Alternative dispute resolutions, known as ADRs, are used to describe any method of resolving disputes without litigation. ADRs are less formal than a court trial and are usually less expensive and time consuming. Alternative dispute resolutions are used to resolve a conflict outside of a court process. Successful ADR processes maintain societal peace and provide justice for those who are not adequately served by the U.S. judicial court system. They do not serve as a rule of law and cannot serve as a legal precedent. Alternative dispute resolutions are frequently useful in infringement and licensing disputes for patents, trademarks, and copyrights.
Knowledge of alternative dispute resolution history is important to understanding its usefulness. Alternative dispute resolution processes in the United States first arose in the 1970s as a potential remedy for crowded court backlogs. The ADR movement launched as a civil rights solution to the delay and expense of litigation. Litigation is the settling of a dispute in a court of law. This movement has grown swiftly and its processes are backed by the American Bar Association, as well as U.S. federal and state governments. In the 1990s, Congress passed three separate statutes that collectively required agencies to create policies encouraging alternative dispute resolutions while also making them more available to disputants.
The first statute, the Administrative Dispute Resolution Act of 1990, requires each federal agency to adopt policies that address the use of the full range of alternative means of dispute resolution and case management. The second statute, the Administrative Dispute Resolution Act of 1996, amends the Administrative Dispute Resolution Act of 1990 (ADRA) and other federal law with regard to alternative means of dispute resolution (ADR) in the administrative process. The third statute, the Alternative Dispute Resolution Act of 1998, was another amendment of the ADRA of 1996 that authorized all ADR processes in district courts.
There are multiple benefits to using alternative dispute resolutions over litigation in a court of law. Serving as more of a court of equity, ADRs allow for more creative solutions to a conflict. They also allow for conflicts to be solved quickly, whereas litigation is more time consuming for all parties including disputants, attorneys, and court staff. Because most ADR processes are resolved with voluntary agreements, parties leave conflicts more content than they may have if they settled in a court of law. ADRs are also much more confidential than a public court trial, allowing parties to settle with privacy.
4 Types of Alternative Dispute Resolutions
There are multiple types of alternative dispute resolutions used in the United States – even specialized processes for different industries. The four main types of alternative dispute resolution methods are negotiation, mediation, arbitration, and conciliation. Depending on which type, each of these processes aim for early intervention or conflict resolution. Alternative dispute resolution examples can include a negotiation case for higher pay or a mediation case where a mediator is needed to settle the dispute of a company not paying an employee on time.
Negotiation is the most flexible method of ADRs. In this process, parties bargain in order to try and reach an agreement. This process is often the first method of conflict resolution used as it can occur before entering into a binding agreement, such as a contract. Not only can negotiation lay the groundwork for a potential future relationship between two or more parties, it can also be used to resolve a dispute that already exists. Negotiations can occur directly or indirectly.
The negotiation process is non-binding, meaning that parties involved in the matter have the option to reject or accept the outcome of the negotiation. This serves as one of the advantages of this type of alternative dispute resolution; both parties have control of the solution process which allows for more successful outcomes. Some common terms negotiated include prices, representations and warranties, covenants, liabilities, conditions, indemnities or out-of-court settlements.
Just as there are advantages, disadvantages of negotiation also exist. If both parties are not equal, the weaker party may be put into a disadvantageous position. For negotiation to work, both parties must be of good faith and trustworthy. Another disadvantage would be the possibility of negotiation termination if a deadlock, or impasse, occurs in the proceedings. A deadlock leads to a huge loss in time and money invested because no resolution was made. The negotiation process of ADRs differs from mediation and arbitration because it does not resort to a neutral third party in creating a solution.
Mediation is the next alternative dispute resolution and is the preferred ADR process of the U.S. Department Of Justice. Mediation is the process wherein a neutral third party intervenes in the conflict resolution. The impartial mediator cannot render a binding decision and simply assists the disputants in reaching a voluntary agreement where both parties leave the dispute content with the solution. Mediation is typically used when conflicting parties are unproductive in their communication with one another and must resort to an impartial mediator to reach an agreement.
Not all mediators work the same in their degree of directiveness. Some mediators prefer to make minimal suggestions, leaving parties to bargain themselves and only intervene when a deadlock has occurred or can be seen approaching. Other mediators have much more input in the details of bargaining for a resolution. An advantage of mediation is the allowance of more creative techniques unavailable to other methods of dispute resolution. An example of this would be a mediator speaking ex parte (without other party) with each disputing party to find a peaceable mutual solution that would not have otherwise developed. These orders are non-binding and are usually temporary until further mediation takes place.
Another advantage of mediation is the opportunity for open lines of communication. Mediators help reduce the discomfort of conflict in the workplace whether it is between management and an employee or between fellow coworkers. This open line of communication reduces the processing time of coming to an agreement, which allows for employees to return to a productive work life quickly. This method of alternative dispute resolution is much less rigid than arbitration.
The next method of alternative dispute resolution used in California is arbitration. Arbitration is the process by which a neutral party listens to both sides’ arguments and renders a binding decision both parties must follow. The neutral party, an arbitrator, does not have to be a lawyer. This process is the judicial method of settling disputes outside of the courtroom.
An agreement for arbitration can be made before or after a dispute arises. In the case of prior to a dispute, parties usually enter into a binding arbitration agreement such as a contract or another form of agreement with an arbitration clause. This step allows them to lay out major terms for the arbitration process. These major terms can include the number of arbitrators, arbitration forum, arbitration rules, fees, and more.
There also exists non-binding arbitration where disputants can reject the arbitrator’s resolution if not content with it. In non-binding arbitration, disputants present their conflict to an arbitrator or an arbitration panel to receive advice, seen as a non-binding decision. It is mainly used to solve labor disputes involving management or commercial disputes.
There are different types of arbitration: national arbitration, international commercial arbitration, and investor-state arbitration. In national arbitration, parties are governed by different rules enacted by the institutions of each country. International commercial arbitration is typically used to settle disputes that emerge from commercial contractual relations between buyers and sellers who work in two different states. Investor-state arbitration refers to the unilateral referral by private individual investors to an arbitral tribunal against a host state of their investment.
Not only are there different forms of arbitration, but there are also specialized types of arbitration. Arbitrators can have specific knowledge of an industry, making them specialized in such cases of arbitration.
The last method of alternative dispute resolution is conciliation. This method of dispute resolution is the attempted resolution of issues raised by a complaint or by the investigation of a complaint. It is important to note that conciliation is not actively used in California. This process differs from arbitration as it is used once a conflict has already occurred to avoid further escalation. It involves a conciliator that does not render binding decisions and simply helps negotiate a resolution to the dispute.
Each alternative dispute resolution can be used to come to an agreement between disputants, but each one has its advantages and disadvantages depending on the type of conflict and its seriousness. Knowing which ADR to use in accordance with the dispute is crucial in coming to a resolution swiftly and inexpensively.