Advantages and Disadvantages of Alternative Dispute Resolution (ADR) Alternative dispute resolution (ADR) programs are tools of equity

rather than tools of law. They seek to resolve individual disputes on a case-by-case basis, and may resolve similar cases in different ways if the surrounding conditions suggest that different results are fair or reasonable according to local norms. ADR refers to any process designed to resolve disputes that does not involve going to court. In order to select the most appropriate process, it is important to understand and appreciate the advantages and disadvantages of the various dispute resolution processes. Like any process, ADR has pros and cons.

ADVANTAGES OF ALTERNATIVE DISPUTE RESOLUTION Time and again, ADR methods, particularly arbitration, have been proven to be more advantageous than the traditional and rigid court litigation. Parties to commercial disputes have been attracted to the unique attribute of, as well as to the benefits that may be gained from these friendly proceedings. Set forth below are the advantages of ADR methods which make them better and effective alternatives to court litigation.

In contrast to litigation, where one cannot "choose the judge", arbitration allows the parties to choose their own tribunal. 1 Arbitrators with an appropriate degree of expertise (for example, quantity surveying expertise, in the case of a construction dispute, or expertise in commercial property law, in the case of a real estate dispute) can be chosen especially when the subject matter of the dispute is highly technical.

Arbitration is often faster than litigation in court. ADR is speedy. 2 Trials are lengthy, without exception. In many jurisdictions it could take years before you even get to begin arguing your case before a judge, much less get a judgment. There are better things you could be doing with your time.

Arbitration can be more flexible. 3

1 2

http://en.wikipedia.org/wiki/Arbitration http://www.justice.govt.nz/publications/global-publications/a/alternative-dispute-resolution-general-civilcases/4-advantages-and-disadvantages-of-adr

Resolutions can be tailored to the needs and underlying concerns of the parties and can address legal and non-legal issues as well as providing for remedies unavailable through adjudicative processes.

Expenses are kept down. 4 Attorneys and expert witnesses are costly; meaning litigating a case can easily run up higher bills. Alternative dispute resolution offers the benefit of getting the issue resolved quicker than would occur at trial and that means less money spent for both sides.

The results can be confidential. 5 The parties can agree that information disclosed during negotiations cannot be used in later proceedings. The final outcome can also be made private if the parties wish. Courts do not offer this. Court trials are open to the public, which means everyone will know your business. That is why so many highprofile cases have out of court settlements.6

In arbitral proceedings the language of arbitration may be chosen.7 In judicial proceedings the official language of the country of the competent court will be automatically applied.

It Increases the chances of settlement. 8 In most legal systems there are very limited avenues for appeal of an arbitral award, which is sometimes an advantage because it limits the duration of the dispute and any associated liability.

Improved satisfaction with the manner and outcome in which the dispute is resolved among disputants. 9 The parties experience less stress in resolving their dispute by not constantly going to court for a long period of time. Court settled disputes normally end

3 4

http://www.ciarb.org/dispute-resolution/resolving-a-dispute/arbitration/ http://scholarship.law.missouri.edu/cgi/viewcontent.cgi?article=1337&context=mlr 5 http://www.jonesday.com/files/Publication/3c7c5ff7-ec4a-4b01-979a6960d29c663f/Presentation/PublicationAttachment/58f159e4-8b12-4012-9532241147d2b4c9/EstreicherBennett_NYLJ_081308.pdf 6 https://suite101.com/a/advantages-and-disadvantages-of-adr-a58925 7 http://en.wikipedia.org/wiki/Arbitration 8 http://www.law.harvard.edu/programs/olin_center/papers/pdf/218.pdf 9 http://www.justice.govt.nz/publications/global-publications/a/alternative-dispute-resolution-general-civilcases/4-advantages-and-disadvantages-of-adr

up in a win-lose situation, while a win-win situation may be come up through ADR mechanisms. There is also increased satisfaction and compliance with settlements when parties have directly participated in crafting agreements.

