Chapter 4 Alternative Dispute Resolution Search for Alternatives

Chapter 4 Alternative Dispute Resolution

Search for Alternatives to Litigation o Trials are a means of dispute resolution that are very expensive and sometimes take many months to resolve. o There are “alternative dispute resolution” (ADR) methods to resolve disputes that are inexpensive, relatively quick and leave more control with the parties involved. 2

ADR o ADR describes any procedure or device for resolving disputes other than the traditional judicial process. o Unless court-ordered, there is no record which is an important factor in commercial litigation due to trade secrets. o Most common: negotiation, mediation, arbitration. 3

Negotiation and Mediation o Less than 10% of cases reach trial. o Negotiation is informal discussion of the parties, sometimes without attorneys, where differences are aired with the goal of coming to a “meeting of the minds” in resolving the case. o Successful negotiation involves thorough preparation, from a position of strength. 4

Assisted Negotiation o Mini-Trial: Attorneys for each side informally present their case before a mutually agreed-upon neutral 3 rd party (e. g. , a retired judge) who renders a non-binding “verdict. ” This facilitates further discussion and settlement. o Expert evaluations. o Conciliation: 3 rd party assists in reconciling differences. 5

Mediation o Involves a neutral 3 rd party (mediator). o Mediator talks face-to-face with parties (who typically are in different adjoining rooms) to determine “common ground. ” o Advantages: few rules, customize process, parties control results (win-win). o Disadvantages: mediator fees, no sanctions or deadlines. 6

Arbitration o Many labor contracts have binding arbitration clauses. o Settling of a dispute by a neutral 3 rd party (arbitrator) who renders a legally-binding decision; usually an expert or well-respected government official. o More formal than negotiation or mediation – similar to trial 7

Arbitration Process o Contracts include a binding arbitration clause or through a submission agreement. o Case begins with a submission to an arbitrator. Next comes the hearing where parties present evidence and arguments. Finally, the arbitrator renders an award. o Courts are not involved in arbitration unless an arbitration clause in a contract needs enforcement. 8

Setting Aside an Arbitration Award o Losing party may appeal the decision to a court. o Winning party may ask a court to enforce the award. o Court’s role is limited to determining whether a valid award exists o Facts and legal conclusions are usually final. 9

Setting Aside an Award o o Award result of fraud or corruption. Arbitrator bias. Arbitrator abuse of discretion. Arbitrator exceeded powers. 10

Disadvantages of Arbitration o Results may be unpredictable because arbitrators do not have to follow precedent or rules of procedure or evidence. o Arbitrators do not have to issue written opinions. o Generally, no discovery available. 11

ADR Forums and Services o Non-profit organizations: o American Arbitration Association. o Better Business Bureau. o For-Profit Organizations: o JAMS-ADR. com 12

Online Dispute Resolution o Also called ODR. o Uses the Internet to resolve disputes. o Still in its infancy but is gaining momentum. o See, e. g. , www. cybersettle. com. o Arbitration Programs. o ICANN resolves domain name disputes. 13

International Dispute Resolution o Forum Selection and Choice-of-Law clauses in contracts govern the transaction. o Arbitration clauses are generally incorporated into international contracts. 14