ADR (Alternative Dispute Resolution)
- What is ADR?
- What is Arbitration?
- What is Mediation?
- What is Facilitative “Classic” Mediation?
- What is a Hybrid Process?
- What are ADR’s Limitations?
- Is ADR Required by the Courts?
- Can Mediation be Converted to Arbitration?
- Are Domain Name Disputes subject to Arbitration?
- What is an Adjudicative Process?
- What is Final Offer Arbitration?
- What is Online Alternative Dispute Resolution?
- What is Private Judging?
- What is a Settlement Conference?
- What is a Special Master?
- What is a Summary Jury Trial?
- What is AAA?
- What is JAMS?
- What is CPR?
- Why Mediate?
- Why Arbitrate?
- How can I use ADR?
ADR is a method, procedure, or technique used in lieu of traditional or formal adjudication to voluntarily resolve a dispute. As used in this chapter, ADR refers to mediation, non-binding arbitration, and binding arbitration.
Arbitration is an adjudicative process in which an arbitrator or panel of arbitrators issues a decision on the merits after a hearing. In general, before the arbitration the parties should agree that the decision by the arbitrator(s) is binding or non-binding. If the parties select non-binding arbitration, any party may reject the non-binding decision. If a party rejects the non-binding decision, the parties can resume the same status as before arbitration and proceed as if arbitration had not taken place.
The advantages of arbitration are as follows:
- Quicker results than available in court
- Shorter and less costly proceedings than court trials because technical rules of evidence and procedure are often relaxed
- Resulting savings both in litigation expenses and client’s time and effort
- Greater choice in selection of fact-finder and better qualified fact-finders (e.g., the agreement may provide for appointment of a particular arbitrator or panel of arbitrators with special expertise)
- Greater privacy than judicial proceedings
- From a defense standpoint, no exposure to “runaway” jury verdicts and less risk of punitive damages
- From a public policy standpoint, there is less burden on the courts and more community involvement in the dispute resolution process.
The disadvantages of arbitration are as follows:
- Perception of “justice by halves”: Arbitrators are more likely than judges to make compromise awards that satisfy neither party (“splitting the baby”).
- There is generally no right to discovery in arbitration proceedings.
- From a plaintiff’s standpoint, lack of a jury trial may limit the value of the claim.
- From a defense standpoint, arbitration usually requires a full-blown evidentiary hearing, with no opportunity for the summary judgment shortcut available in court.
- Some arbitrations routinely take longer than court proceedings (e.g., in medical malpractice cases). There are usually no “fast track” rules in arbitration, and arbitrators are often more lenient than judges in permitting continuances.
- Arbitration filing fees are usually higher than court filing fees. Some arbitration agreements require a panel of several arbitrators whose fees are likely to be substantial.
- Finally, there is less control on delay in arbitration than in court proceedings, and such delays run up costs and legal fees.
- An arbitrator may make an award based on broad principles of “justice” and “equity” rather than the rules of law or evidence that would apply in court proceedings.
- If the opposing party wishes to avoid arbitration, it can utilize various procedures to challenge and delay the arbitration hearing.
- Moreover, after an award is made, the opposing party has additional procedures to challenge the award.
- There are only limited grounds (e.g., fraud, corruption) on which an arbitration award can be challenged in court.
- There are only limited grounds to join non-signatories, so that there may be incomplete resolution of the dispute, with parties at fault watching the proceedings from the sidelines.
- A defendant who obtains a contractual arbitration award cannot use the award as a basis for a claim of malicious prosecution.
Mediation refers to a process whereby a neutral third person called a mediator acts to encourage and facilitate the resolution of a dispute between two or more parties. It is a voluntary, informal and non-adversarial process with the objective of helping the disputing parties, reach a mutually acceptable written agreement. In mediation, decision making authority rests with the parties. The role of the mediator includes, but is not limited to, assisting the parties in identifying issues, fostering joint problem solving, and exploring resolution alternatives.
It is mediation which involves a neutral third party in the dispute resolution process. In “facilitative” mediation, the neutral usually deals directly with the parties rather than through their attorneys. The mediator's function is to assist in negotiations. The mediator helps the parties define the issues, overcome barriers to communication, and explore alternative methods of resolving their dispute. The mediator's key function is to make sure each party is realistically evaluating his/her position.
The potential advantages include:
- It is generally inexpensive
- Confidential proceedings
- Reduces emotional barriers to communication and assists the parties to focus on their best interests
- Parties control the process and decide the outcome
- When compared to litigation, there is a better chance to reach a satisfactory solution
The potential disadvantages include:
- Participation cannot be compelled
- Results are not binding on the parties
- The rate of success highly depends on the mediator’s knowledge and skill
There are other ADR methods which include hybrid processes such as arbitration-mediation (“Arb-Med”) and mediation-arbitration (“Med-Arb”), as well as variations on standard methods of ADR such as mini-trial and baseball arbitration. The parties may agree to the hybrid forms of ADR at the time a dispute arises, and may provide for them in a pre-dispute clause.