Party Autonomy10 ADR methods are primarily highlighted by their unique attribute of party autonomy. The emphasis of these procedures is on the voluntary agreement of the parties in submitting their dispute and in choosing the arbitrators, the venue or place of arbitration, the language to be used, and the rules or procedure to be followed. In no way can the parties freely agree on these matters when they file a case in court.

There is a broad conformity that dispute resolution through ADR mechanisms can be beneficial. Nevertheless, there are some significant variations among the public about the extent and nature of those benefits for disputants. ADR practitioners are most enthusiastic about the benefits of ADR take-up while lawyers and disputants tend to be more qualified with regard to the actual benefits associated with ADR.

ADR Practitioners' View of ADR Benefits ADR practitioners see the real benefits of arbitration lying in the ability of the disputants to select an arbitrator by mutual agreement and the considerable specialist expertise an arbitrator may bring to the resolution of a dispute with substantial technical components. It is for the latter reason that arbitrators have so frequently been used in technical sectors such as the building industry. 11

Lawyers' Perceptions of ADR Benefits The majority of lawyers believe that disputants seek ADR resolution of disputes in an effort to:

reduce the cost of a dispute speed resolution, and reduce uncertainty around the outcome of judgment in the court system

10

http://www.arbitrationicca.org/media/0/12223895489410/limits_to_party_autonomy_in_international_commercial_arbitration.pdf 11 http://www.justice.govt.nz/publications/global-publications/a/alternative-dispute-resolution-general-civilcases/4-advantages-and-disadvantages-of-adr#4.2

For most lawyers the effectiveness of ADR is contingent on two major factors. First is the willingness of disputants to engage in a resolution process. It was noted by many ADR practitioners, lawyers and the judiciary that although disputants may initially feel hesitant and uncomfortable about ADR, disputants in retrospect often find the experience very useful. Second is the experience of the ADR practitioners. There may be some relationship between the ADR skills and experience of lawyers and the extent to which they perceive the importance of their own role in encouraging effective ADR. 12

Disputants' Perceptions of ADR Benefits It is clear that ADR is seen as a less costly approach to dispute resolution than having the dispute resolved through a judgment given by the Court. Almost as always, many see ADR as a comparatively faster mechanism for dispute resolution. 13

DISADVANTAGES OF ADR There was widespread support for the use of ADR techniques to resolve disputes but ADR was not always seen as an alternative to resolution through the courts. Moreover, even the most enthusiastic supporters of ADR - ADR practitioners - still saw some potential disadvantages for disputants in using ADR. Some of the disadvantages include:

There is no guaranteed resolution. 14 With the exception of arbitration, alternative dispute resolution processes do not always lead to a resolution. That means it is possible that you could invest the time and money in trying to resolve the dispute out-of-court and still end up having to go to court.

12

http://www.justice.govt.nz/publications/global-publications/a/alternative-dispute-resolution-general-civilcases/4-advantages-and-disadvantages-of-adr#4.2 13 http://www.justice.govt.nz/publications/global-publications/a/alternative-dispute-resolution-general-civilcases/4-advantages-and-disadvantages-of-adr#4.2 14 http://www.lexology.com/library/detail.aspx?g=33b8db51-dbfa-48b3-be6d-f170511a701b

Arbitration decisions are final. 15 There are very limited avenues for appeal, arbitration is most often binding. With few exceptions, the decision of a neutral arbitrator cannot be appealed. This means that an erroneous decision cannot be easily overturned. Arbitration also leaves no room for an appeals process in the overwhelming majority of instances. This is a risk parties and individuals should seriously assess prior to engaging in arbitration, as well as when considering the methods for resolving their disputes. Most individuals would like the option for an appeal in the event a ruling is not in their favor, which is more than probable in the course of a civil court trial, however, with arbitration, the options for appeals are virtually nil, not to mention the costs associated with an appeals process may not even be worth the amount being disputed between two parties. Decisions of a court, on the other hand, usually can be appealed to a higher court.

