend the mediation. A representative of each party who has the authority to take part in the process and make decisions should either attend in person or be within permanent access via telephone or online. If necessary, experts in the field and technical people should be also asked to be present. Although the lawyer observes and corrects the mediation process rather than puts forward suggestions, he / she should be provided with a mediation brief in advance to allow time for them to familiarize themselves with the dispute. Each party should formulate its strategies of resolving the dispute. It does not mean, however, that a party should insist on its way of resolution; hearing and considering settlement proposals is equally important. If the contract which is negotiated needs change, each party should be prepared to quickly assess the new edition.
The role of a lawyer in mediation is not confrontational like at trial, i.e. the lawyer is not required to question the evidence or estimate the truthfulness of each party. The lawyer only facilitates the process of resolving a dispute and should draw up a correct memorandum once the matter has been settled.
Interestingly, in several countries like the United Kingdom alternative dispute resolution means the procedure which is called mediation in other countries.
Collaborative law or collaborative divorce is another form of alternative dispute resolution which involves an attorney presented by each party to facilitate the resolution process within the limits of specifically contracted terms. The solution is sought for and reached with the help of the attorneys and experts which the parties choose on the basis of mutual agreement. Like in mediation, no resolution is imposed on the parties. Strictly speaking, collaborative law is a formalized process and a part of official litigation rather than a purely alternative resolution approach. However, it is described as a type of ADR because it relies on its methodology in attitudes and elements of process.
Other forms of alternative dispute resolution include the following:
- Case evaluation
- Early neutral evaluation
- Family group conference
- Neutral fact-finding
- Rights-based mediation
- Interest-based mediation
Case evaluation involves a representative of the third party in the role of a neutral case evaluator who is addressed counsel the parties on the relative advantages and disadvantages of their respective positions and estimates the likely outcome of the dispute if taken to court or arbitrator. Overall, case evaluation is a service which can serve as a preliminary step in dispute resolution.
In contrast, early neutral evaluation may take place after a case has been issued to court. In early neutral evaluation, an expert investigates the case and gives a balanced and neutral evaluation of each party’s perspectives in the dispute. The advantage of this approach is that neutral evaluation gives parties an objective picture of the case and, as a result, moves them towards compromise and agreement.
Although an effective tool for settling down family conflicts and building cooperative skills between the members of a family, family group conference has no direct relation to contracting.
Neutral fact-finding is opposed to, for example, mediation because it is concerned with finding evidence and looking deeply into the factual aspect of the case rather than with finding effective solutions. It has a neutral third party entitled either by the parties or by the court to investigate the case and report or testify at trial. Neutral fact-finding is widely used in resolving challenging scientific and factual conflicts.
Ombudspersons are third party chosen by an institution to meet the complaints by employees, clients and constituents. The institutions enrolling ombudspersons may vary from universities, hospitals, and government agencies to large privately owned corporations.
Conciliation is a methodology that reminds of arbitration, but a conciliator has less authority than an arbitrator. A conciliator, a representative of the third party invited by the disputing parties voluntarily, meets separately with each party trying to resolve the conflict. Since conciliation has no legal standing, the conciliator usually is not entitled to seek evidence and call witnesses, imposes no resolution, and does not make award. Conciliation is more focused on concession and compromise than mediation, in which the mediator’s role is first and foremost to optimize parties’ needs and reframe representations. In order to make the parties agree to compromise, the conciliator usually asks them to make a list of their goals in the dispute and then mark them in the order of priority. After that, the conciliator asks each party to make a concession at certain points starting with those considered least important. Successful conciliators are experienced negotiators. While some of them work for one of many non-governmental entities, others are employed by governmental institutions such as the Federal Mediation and Conciliation Service. Conciliation usually does not have parties to face each other and discuss the matter together.
Mini-trials are settlement procedures which involve the disputing parties to meet at a hearing held by a neutral counselor (not a judge). The objective is to present the advantages and disadvantages of each side if they take the case to court. An attempt is also made to formulate a voluntary settlement. In many examples, a realistic assessment of the outcome of a court trial prevents many people from taking the case a step further and encourages resolution. The technique appears so effective in reducing the caseload of traditional courts that they started funding mini-trials as well as early neutral evaluation.
Mediation-arbitration is a procedure which combines certain features of mediation and arbitration. The third party is presented here by a person who serves as both a mediator and arbitrator. If parties fail to find resolution in the customary mediation process, the third party has the authority to impose a binding decision upon them. It is widely argued that this procedure leaves place for manipulation by the parties. It may happen in the mediation phase in form of an attempt to influence the result of the arbitration. The reason can be disclosures made during the mediation phase which may present immaterial, prejudicial and/or inadmissible evidence that might cause ethical dilemmas in the following arbitration phase.
The arbitration-mediation procedure applies the reverse order. Parties arbitrate first, but a binding decision made by an arbitrator is only memorialized; parties do not familiarize themselves with it. After that, the parties start mediating. Unless successful at finding a resolution, they call for the arbitrator to announce his / her decision and the parties are bound by it. In other words, the alternatives is for parties to either cooperate in seeking a solution and find the one that would content both or to let the third party impose a solution which they will not be able to negotiate.
Rights-based mediation makes a reference to human rights stated in 1948 in the Universal Declaration of Human Rights adopted by the General Assembly of the United Nations. In this respect, rights-based mediation may be described as relying on independent legitimate standards in determining who is right the dispute. A controversy which is implied by this definition is that the role of a mediator is not decide who is right but rather to help the sides work towards mutual understanding and finding a resolution. However, in rights-based mediation, the mediator is encouraged to persuade the parties to concentrate on a mutually acceptable resolution and put aside their factual dispute.
Compared to rights-based mediation, interest-based mediation focuses very little on the history of the case and is very solution-oriented. It puts great emphasis on relationships between parties. The role of a mediator in this case is to restructure the usually spoilt relationships and persuade the parties that they are unlikely to succeed without trust to each other and cooperation. The resolutions are very individual and not regulated by some legislative system.
Although there are some other relating types of alternative dispute resolution, we have described the basic ones and tried to show that alternative dispute resolution may be an effective approach not only because of the cost and time reduction but also because of less stress and negative emotions associated with cooperative process of finding resolution as compared to a court trial.
Allies, D., Anderson, D. (2005). Conflict Resolution: An Introductory Text. Emond Montgomery Publication.
Glasner, K (2000). Contract disputes: The role of ADR. Dispute Resolution Journal. Retrieved May 15, 2009, from http://findarticles.com/p/articles/mi_qa3923/is_200008/ai_n8912761/?tag=content;col1
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