“Alternative dispute resolution (ADR) has a critical role to play for in-house counsel seeking to do more with less, but it remains something of a novelty as compared to the centuries-long tradition of courtroom litigation.
While there were many international arbitrations in the nineteenth century and into the early twentieth century, they tended to be pursuant to treaties under public international law with states acting against other states on behalf of their nationals and their commercial interests. Such arbitrations tended to be between imperial powers – British, Dutch, Portuguese or Soviet – and only following the dismantling of these empires and the consequent explosion in the number of independent nation states did international arbitration become the mainstream concern it is today.
Mediation is a more recent phenomenon, propelled into existence in the United States in the mid-1970s, as a response to spectacular increases in the number of civil and commercial disputes during the 1950s and 1960s and fear of the consequences of this trend if left unchecked. Uptake of mediation outside of the United States in the absence of such pressures has been uneven.
Nevertheless, mediation has been adopted for different reasons in different jurisdictions, and is now a mainstream, though not always well-understood, option in the UK. While its roots can be traced back to the late 1980s in the UK, only with the advent of the CPR following the Woolf Reforms of 1999, did commercial mediation receive judicial support, and then only weakly.
Since then, commercial mediation has grown in stature and case volume, and the process itself has evolved and adapted to meet market demands. In 2016, most, but not all, cases heading to court will be mediated at some point along the way. Quite when the mediation could and should optimally occur is a substantial and much-debated topic.”
The author goes on to say…
“Companies should be aware of alternative dispute resolution options
For companies dealing with disputes – as either a claimant or a defendant – a grounding in the available dispute resolution options is a pre-requisite for a satisfactory outcome.
Mediation and arbitration are the two most common alternatives to litigation in court. They are markedly different but fall under the umbrella term “alternative dispute resolution” or “ADR”.
Their principal distinguishing feature is that arbitration is, generally speaking, binding, and mediation is non-binding. Both are, in different degrees, consensual and, unlike court, offer procedural flexibility and confidentiality.
Arbitration is binding and consensual
Arbitration, as compared with mediation, is better established and has a longer history; despite its private and confidential nature, it is similar to court in that parties will present their case to a tribunal, which will make a determination by which the parties will be bound. They are, however, bound by consent: the parties have agreed by contract to give the tribunal jurisdiction over their dispute and agreed to be bound by their findings.
In most cases, the determination is final and not subject to appeal in the way that superior courts hear appeals from lower courts. It is fundamental that parties have the right to select and appoint the tribunal of their choosing, subject to the agreement of any other parties in the case. The tribunal will then agree on a procedure with the parties, which will include a timetable, the scope of document disclosure (if any), the role of witnesses (if any), whether an oral hearing is necessary and, if so, whether cross-examination is desirable or appropriate.
Procedurally, therefore, each arbitration has the potential to be different, according to the facts and the demands of the parties. The resulting award has the power of a contract and can be enforced internationally, if required, in almost every country under the New York Convention (1958).
Mediation is less formal
Whereas arbitration can fairly be described as a “creature of contract”, mediation is altogether less formal. Unlike arbitration, which operates with the support of legislation and the approval of the courts, mediation floats free. At its simplest, mediation is a facilitated negotiation; until an agreement is reached and reduced to writing the parties have no obligations.
The mediator has no power to compel witnesses or document disclosure, and no power to impose a settlement on the parties. The parties are free to engage or disengage with the process as they wish. Much therefore depends on the personal power, skill, charisma and gravitas of the mediator to drive discussion forward productively to a mutually agreeable outcome. All negotiations are confidential and without prejudice to further proceedings if the matter does not settle.
From this privileged position, a skillful mediator can deploy a range of skills and tactics to sustain dialogue, explore workable solutions and, in the vast majority of cases, produce a settlement.”
The author concludes…
“Alternative dispute resolution is a growing and valuable global phenomenon whose entry into the mainstream is often reflected by the relabelling of ADR as “appropriate” or “additional” dispute resolution”.”
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Curated for PhloxADR – Your Alternative to Court
We are a group of alternative dispute resolution (ADR) professionals that have experienced some of the same struggles you face today. Seeking alternatives to lengthy court experience, sky rocketing legal costs and never ending battles, which brought us together, is the service we provide for you.