What is arbitration?
Arbitration was devised to overcome some of the problems encountered in litigation. Arbitration still empowers a third party to decide a dispute, though it is more likely that the arbitration would have subjected-area expertise which makes the decision more palatable as the arbitrator would better understand the issues at stake since he is able to speak the same language as the disputing parties.
It is instructive to consider ADR as a composite Dispute Resolution Tool Box; the tool kit containing different tools for the effective resolution of disputes.
It is also pertinent to note that the term ‘alternative’ is no longer appropriate to mainstream ADR processes. It is better to think of these techniques as ‘Effective Dispute Resolution’ (EDR) solutions matching the needs of the parties in order to use the most effective technique in each situation. These will naturally include litigation as some disputes may require litigation for effective resolution.
ADR is flexible and adaptable and specific ADR processes can be devised to suit complex disputes in interpersonal and communal conflicts. Where there is willingness to use alternative methods of dispute resolution, an appropriate process can be found.
CHOOSING THE ‘RIGHT’ ADR MECHANISMS FOR SPECIFIC DISPUTES
One size does not fit all. The dispute resolution mechanism chosen for a particular dispute will depend on the result desired. For example, where a severance in a relationship is the goal or interim relief is sought or precedence is required and where the delay is seen as beneficial, then an adversarial process such as litigation might be the most appropriate route to take. However, where parties are in an important relationship, the sustenance of which is mutually beneficial, or where there is a predisposition on the part of the parties for a settlement, where there is a desire for confidentiality or for party control of ownership dispute and outcome; where there is a belief that neutral third parties may help arrive at a negotiated solution, where there is a concern for loss of face, where emotions have run so high that a forum is needed to fully express feelings, where there are complex or technical issues and more importantly, where there is a desire to save an ongoing relationship; then an amicable dispute resolution mechanism such as mediation would be the most appropriate approach.
Every business owner has signed an agreement at one point or another. In a perfect world, these agreements would always be executed as they’re agreed upon. However, everyone knows that contracts are breached and agreements aren’t honored all the time. These disputes and incongruities can lead to more trouble, headaches, and lawsuits more often than not. One thing is certain when these issues arise; all parties are faced with potentially higher fees and costs than they initially anticipated. As a business owner, it’s imperative to find a way to mitigate the cost of these issues when they do arise. So, how is this done?
If you’ve never needed to implement an Alternative Dispute Resolution (ADR) clause, you should consider yourself lucky. If you have, then you understand the benefits of a properly written ADR clause. An ADR clause can help with many inconvenient post-agreement situations. That being said, if you’ve never heard of an ADR agreement, then you should consider the following.
An ADR clause is included in a contract or agreement and provides for a dispute resolution process that falls outside of the judicial process. There are many reasons to include an ADR clause. Some of the benefits include reduced costs (versus litigation), more efficient/expeditious, full compliance with due process, choice of an arbitrator for arbitration, flexible scheduling, and confidentiality of proceeding to name a few. There are also different kinds of dispute resolution methods to consider when drafting your contract or agreement. Different industries are better suited for certain kinds of methods than others. The most common methods include arbitration and mediation. The more uncommon methods include structured negotiations, standing project neutral, standing dispute review board, and expert determination to name a few.
If you’ve ever had to implement an ADR clause then you may or may not have had issues when the situation presented itself. As great as an ADR clause is for both parties, it must be well written and specifically acknowledged by all parties on the agreement – on top of the agreement being properly executed. These elements are critical for the clause to take effect. Consult with us before finalizing your agreements to make sure your ADR clause is enforceable.