ADR: Using Mediation and Arbitration to Resolve Legal Disputes
Civil actions are the traditional method for resolving disputes. But concerns about court congestion and delays, rising litigation costs, and the negative psychological and emotional impact of litigation have increased the use of alternative dispute resolution (ADR) techniques. Two frequently used ADR processes are mediation and arbitration. Mediation is essentially negotiation facilitated by a neutral third party. Arbitration is a binding resolution process similar to trial but with fewer technical rules and requirements. ADR procedures can be initiated by the parties or may be compelled by legislation, the courts, or contractual terms. Each method of dispute resolution has benefits and drawbacks. It is, therefore, important for an individual considering the use of ADR to understand the different processes in the context of their specific needs and goals.
When parties are unwilling or unable to resolve a dispute, they often turn to mediation. Mediation is generally short-term, structured, task-oriented, and participatory. In mediation, the disputing parties work with a neutral third party, the mediator, to resolve their disputes. The mediator facilitates the resolution of the parties’ disputes by supervising the exchange of information and the bargaining process. The mediator helps the parties find common ground and deal with unrealistic expectations. He or she may also offer creative solutions and assists in drafting the final settlement. The role of the mediator is to interpret concerns, relay information between the parties, frame issues, and define the problems.
Mediation is usually a voluntary process. In some jurisdictions, however, statutes, rules, or court orders may mandate participation in mediation. Mediation is prevalent in small claims courts, housing courts, family courts, and some criminal court programs and neighborhood justice centers. Unlike the litigation process, where a third party neutral, usually a judge, imposes a decision on the parties, there is no compulsion in mediation. The parties and their mediator ordinarily control the mediation process. They decide when and where the mediation takes place, who will be present, how the mediation will be paid for, and how the mediator will interact with the parties.
Mediation usually begins when the parties submit their case to the mediator or the court orders mediation. In voluntary mediation, the mediator screens the case to determine whether it is appropriate for mediation and whether the parties are ready to participate. When the parties meet, the mediator will explain the process to the parties. The parties may then relate their views in a face-to-face negotiation. After the initial discussion of the parties’ views, the mediator may separate the parties for private discussion sessions. The mediator may then shuttle back-and-forth between the parties in order to assist them with information exchange and bargaining. Finally, the mediator helps the parties define and draft the agreement.
Mediation agreements may be oral or written and their content varies with the type of mediation. Whether a mediation agreement is binding depends on the law in the individual jurisdictions. Usually, mediation agreements are considered enforceable contracts. Additionally, in some court-annexed mediations, the agreement becomes a court judgment. If an agreement is not reached, however, the parties may decide to pursue their claims in other forums.
The mediation process is generally considered more expeditious, inexpensive, and procedurally simple than adversarial problem solving, such as litigation. It allows the parties to focus on the underlying circumstances that contributed to the dispute rather than on narrow legal issues. The mediation process does not focus on truth or fault. Questions of which party is right or wrong are generally less important than the issue of how the problem can be resolved. Disputing parties who are seeking vindication of their rights or a determination of fault will not likely be satisfied with the mediation process.
Arbitration is the most formal alternative to litigation. In this process, the disputing parties present their case to a neutral third party, who renders a decision. Arbitration is widely used to resolve disputes in both the private and public sector. Arbitration is generally considered a more efficient process than litigation because it is quicker and less expensive. It also provides greater flexibility of process and procedure. The parties often select the arbitrator and exercise control over the relevant procedures. Arbitrators typically have more expertise in the specific subject matter of the dispute than do judges. They may also have greater flexibility in decision making.
Under the traditional arbitration model, parties voluntarily participate in the arbitration process. Their participation may be the result of a preexisting contractual provision or an agreement that occurs after the dispute has arisen. Arbitration agreements generally provide a means for selecting the arbitrator or panel of arbitrators, the format of the hearing, the procedural and evidentiary rules to be used, and the controlling law. If these details are not provided for in the contract, the parties may seek assistance from agencies that administer arbitrations.
Typically, a party initiates the arbitration process by sending the other party a written demand for arbitration. The demand generally describes the parties, the dispute, and the type of relief sought. The opposing party usually responds in writing, indicating whether they believe the dispute is arbitrable. If the dispute is arbitrable, the parties then select an arbitrator or panel of arbitrators. In most jurisdictions, the format for arbitration is similar to a trial. The parties make opening and closing arguments, present testimony and witnesses, and offer documents. The evidentiary rules, however, are not applicable and the discovery and cross-examination opportunities are limited. The record is also less complete than that compiled at trial and, as a general rule, written transcripts are not made.
Arbitrators have broad discretion in making their decisions, and judicial review of arbitration decisions is limited. Although it varies from state to state, there are only a limited number of circumstances under which a court will overturn an arbitrator’s decision.
Compulsory arbitration has grown in the United States particularly in the areas of public sector employment disputes, court-annexed programs, and medical malpractice disputes. Several states have enacted legislation mandating critical public sector employees such as police, teachers, and firefighters to participate in arbitration as the final step in negotiating the terms of their collective bargaining agreements. Additionally, court-annexed arbitration has become compulsory for certain categories of civil cases in several state and federal district courts. In some jurisdictions, however, court-annexed arbitration is offered as an option. The arbitrators in court-annexed arbitration are usually lawyers or retired judges, and the parties may or may not have an opportunity to select from a pool of potential arbitrators.
Court annexed arbitration differs from the traditional arbitration model in several ways. It often requires parties to arbitrate rather than voluntarily participating. Parties have a right to a trial if they are not satisfied with the arbitrators’ award, but in some systems parties must pay court cost or arbitrators’ fees if they do not have a better outcome at trial.
Arbitration is the preferred method of resolving international commercial disputes because it is efficient, low cost, private, procedurally flexible, and administered by experts in the disputed area. At the international level, arbitration also allows parties to avoid litigation in a foreign courtroom. The United Nations Committee on International Trade Law and the International Chamber of Commerce have both established arbitration rules. In the United States, both state and federal statutes govern international arbitration law.
The current emphasis on resolving civil disputes through ADR began as a legal reform movement in the 1970s. Concern over the negative effects of increasing litigation caused legal reformers to seek alternatives to the traditional litigation system. Mediation and arbitration are two frequently used ADR mechanisms for resolving problems that do not lend themselves to the traditional litigation process. With ADR the parties are better able to formulate a remedy that meets their specific goals and needs. ADR allows the parties to play a substantial role in resolving their disputes and to avoid the uncertainty of trial and appeal. Perhaps most importantly, ADR decreases the substantial economic, social, and psychological costs of litigation.
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