Disputes are part of our lives. Be it our homes, workplace, businesses, friends, consumers or whatever, disputes happen everywhere. When two people or two business entities have common interests, differences are bound to creep in. And when there are differences disputes happen.
Earlier whenever there was any kind of business dispute (dispute with a supplier, with employer or consumer dispute etc.), if it could not be amicably resolved by the disputing parties themselves, the only recourse was to approach the court. However, court cases are very expensive and time consuming. But with the emergence of Alternative Dispute Resolution mechanisms we now have a viable method of dispute resolution which is non-adversarial, cost effective and comparatively less time consuming as compared to conventional court litigation. Most dispute resolution law firms prefer alternative dispute resolution methods over conventional court litigation.
Alternative Dispute Resolution
As alternative dispute resolution methods are non-adversarial, there is less chance of relationships getting soured. Whatever the dispute might be, you may still want to continue doing business with your supplier, employer or other business acquaintances, so resolving business disputes privately and amicably without going to court serves your business interests. Court litigation makes the dispute public which is not good for the either party as it may dent their reputation.
Alternative dispute resolution processes resolve disputes outside of court, though in some cases the judiciary may require conflicting parties to resolve disputes through specific ADR methods, such as arbitration. In some cases the power to resolve the dispute is vested in neutral third party while in some others the disputing parties resolve the dispute themselves.
An effective dispute resolution process should take into account the needs of the parties. All the data must be compiled into a detailed dispute resolution clause with the appropriate language so that it is clear for all the parties.
Alternative Dispute Resolution Methods
The most commonly used ADR methods are mediation, negotiation and arbitration. Other methods of ADR include mini trials, med-arb ( a hybrid form of mediation and arbitration) and summary jury trial. Disputes between employers and employees, between businesses, and between consumers and business are generally resolved through alternative dispute resolution. Focus of this article is on use of the ADR methods in resolving business disputes, their advantages and disadvantages, the possible legal consequences on the disputing parties, and situations where ADR is not viable.
According to some dispute resolution law firms, though ADR methods are used outside of the courtroom, it doesn’t mean they are beyond the ambit of the legal system. Participation in alternative dispute resolution has some major legal implications. For example, parties that have agreed through contract that they will accept the decision of the arbitration proceeding as binding lose their right to appeal in court.
Businesses these days, when they enter into commercial dealing with another business entity sign contracts at the outset that include mandatory arbitration clause. This implies that if there is a dispute between the contracting parties, it has to be resolved through arbitration process instead of staking a claim directly in a court. A third party known as the arbitrator is the deciding authority. If the contract is binding then you forego your right to go to court and have to accept the outcome of the arbitration.
Mediation is another ADR technique which is sometimes used to resolve business disputes. It is somewhat similar to arbitration except that it is not mandated by courts and the decision of the mediator is not binding on the parties. Whether to accept or reject the decision is at the discretion of the disputants.
This is another ADR method, though very rarely used. There is no third party involved and the onus lies on the disputants to resolve the dispute. As such, the outcome is rarely positive and acceptable.
Whether you enter into such a contract or not, the likelihood of business dispute arising in future is always there. So it is very important to understand the arbitration process and other ADR methods and their legal implications. You also need to know in what situations ADR is not that beneficial and conventional court litigation would be a better option. When the disputing parties have unequal bargaining power the ADR may not be the correct choice.
To conclude, ADR is dispute resolution mechanism which happens outside of court. It is non- confrontational, less expensive and faster than court litigation. It is privately held away from the public glare and there is less sour feeling between the disputants and their business relationship can continue as usual. Many litigation law firms in Delhi now see alternative dispute resolution, particularly arbitration as a good way to resolve business disputes.