Title: Alternative Dispute Resolution Mechanisms
Presentation Type: Voice presentation and slide presentation
Presentations main idea: Suggesting the best alternative dispute resolution mechanism for a case scenario
Alternative Dispute Resolution (ADR) refers to any process designed for the resolution of disputes without having recourse to the law courts. It refers to all those dispute resolution mechanisms and processes other than litigation. These processes include but are not limited to negotiation, enquiry, mediation, conciliation, expert determination, arbitration and traditional dispute resolution mechanisms. Other mechanisms would include dispute prevention, adjudication, expedited arbitration, hybrid between mediation and arbitration and hybrid between arbitration and mediation. One of the key reasons that parties may favor ADR processes over combative litigation is that, unlike confrontational litigation, ADR procedures are typically collaborative and allow the parties to comprehend each other’s perspectives. ADR also enables the parties to devise more imaginative solutions that a court may not be legally permitted to enforce.
This paper is going to look into a dispute between ABC developments ltd and CBC ltd, give submissions on three possible dispute resolution mechanisms the two parties can adopted then in the conclusion part suggest the most suitable mechanism.
Key Facts of the Dispute
That ABC Developments ltd contracted CBC to refurbish a mall. This contracted had a completion date and a liquidated damages clause that would take effect in the event the date of completion is not met. However the contractors CBC have encountered challenges because ABC failed to provide sufficient information regarding the modifications to be made in different shops in the mall and there were also last minute changes into the modifications of some of the shops. This has resulted to delay and it is evident that the work would not be completed on time and also ABC is accusing CBC of providing poor quality.
Therefore the legal issue in this dispute which is essential in determining the best alternative dispute resolution to apply here would be whether the late modifications and failure to give explicit instructions occasioning failure to complete the contract on the stipulated time is enough reason to stop the liquidated damages clause in the contract from taking effect.
Arbitration is a contract-based method of resolving binding disputes. In other words, a party’s right to refer a dispute to arbitration is contingent on the presence of a written agreement between them and the other parties to the dispute that the disagreement may be referred to arbitration.
Commercial contracts will frequently include provisions for resolving contract-related disputes. If the parties choose for arbitration, the arbitration agreement is usually included in the document that records the conditions of the commercial transaction. After a disagreement has occurred, parties can also engage into an arbitration agreement.
When the parties enter into an arbitration agreement, they agree to refer their dispute to a neutral tribunal to determine their rights and obligations. Arbitration is not the same as mediation or conciliation, despite the fact that it is sometimes referred to as a form of alternative dispute resolution. A mediator or conciliator can only make suggestions, and the parties have the option of accepting or rejecting those advice. An arbitration panel, on the other hand, has the authority to make binding rulings on the parties.
Advantages of Arbitration
1. Unlike courts it is easy to schedule and a quick resolution can be reached
2. Unlike courts it has simplified rules on procedure and evidence
3. Unlike courts it safe from public scrutiny
4. Both parties take part in choosing the arbitrator giving confidence to each party on the tribunals’ impartiality
Disadvantages of Arbitration
1. On mandatory arbitration, the parties do not have power to choose an arbitrator there by the process might not fair.
2. Choosing an arbitrator is not necessarily an objective procedure. In other situations, the arbitrator may be biased because he or she has a commercial link with one of the parties or is chosen from a pool list by an agency. In such cases, impartiality is lost.
3. Although the arbitrator is required to follow the law in general, the standards used are not clear. Instead of strictly following the law, the arbitrators may consider the “apparent fairness” of the respective parties’ positions. This is especially crucial if your side might benefit from a rigorous interpretation of the law.
4. Arbitration can be more expensive than judicial procedures in certain situations. High-quality arbitrators can charge fees that would not be allowed in court. The final decision or award in a non-binding arbitration is not “binding,” and the parties are free to take their dispute back to court, thereby adding the expense of litigation to the cost of the preceding arbitration. (Ridley‐Duff, R. and Bennett, A., 2011)
In general, the phrase “adjudicate” means “to make a decision” or “to judge.” A specialized usage of the term “adjudication” emerged in recent times as a kind of alternative dispute resolution (ADR) applicable to the construction sector. Its definition in this context is not widely agreed upon, with it being defined more often by what it is not than by what it is, although most definitions reflect the following characteristics: (Resnik, J., 1994)
a) The goal is to make a conclusion that is fair, quick, and economical.
b) The adjudicator must operate impartially and in compliance with natural justice standards.
c) Adjudication is neither arbitration nor expert determination; yet, the adjudicator may depend on his or her own competence.
d) The judgment of the adjudicator is immediately binding (finality is dependent on whether it is challenged within the allotted time, in which case finality may be reached through arbitration, litigation or by agreement).
Advantages of Adjudication
a) Interim-binding (that is, they are binding until the matter is resolved by legal action, arbitration, or agreement);
b) Usually enforced in court by the victorious party;
c) Seldom successfully contested by the losing side.
Disadvantages of Adjudication
a) Adjudication can be costly than litigation
b) On mandatory adjudication like arbitration parties might not have the luxury to choose their adjudicator.
Mediation refers to an informal and non-adversarial process in which an impartial mediator encourages and facilitates the resolution of a dispute between two or more parties; however, it does not include attempts made by a judge to settle a dispute during judicial proceedings.
A party to a dispute may choose mediation over traditional litigation or other kinds of alternative dispute resolution for a variety of reasons. Affordability, speedy settlement, private sessions, secrecy, involvement in the resolution of the conflict, and, in many circumstances, maintenance of the relationships between the parties is some of them.
Mediation costs less than the average time and money spent on litigation of a disagreement. The hourly charge of a mediator is typically cheaper than that of a lawyer. Parties can generally schedule mediation within weeks after reaching an agreement to mediate or receiving a court order to mediate. (Menkel-Meadow, C., 2015)
Mediators are available in the evenings, on weekends, and on regular weekdays. There are no observers present during the mediation, and nothing spoken during the mediation may be repeated or relayed to another party by the mediator. The only record of the proceedings is the Settlement Agreement. The parties’ Agreement to Mediate, which they sign before to the conference, frequently reminds them of the secrecy of the session and that the mediator is not accessible as a volunteer witness in a trial of the issue.
The capacity to provide user-friendly remedies to disputes is an appealing aspect of mediation. The parties are given the authority to address their problem in workable terms in order to create a “win-win” settlement. This frequently helps healing if one side is extremely resentful or permits the parties to continue their business, job, or personal connection. In many circumstances, the parties improve their working relationship in order to increase workplace efficiency.
For this case scenario, the best Alternative dispute resolution mechanism would be mediation. This is because solution required for this kind of dispute is one that would ensure completion of the contract and continued good relations among the two contracting parties and mediation as depicted above would provide this. Also the earlier this is settled the better so that the contract does not delay any further and among the three alternative disputes resolution mechanisms discussed here mediation would not take much time
Call for question from audience and then giving answers
Ridley‐Duff, R. and Bennett, A., 2011. Towards mediation: developing a theoretical framework to understand alternative dispute resolution. Industrial Relations Journal, 42(2), pp.106-123.
Resnik, J., 1994. Many Doors–Closing Doors–Alternative Dispute Resolution and Adjudication. Ohio St. J. on Disp. Resol., 10, p.211.
Menkel-Meadow, C., 2015. Mediation, arbitration, and alternative dispute resolution (ADR). International Encyclopedia of the Social and Behavioral Sciences, Elsevier Ltd.
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