Alternative Dispute Resolution (or “ADR”) provides an alternative means of resolving disputes without resorting to litigation.

The two dominant methods of ADR are arbitration, where disputing parties agree to be bound by the decision of an independent third party, and mediation, where a third party attempts to arrange a settlement between the two disputing parties.  The term “Alternative Dispute Resolution” can also sometimes be referred to in cases where the parties are merely entering into bilateral negotiations without the assistance of any third party.  The main defining characteristic of ADR is that the parties are seeking to resolve their dispute without the cost and inconvenience of full-scale litigation.

TYPES OF ADR

ADR can be broken into three basic categories: Arbitration, Mediation and Negotiation. 

        ARBITRATION

In arbitration, a third party acts as a sort of private judge, who, after hearing arguments from  both sides, imposes a resolution on the parties.

The principal distinction between an arbitrator and mediator is this: whereas a mediator will try to help the parties find a middle ground on which to compromise, the arbitrator remains totally removed from the settlement process and will merely give a determination of liability and, if appropriate, an indication of the quantum of damages payable.  In arbitration, the parties never need to reach a settlement or come together with any compromise.  The arbitrator simply evaluates the case and determines the winner.

Arbitration can be either voluntary or mandatory and can be either binding or non-binding. Arbitrations often occur because parties to contracts agree that any future dispute concerning the agreement will be resolved by arbitration.  However, in recent years, as arbitration clauses have become more prevalent, the courts have shown a reluctance to enforce such provisions.

        MEDIATION

In mediation, a third party mediator, facilitates the resolution process, but does not impose a resolution on the parties.  The mediator’s role is to facilitate and encourage dialogue between the parties, thereby bringing the parties to a mutually agreed resolution.

        NEGOTIATION

The term “negotiation” encompasses a wide range of situations.  In its most basic form, a negotiation is simply a discussion between two or more parties, aimed at achieving the mutual resolution of some dispute. 

COURT MANDATED ADR

Many courts have instituted procedural requirements designed to encourage settlement of disputes through ADR.  For instance, in Nevada, the Eighth Judicial District Court automatically refers all cases to arbitration prior to trial, unless the case qualifies for a specific exemption.  In these instances, the arbitration often takes the form another procedural step in the litigation process.  While the arbitrator’s decision can, and often is, appealed, thereby pushing the case closer to trial, the arbitrator’s decision can prove quite helpful in encouraging a settlement between the parties.  In many instances, allowing the arbitrator to review the case as a neutral third party can inject some sense of perspective into the dispute, forcing the parties to more honestly assess their respective positions.

For further information, please take a look at our Frequently Asked Questions on this subject.