Alternative Dispute Resolution is a process of resolving disputes between parties, prior to, or during litigation. Mediation and Arbitration are the two most widely used forms of alternative dispute resolution. The legal profession, many businesses, and the insurance industry have made mediation and/or arbitration a part of their professional or business policy for resolving disputes.
Most businesses and people are all too familiar with litigation. At the first sign of a disagreement or dispute it is not unusual to hear, “I will sue you”, or “I will see you in court”. When faced with a dispute, those who own, operate or manage businesses are learning, it is more advantageous to reach practical and private agreements than to fight, sometimes for years, and spend huge amounts of money in litigation battles.
Types of situations where mediation or arbitration of disputes might be an option attempted prior to litigation are: disputes arising under collective bargaining agreements between labor and management, disputes between business partners, disputes involving co-workers, harassment, or discrimination, disputes between landlords and tenants, contract disagreement, insurance, property, and injury matters.
Mediation – a process whereby a neutral third party ‘mediator’ acts to facilitate the resolution of a dispute between 2 or more parties. The mediator does not render a decision and has no ability to force a party to accept a particular settlement or resolution. The mediator uses negotiation skills and techniques to enhance the ability of the parties to reach a settlement or resolution. While very important, the applicable law and the rules of evidence, what can be considered in support of a case, are secondary to the process of reaching a mutual agreement. The cost of mediation is less than that of arbitration or litigation.
Arbitration – a process whereby a neutral third party or panel ‘arbitrator or arbitration panel’ considers the facts and arguments presented and renders a decision in a dispute between 2 or more parties. The arbitrator or arbitration panel serves the same role as a judge or panel of judges. Settlements or resolutions are based on the applicable law; however, the rules of evidence are not as strict as in litigation. The cost of arbitration is greater than mediation and in the overwhelming majority of cases less than litigation.
Litigation – a process whereby a judge or jury considers facts and arguments and renders a decision in a dispute for the purpose of enforcing a right or seeking a remedy. Unlike mediation and to some extent arbitration, settlements or resolutions are based solely on the law, and the rules of evidence are strict and limit what can be considered. In litigation it is less likely that genuine issues in a dispute can be addressed as readily as in mediation or to a lesser extent arbitration.
Justice Sandra Day O’Connor said, “The courts of this country should not be the places where the resolution of disputes begins. They should be the places where disputes end – after alternative methods of resolving disputes have been considered and tried. The courts of our various jurisdictions have been called the courts of last resort.”
Disputes and conflicts in business are impossible to avoid. How disputes and conflicts are resolved can have a positive or negative impact on the profit margin of a business, the working environment of a business, employer-to-employee relationships, employee-to-employee relationships, and business-to-business relationships. When disputes and conflicts do arise, businesses are finding that alternative dispute resolution, as a first option to resolving the dispute, is more positive than negative.
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