ADR in Business: When Business Meets Conflict

ADR in Business: When Business Meets Conflict

Alternative Dispute Resolution ("ADR") refers to any means of settling disputes outside of the courtroom; it is also known as "Appropriate" Dispute Resolution.

I. What is ADR?

Alternative Dispute Resolution ("ADR") refers to any means of settling disputes outside of the courtroom; it is also known as "Appropriate" Dispute Resolution. Other lawyers think ADR stands for Alarming Drop in Revenue whilst settling disputes!
ADR typically includes early neutral evaluation, negotiation, conciliation, mediation, and arbitration. While the two most common forms of ADR are arbitration and mediation, negotiation is almost always attempted first to resolve a dispute.

Types of ADR Processes:

Negotiation: A voluntary process of resolving disputes without a third party’s involvement or binding resolutions.Mediation: A negotiation that utilizes a third-party process manager to assist disputants in collaborating to produce an outcome based on consensus.
Mediation is non-binding.Arbitration: Less formal than adjudication, this method empowers a neutral decision-maker to decide how to resolve a dispute. The results are binding.

[Vermont Land Use Education & Training Collaborative, 2011:1]

II. Why ADR?

ADR in Business: When Business Meets Conflict

Illustration: imagine two cooks having a disagreement about who deserves the last orange. A judge would listen to both cooks reasoning and award the orange to one of the cooks. Alternatively a judge might split the orange in half. In contrast, a process manager would allow each cook to explain their interests in receiving the orange. At this point, the process manager could discover one cook needs zest from the peel to make marmalade, while the other requires the flesh to create juice. A process manager might then produce a result that satisfies both cooks by giving the rind to the first cook and the flesh to the second cook.

[Vermont Land Use Education & Training Collaborative, 2011:2]

My interest in the use of ADR in business disputes arose when I came across an overview presented by Lord Justice Mance during the first European Conference of Judges. The Lord Justice refers to the publicity booklet issued by English barristers, which dates back to the mid-80s, wherein he refers to an episode where he saw a caricature of a lion-faced barrister who was sitting by the table and yelling at the client “Settle!? What’s the fun out of that?” [Mance, 2003: 17].

In rеcеnt yеаrs, а trеnd tоwаrds еxpаnsiоn оf ADR hаs bееn nоticеd. ADR is cоnsidеrеd tо bе аn аttrаctivе cоmpеtitоr tо thе cоurt on account of fеаturеs such аs prеsеrvаtiоn оf privаcy, cоsts sаving, еxpеditiоus dеcisiоn mаking, chоicе аnd cоmpеtеnce оf mediators/аrbitrаtоrs, аnd avоidаnce оf аdvеrsаriаl prоcееding, аs thеrе аrе limits оf аdjudicаtiоn. Within a rеlаtivеly shоrt timе, lаwyеrs аs wеll аs оthеr mеmbеrs оf sоciеty began rеаlising thаt litigаtiоn аlоnе cаn hаrdly оffеr mоrе thаn a prоfitаblе оccupаtiоnаl nichе fоr bаrristеrs [Mance, 2003: 17].

Conflict is inevitable in business relationships, just as it is in social relationships. I firmly believe that the most efficient way of resolving business disputes is amongst the parties themselves. The latter process can be facilitated by use of a mediator where needed. Arbitration is most commonly used today for the resolution of commercial disputes, particularly in the context of international commercial transactions. All in all, cоurt shоuld bе the last resort as it is not the best venue to address commercial disputes.

III. Interdependency between the courts and ADR in civil justice

ADR without the credible threat of judicial determination is the sound of one hand clapping.

ADR in Business: When Business Meets Conflict

(Lloyd Whannel: the Sound of One hand Clapping)

I advocate a modern view towards encouraging alternative means of dispute resolution and not just seeing the beauty of adjudication in it. I am passionately committed to the idea that neither adjudication, nor ADR should be seen as a panacea. However, adjudication and ADR should be in tandem, otherwise there will be the mere “sound of one hand clapping”.

ADR in Business: When Business Meets Conflict

Author: Beata Kozubovska

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