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An Analysis of NCR’s Alternate Dispute Resolution Policy: How the Company Makes it Work
Alternate Dispute Resolution (ADR) has been gaining pace with the advent of globalization and a correlated increase in the number of commercial transaction and contracts between people and businessmen from around the world but Alternate Dispute Resolution has now become concerned with procedure much like litigation and this mutation can be attributed to the rise in domestic as well as international commercial arbitration[1]. The elaborate procedural rules and the engagement of lawyers in the process has led to a deviation of the system from one based on coordination and cooperation between parties to one that can be likened to the traditional judicial route of litigation that fosters animosity and empathizes the importance of “winning” over attainment of justice[2]. So far Alternate Dispute Resolution is still considered to be an alternative to litigation and it still stands in the periphery of the judicial system with a lack in awareness and a lack of overall commitment from those who would benefit from methods of ADR, such as arbitration, the most: companies.
However, some companies have wholeheartedly committed to the ADR process and this is linked to whether the company’s management believes just in winning or whether they want more than just another corporate courtroom battle. At NCR and many other companies including AT&T, US WEST, BankAmerica, and Chevron, top management has decided that winning at all costs is too expensive. These companies evaluate lawyers, contract managers, paralegals, and any employee associated with the legal field not just by lawsuits won or lost but also by the number of disputes they have peacefully resolved or avoided[3]. The legal department at these corporations are also required to reduce the number of lawsuits, the amount of time and money spent on resolution and to limit the amount of negative public exposure that an non-avoided lawsuit would bring. NCR has been the most successful with using these measures to resolve disputes and closing more than 60% of cases filed against them since the company’s inception.
NCR’s policy on Alternate Dispute Resolution requires all commercial contracts that they enter into to have an ADR clause whether the mode of resolution be arbitration, mediation or conciliation. The corporate policy is to avoid or resolve disputes and to this extent their employees and staff have been trained in problem solving, dispute avoidance and negotiation. To ensure that this process works, a person is specifically employed to analyze the financial and reputation-based ramifications of each case that does come up and determine whether it should be litigated or arbitrated[4]. The report contains mechanisms and steps to be followed for ADR and suggestions on how the dispute can be resolved and the relationship between parties can be strengthened. The report is then submitted to the top managers of the company and if they feel that the dispute can be resolved without litigation the company proceeds with ADR; the aim being efficient resolution with low expenditure. An example of how arbitration has worked in NCR’s favour can be traced back to 1992 when NCR discovered that one of its suppliers had sent them computer boards that did not conform to specifications so NCR requested for the boards to be returned for a refund but the vendor refused on the grounds that NCR had not complained in a timely manner. The vendor refused to provide any refund and threatened to file a huge lawsuit but sticking to its company policy, NCR refused litigation and filed an arbitration demand instead. The vendor’s legal counsel tried to have the process thrown off track by refusing arbitration, objecting to the venue and filing a motion for discovery but the American Arbitration Association dealt with all these issues and scheduled an arbitration session which led to the two parties settling days before the hearing[5].
This example is a perfect illustration of how arbitration allows parties to handle and resolve disputes efficiently especially when both parties have positions of merit because more often than not, parties with more financial strength will bow down to an amicable settlement before the dispute can go to trial[6]. Here, NCR ended up with a result far better than one that it could have received through the process of litigation allowing for the expenditure of only $5,000 by using an in-house counsel but the vendor by using an outside expert and dragging the arbitration process ended up spending close to $20,000 only to reach a result that NCR suggested in the first place.
[1] Anubhav Pandey, All you need to know about Alternative Dispute Resolution (ADR), iPleaders, (May 9, 2017, 11:37 AM), https://blog.ipleaders.in/adr-alternative-dispute-resolution/.
[2] Editor, Explain the Advantages and Disadvantages of Alternative Dispute Resolution, LawyersnJurists, (Apr. 9, 2020, 8:59 PM), https://www.lawyersnjurists.com/article/advantages-disadvantages-alternative-dispute-resolution/.
[3] Todd Carver, Alternative Dispute Resolution: Why It Doesn’t Work and Why It Does, Harvard Business Review, (Jun. 4, 1994, 9:15 PM), https://hbr.org/1994/05/alternative-dispute-resolution-why-it-doesnt-work-and-why-it-does.
[4] Id.
[5] Bhavana Sunder, International Commercial Arbitration Law and Recent Developments in India, NishithDesai Associates, (Feb. 19, 2020, 6:45 PM), http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research_Papers/International_Commercial_Arbitration.pdf.
[6] Adrienne Krikorian, Litigate or Mediate? Mediation as an alternative to Lawsuits, MediateIndia, (Jan. 25, 2002, 3:44 PM), https://www.mediate.com/articles/krikorian.cfm.
- Alternate Dispute Resolution
- NCR
- Company Policy