Arb-Med is a process in which an arbitrator conducts arbitration and renders a final decision, but does not share it with the parties. Thereafter, the arbitrator conducts mediation with the parties in which he/she acts as the mediator and attempts to reach a settlement. This process, like Med-Arb, is intended to combine the benefits of arbitration with mediation, allowing the parties the chance to voluntarily settle with a third party's assistance, and also providing a binding decision.
Med-Arb is a classic mediation with an important addition: If the parties are unable to settle all or any portion of their dispute, the mediator changes position, and becomes the decision-maker and renders a binding decision. The advantage is that it permits the parties to access benefits of mediation, but ensures a final decision in the event settlement is not reached, without requiring separate arbitration.
Often the aspects of a particular method that are most beneficial are the very aspects that may prove problematic. For example, mediation can be effective because it is non-coercive and nonbinding, but it does not guarantee resolution of a dispute.
More courts are mandating the use of ADR processes in the course of litigation. [See Judicial Arbitration Act, Civ. Proc. Code, §§ 1141.10 et seq.; Civil Action Mediation, Civ. Proc. Code, §§ 1775 to 1775.16; Judicial Arbitration (and mediation) Rules for Civil Cases, Cal. Rules of Court, rules 1600 et seq.; Local Rules, Los Angeles Superior Court, Chapter 12, Rules 12.0 et seq.; Local Rules, Los Angeles Superior Court, Chapter 10, Probate Department Rules Re: Probate Mediation, Rules 10.200 et seq.; Coordinated Rules of Superior and Municipal Courts, San Diego County, Civil Litigation, Division II, Rules 9.1 et seq.] However, submitting a dispute to ADR usually requires agreement between the parties. The parties may agree to ADR at the time a dispute arises, or they may include a provision in their contract that requires submitting future disputes to ADR for resolution.
The parties may agree to transform mediation into a binding arbitration. If this agreement is reached in a mediation involving pending litigation, it may be enforced (i.e., the right to arbitrate may be specifically compelled) under California Code of Civil Procedure § 664.6 as long as statutory requirements are satisfied.
In general, persons registering domain names on the Internet agree to submit domain name disputes to “mandatory administrative proceedings” initiated by third-party complainants. These are not arbitrations subject to the Federal Arbitration Act because the Uniform Domain–Name Dispute Resolution Policy (UDRP) contemplates parallel litigation. So, the parties are free o file lawsuits either before, after or during the administrative proceedings.
It is when a neutral third party participates in order to review and consider the facts, evidence, and/or arguments so to render a reasonable and binding decision or solution based on an agreed upon standard of legality. The neutral's role is to provide a resolution for the parties, but not to assist them in reaching an agreed-upon solution.
In general, the parties (i.e., plaintiff and defendant) submit a "final offer" separately to the arbitrator. The arbitrator selects between the offer or demand presented based upon the provided evidence, facts and arguments. This type of arbitration is often referred to as “baseball arbitration” because it was utilized to solve disputes between teams and baseball players.
Online alternative dispute resolution (‘OADR‘), or ADR online, refers to the use of Internet technology, either in whole or in part, as a tool for conducting alternative dispute resolution proceedings to resolve commercial disputes arising from the world-wide-web. These proceedings are operated by neutral private bodies under published rules of procedure.
Private judging is a private trial that is conducted by a former judge and is somewhat similar to a conventional trial in that judgment may be appealed for errors of law or as against the weight of the evidence.
A settlement conference is an evaluative mediation that is mostly used in non-complex matters, where the party representatives meet with a neutral who is most often a retired or former judge.
A Special Master is a neutral third party who assists with legal or administrative disputes that are complex in nature. The Special Master or Discovery Master assists in designing case settlement options and can mediate specific issues in a case, or groups of cases. Masters may be court-appointed and selected by the parties. They are also referred to as “discovery master/referee”.
It is a highly structured, formalized and evaluative process in which a private “jury” is assembled to review the case and issue its decision. The jury’s decision is non-binding and mediation proceedings can be held in the future to resolve the matter.
AAA is the American Arbitration Association. They provide arbitration and mediation services towards litigants. By using them, certain processes are standardized, and it gives access to various arbitrators.
JAMS is another arbitration and mediation service provider. Much like AAA, they provide various rules and procedures, as well as mediators and arbitrators to settle disputes between litigants.
CPR is the International Institute for Conflict Prevention & Resolution. It is an organization dedicated to alternative dispute resolution and provides rules and methods for dealing with conflicts between parties.
Mediation on its own is generally non-binding without some sort of contractual agreement afterwards. In general, the process can be more collaborative than adverse. As such, it works well in business relationships where an entity may work with the other party and the parties wish to maintain this relationship.
Arbitration may be either binding or non-binding depending on stipulation. A binding arbitration means that the parties have agreed to waive their rights to a court trial and have agreed to accept the arbitrator’s decision as final. On the other hand, a non-binding arbitration means the parties have retained the right to request a court trial if they do not accept the arbitrator’s decision. Utilizing arbitration to settle a dispute may be best in scenarios where the parties wish to avoid the expenses and hassle of a full trial. While less costly, arbitration can still be a financial burden in some cases.
ADR can be suggested by any party in a dispute, though commonly, it is implemented as part of a contract. It may then be added to an agreement, with conditions on who may arbitrate or how a dispute may be settled between the parties.