The parties are required to pay for the arbitrators, in some arbitration agreements.16 This adds an additional layer of legal cost that can be unaffordable especially in small consumer disputes.

Although usually thought to be speedier, when there are multiple arbitrators on the panel, juggling their schedules for hearing dates in long cases can lead to delays. 17 This is a disadvantage because ADR mechanisms are designed to help resolve disputes in a speedy manner. However, one cannot discount the fact that when there are multiple arbitrators, their absence during hearings can prolong the proceedings.

Discovery may be more limited in arbitration or entirely nonexistent.18 Discovery modes of procedure are more available and accessible in court litigations especially that court officers can be easily ordered by the judge to execute the same. In ADR, the ADR practitioners are limited to the resources

15 16

http://en.wikipedia.org/wiki/Arbitration http://en.wikipedia.org/wiki/Arbitration 17 http://en.wikipedia.org/wiki/Arbitration 18 http://en.wikipedia.org/wiki/Arbitration

and materials that the parties present during arbitration. In the arbitration process, there is a limited period of discovery, which can lead to surprise evidence or testimony occurring during an arbitration process, which a party may or may not be able to effectively refute at the time of their arbitration hearing. Likewise, there is no jury to decide the outcome of a dispute, but rather, the decision rests solely in the hands of the arbitrators, whom usually consist of one individual or a panel of three persons, that may or may not be able to remain entirely impartial during all proceedings regarding all matters.

The potential to generate billings by attorneys may be less, than pursuing the dispute through trial.19 It is a fact that lawyers earn better in court litigations than in ADR mechanisms. Lawyers can bill their clients as long as the case lasts. In ADR, lawyers are generally advisers of their clients only and the period for the dissolution of the case normally is entrusted to the decision of the parties when they arrive at an amicable settlement.

ADR programs do not set precedent, refine legal norms, or establish broad community or national standards, nor do they promote a consistent application of legal rules.20

Is it to ones advantage to use alternate dispute resolution? In many cases, the answer is a resounding Yes. However, there is no absolute answer. Instead, the circumstances of each case need to be weighed separately. Knowing ones options is an important first step.21 ADR Practitioners' Views on the Disadvantages of ADR ADR practitioners tended to see any disadvantages of ADR for disputants as being related primarily to the particular ADR technique used or the methods by which ADR techniques are implemented. It has already been noted that ADR practitioners, like lawyers and disputants, see arbitration as a less attractive ADR technique than mediation. It should also be recognized, however, that even within mediation, some processes are seen as more likely to achieve all the benefits claimed for ADR than others.

19 20

http://en.wikipedia.org/wiki/Arbitration http://www.usaid.gov/sites/default/files/documents/1868/200sbe.pdf 21 https://suite101.com/a/advantages-and-disadvantages-of-adr-a58925

ADR practitioners recognize that mediation may encompass a variety of models, ranging from developing consensual solutions to risk management or evaluative models for dispute resolution. As Boulle notes, mediation is: "a decision-making process in which the parties are assisted by a third-party, the mediator; the mediator attempts to improve the process of decision-making and to assist the parties reach an outcome to which each of them can consent". Many ADR practitioners believed the full range of potential benefits, especially those related to increased user satisfaction with outcomes and compliance with ADR resolutions, were less likely to be achieved where mediation focused on risk assessment, cost-benefit review, or evaluation of the likelihood of success in court rather than consensual solution development.22

Lawyers' Views on the Disadvantages of ADR Lawyers have, perhaps more than any of the other stakeholder groups, a diversity of views around the merits and potential problems of ADR. In particular there is a view among some lawyers that ADR both delays dispute resolution and increases costs. Lawyers' views can be very powerful in relation to take-up of ADR. Parties can be explicitly advised by their lawyer not to take-up ADR on the grounds that it is too expensive or ADR would be ineffective. Some disputants assume that if lawyer-to-lawyer informal discussion had failed to resolve the dispute then ADR would simply not be an option. Even among lawyers who believe the benefits of ADR were such as to justify some mechanism by which the courts could order parties to mediation, there is still a concern that ADR should not be promoted in a manner that compromised litigants' access to justice.23

