Alternative Dispute Resolution
Disputes are a normal part of life and when parties involved in disputes are unable to resolve them amongst themselves, they need to get other parties involved in the dispute resolution process, or take the matter to court. Court proceedings generally necessitate the assistance of an attorney and by nature, become very time consuming and costly. Frequently, the cost of handling a dispute through the court system far exceeds the economic value of the dispute in question. Additionally, court proceedings often add fuel to the fire and result in compounding the original problem. Thus, it is generally much more desirable for parties who need the assistance of others to resolve a dispute, to agree on submitting that dispute to some form of Alternative Dispute Resolution ("ADR”).
The three most popular forms of ADR are:
Binding Arbitration is a type of ADR where parties agree, by contract to submit their dispute to a neutral, arbitrator or arbitrators, who will render a decision that the parties agree to be bound by. In general, the arbitrator is a neutral person chosen by the parties. The arbitrator reads the submission materials supplied by all parties, hears testimony, examines evidence and renders an award (decision) on the case as to liability and damages. Unless otherwise agreed, the decision is generally non-appealable and legally binding.
Non-binding Arbitration is a type of arbitration in which the arbitrator makes a determination of the rights of the parties to the dispute, but this determination is not binding upon them, and no enforceable arbitration award is issued. The "award" is in effect an advisory opinion of the arbitrator's view of the respective merits of the parties cases. Non-binding arbitration is used in connection with attempts to reach a negotiated settlement. The role of an arbitrator in non-binding arbitration is, on the surface, similar to that of a mediator in a mediation. However, the principal distinction is that whereas a mediator will try to help the parties find a middle ground to compromise at, the arbitrator remains totally removed from the settlement process and will only give a determination of liability and, if appropriate, an indication of the quantum of damages payable. Subsequent to a non-binding arbitration, the parties remain free to pursue their claims either through the courts, or by way of a binding arbitration, although in practice a settlement is the most common outcome. The award and reasoning in a non-binding arbitration is almost invariably inadmissible in any subsequent action in the courts or in another arbitration tribunal.
Mediation is another form of ADR that involves efforts to settle a legal dispute through active participation of a third party (mediator) who works to find points of agreement and make those in conflict agree on a fair result. Mediation differs from arbitration in which the third party (arbitrator) acts much like a judge but in an out-of-court less formal setting but does not actively participate in the discussion. Mediation has become very common in trying to resolve disputes between homeowners’ associations and members and disputes between members and other occupants (tenants) of properties located within a common interest development. Mediators are professionals who are generally retired judges or lawyers. They charge fees for their services that are generally shared by the parties to the mediation and those fees are usually much less than fighting the matter out in court and may achieve early settlement and an end to stress and anxiety. Mediation does not always result in a settlement as settlements require the agreement of all parties to the dispute.
Conciliation is a form of ADR that involves the parties choosing an independent third party who hears both sides, either privately or together, and then prepares a compromise which the conciliator believes is a fair disposition of the matter. The conciliator's report or conclusions are then put to both sides, who may agree or disagree with it. It is not binding nor is it enforceable unless the parties adopt it.
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