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Alternative dispute resolution (ADR)

Alternative dispute Resolution ADR

The term alternative dispute resolution (ADR) or external dispute resolution (EDR) refers to any method that the disputing parties agree to utilize in order to resolve their differences amicably and prevent the need for court action.

ADR processes include Mediation, Arbitration, Conciliation, Negotiation, and Collaborative law. With the exception of binding arbitration, the objective of alternative dispute resolution (ADR) is to offer a platform for the parties to negotiate a voluntary, consensual agreement rather than having a court or other authority determine the matter.

The ability for the parties to resolve their disputes outside of customary legal or court processes is a feature shared by all ADR techniques, while each is subject to a particular set of regulations.

In contrast to mediation and conciliation, where the third party’s role is to encourage an amicable agreement between the parties, negotiation, for instance, does not involve a third party who intervenes to aid the parties in reaching a resolution.

An arbitrator or panel of arbitrators will play a significant role in arbitration since they will issue a binding arbitration award to the parties. Contrarily, in conciliation and mediation, the third party does not impose any legally binding judgment.

History of Alternative Dispute Resolution Procedures

The first attempts at using alternative dispute resolution (ADR) procedures as a method for resolving environmental and ecological systems conflicts as well as a potential remedy for crippling court backlogs took place in the 1970s.

To shorten the duration and cost of civil litigation, the Attorney General recognized the necessity for ADR in an order he issued in 1985.

In the Congressional testimony of its Assistant Attorney General, Office of Legal Counsel, who supported the 1990 passing of the first ADR legislation, the Department of Justice once more acknowledged the advantages of ADR a few years later.

ADR has historically met resistance from many powerful parties and their supporters, but in recent years both the general public and the legal community have come to embrace it widely.

In fact, several courts increasingly demand that some parties use ADR of some kind, such as mediation, before allowing the parties’ cases to go to trial (in fact, the European Mediation Directive (2008) expressly anticipates so-called “compulsory” mediation).

This indicates that attendance is required, not that a settlement must be obtained through mediation. ADR is also becoming a more popular choice for parties to merger and acquisition agreements to settle disputes after the transaction has been completed.

ADR’s Benefits

There are many benefits to alternative dispute resolution (ADR), including:

  • Complaints are processed more quickly and resolved earlier.
  • The process leads to more creative solutions.
  • Savings in time of attorneys, staff, and parties who are federal employees.
  • Quicker resolution than what a hearing would provide, and less time spent by the parties under the shadow of outstanding litigation.
  • Creative resolutions acceptable to the parties, but which a third-party reviewer could not impose.
  • A durable and voluntary agreement.

Nevertheless, even in instances that do not resolve, the ADR procedure has other significant benefits, such as:

  • Laying the groundwork for a subsequent settlement.
  • Increasing clarification of the issues for third-party review.

ADR processes

1- Negotiation:

The most effective way to resolve disputes is through negotiation. Negotiation is usually always tried in an effort to settle a disagreement before turning to arbitration or mediation, the two most well-known ADR processes.

The parties can meet to resolve a disagreement through negotiation. The fundamental benefit of using this method of dispute resolution is that it gives the parties the ability to decide the process and the outcome themselves.

Comparatively speaking, negotiations are significantly less formal and offer a great deal more flexibility.

2- Mediation:

Another informal choice for the lawsuit is mediation. Mediators are experienced negotiators who bring conflicting parties together to try and reach a settlement or agreement that both sides can accept or reject.

A binding agreement cannot be reached through mediation. Numerous different case types, including juvenile offenses and federal government agreements with Native American Indian tribes, are subject to mediation.

Conflicts between investors and their stock brokers are increasingly being resolved through mediation.

3- Arbitration:

One of the most famous and vigorous types of ADR is arbitration. While rules of evidence are streamlined, there is less discovery, and arbitration is more formal than mediation. It is also quite comparable to typical court proceedings (ex. hearsay is usually admissible in arbitration).

Arbitration can take many different forms:

  1. National arbitration, such as that conducted in the United States, France, or Germany, is governed by laws passed by the institutions of each of those nations.
  2. International commercial arbitration is frequently used to resolve disagreements resulting from business contracts between parties based in different states (buyers and sellers).
  3. Investor-State Arbitration, When a private individual investor unilaterally refers a dispute involving their investment against a host State to an arbitral tribunal.

There are more arbitration categories and areas of expertise for this ADR, such as post-M&A arbitration and construction arbitration.

The “New York Convention,” a convention on the recognition and enforcement of foreign arbitral awards, was drafted in 1958 to assist with the recognition and enforcement of awards awarded in other nations in domestic courts.

The United States joined the convention in 1970, and as of November 2021, 156 countries were a part of it.

4- Conciliation:

An alternative dispute resolution (ADR) method is where the parties to a dispute engage a conciliator who meets with the parties both separately and jointly in an attempt to resolve their disputes.

They accomplish this by easing tensions, enhancing communications, deciphering problems, encouraging parties to consider viable solutions, and aiding parties in reaching an amicable resolution.

Conciliation differs from arbitration in that the conciliation process itself has no legal standing, and the conciliator typically has no ability to request evidence or call witnesses, write a decision, or issue an award.

5- Collaborative law:

Also known as collaborative practice, divorce, or family law is a legal procedure that enables couples who have decided to separate or dissolve their marriage to engage with their collaborative experts, such as collaboratively trained lawyers, coaches, and financial specialists.

In order to avoid the unknown outcome of court and to obtain a settlement that best serves the individual needs of both parties and their children without the underlying threat of litigation.

The procedure enables parties to reach an equitable settlement. A “participation agreement” that binds the spouse to the procedure and bars each attorney from representing the other in any subsequent family-related action signifies the start of the voluntary process.

Three approaches are frequently employed to settle disputes outside of the court system: (i) Negotiation, (ii) Mediation, (iii) Arbitration.

ADR in Egypt

Egypt is just one illustration of how the IFC is attempting to encourage mediation for business purposes.

The IFC invested $128 million between 2004 and 2009 to support ADR initiatives, hosted 157 seminars with over 7,500 attendees, and sponsored 2,561 cases for mediation (with a 73% resolution rate). In Southern Europe (Serbia, Albania, Bosnia, and Herzegovina, Macedonia, and Ukraine), MENA (Egypt, Pakistan, and Morocco), Southeast Asia (Cambodia and Bangladesh), and the Pacific Islands, they created 13 ongoing initiatives.

In May 2010, a conference took place in Cairo to encourage the use of ADR. It was organized by the Cairo Regional Centre for International Commercial Arbitration (CRCICA) in collaboration with the International Finance Corporation (IFC; the private sector arm of the World Bank).