Disputants' Views on the Disadvantages of ADR Most ADR systems do not include legal or procedural protections for weaker parties. A more powerful or wealthy party may press the weaker into accepting an unfair result, so that the settlement may appear consensual, but in fact result
22

http://www.justice.govt.nz/publications/global-publications/a/alternative-dispute-resolution-general-civilcases/4-advantages-and-disadvantages-of-adr#4.2 23 http://www.justice.govt.nz/publications/global-publications/a/alternative-dispute-resolution-general-civilcases/4-advantages-and-disadvantages-of-adr#4.2

from coercion. For the same reason, ADR programs may not work well when one party is the government. 24

In the outline of advantages and disadvantages of dispute resolution processes provided above, a simplified guideline below is provided to determine the circumstances when ADR may be appropriately used or not.

1) ADR can support and complement court reform. Use ADR when: Case backlog impairs court effectiveness. Complex procedures impair court effectiveness. Illiterate or poor cannot afford the courts or manage their way within them. Small informal systems can better reach geographically dispersed population. Do not use ADR when: The courts reputation is sufficiently tainted to suggest that independent programs may enjoy more popular support.25

2) ADR can by-pass ineffective or discredited courts. Use ADR when: Working with or within the existing judicial system is unlikely to be effective or receive popular support. Complex or technical disputes can be handled more effectively by specialized private ADR systems.

24

http://www.justice.govt.nz/publications/global-publications/a/alternative-dispute-resolution-general-civilcases/4-advantages-and-disadvantages-of-adr#4.2 25 http://www.usaid.gov/sites/default/files/documents/1868/200sbe.pdf

Do not use ADR when: Official opposition is sufficiently strong and controlling to suppress competing programs. In these cases, links to the official judicial and legal system may be necessary for success.26

3) ADR can increase satisfaction of disputants with outcomes. Use ADR when: High cost, long delay, and limited access undermine satisfaction with existing judicial processes. Cultural norms emphasize the importance of reconciliation and relationships over "winning" in dispute resolution. Considerations of equity indicate that creativity and flexibility are needed to produce outcomes satisfactory to the parties. Low rates of compliance with court judgments (or a high rate of enforcement actions) indicate a need for systems that maximize the likelihood of voluntary compliance. The legal system is not very responsive to local conditions or local conditions vary. Do not use ADR when: Cultural norms suggest a preference for formal, deterministic solutions. Cultural norms are discriminatory or biased and would be perpetuated in the ADR system.27

4) ADR programs can increase access to justice for disadvantaged groups. Use ADR when:

26 27

http://www.usaid.gov/sites/default/files/documents/1868/200sbe.pdf http://www.usaid.gov/sites/default/files/documents/1868/200sbe.pdf

Use of formal court systems requires resources unavailable to sectors of the population. Formal court systems are biased against women, minorities, or other groups. Illiteracy prevents part of the population from using formal court systems. Distance from the courts impairs effective use for rural populations. Do not use ADR when: Disadvantaged groups need to establish rights in order to reduce power imbalances. Local elites have the power to control program implementation. A number of barriers to access to the justice system can be addressed effectively in an ADR program.28

5) ADR programs can reduce delay in the resolution of disputes. Use ADR when: Delays are caused by complex formal procedures. Court resources are insufficient to keep up with case backlog. Do not use ADR when: Official intervention will impose complex procedures on ADR programs.

6) ADR programs can reduce the cost of resolving disputes. Use ADR when: High costs in the courts are driven by formal procedures or the requirement of legal representation.

28

http://www.usaid.gov/sites/default/files/documents/1868/200sbe.pdf

 Court filing costs are high. Court delays impose high costs on parties. Do not use ADR when: Official intervention will impose formal procedures or costs on ADR.29

29

http://www.usaid.gov/sites/default/files/documents/1868/200sbe.pdf