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Can Companies Make Alternate Dispute Resolution the Norm?
The increasing number of contractual relationships coming into existence coupled with a lack of awareness on methods of dispute resolution other than litigation has led to the number of disputes courts being overburdened with cases and understaffed with judges. So, people, lawyers and even judges, have begun turning toward Alternate Dispute Resolution (ADR) in an attempt to offer some solace and speedy justice to parties to a dispute who, usually, want to preserve the nature of their relationship. In ADR there is a third-party present who is neutral and facilitates a healthy discussion between the parties, thus enabling them to come to a mutually agreeable settlement. The role of this third party (mediator) in a mediation is to facilitate a discussion between the parties, in arbitration the third party (arbitrator) assesses the evidence and makes a binding decision, in conciliation the third party (conciliator) facilitates discussion and provides solutions to the parties, while in negotiation there is very rarely a third party as the parties discuss amongst themselves[1].
However, a process that began with an aim to simplify the dispute resolution process and preserve relationships between parties has mutated into a system similar to the traditional judicial route with the introduction of extra procedures such as motions, briefs, discovery, depositions, judges, lawyers, court reporters, expert witnesses, publicity, and damage awards beyond reason. This mutation has allowed the process of Alternate Dispute Resolution to mirror the tedious litigation system especially when it comes to commercial arbitration where giant corporations are failing to reap the benefits of Alternate Dispute Resolution because of lack of commitment and faith in the process[2]. Not all companies though are taking this undedicated route, Toyota for example has set up an Arbitration Board that has laid down rules for arbitration, allowed for arbitration awards to be binding on the company, and set up an open and public record of case histories[3]. This process has proven useful for Toyota to handle disputes and claims more swiftly and in a more cost-efficient manner.
So how can companies learn from Toyota and reduce their litigation costs and save their public image and reputation? There are a few steps that companies can follow to make Alternate Dispute Resolution the norm rather than just an alternative to litigation. These steps are:
- Companies must ensure that they undertake the process of Alternate Dispute Resolution wholeheartedly and not just as a ruse to cut costs and save time because if parties are not convinced that the process in different from litigation, they will waste time with courtroom hysterics and long unnecessary procedures.
- The process should be streamlined and the parties to the disagreement must agree on the undisputed facts and issues before submitting the matter to arbitration, mediation or conciliation, thus allowing the arbitrator, mediator or conciliator, respectively, to get straight down to the matter rather than wasting time on briefs and testimonies[4].
- Flowing from the previous point, in certain cases there is no need for the submission of briefs and as such, the necessity for briefs should be limited depending on the case in order to be more time efficient.
- Before the chosen Alternate Dispute Resolution mechanism, parties can get together and have pre-hearing discussions which allows them to get on the same page regarding certain issues and they can agree on documents and evidence to be presented to the arbitrator, mediator or conciliator[5]. However, it is important to ensure that these discussions do not resemble the typical hostile environment that is found in the litigation process.
- Companies should also be urged to draft guidelines for Alternate Dispute Resolution processes that mandate damage limitations. Where possible, parties should stipulate the extent of damages and the arbitrator, mediator or conciliator should make a decision on the reasonableness of the limitation on damages before hearing evidence.
- The typical strategy in litigation proceedings is for parties to attempt to bring better experts than the other and this results in a competition to find the most believable expert rather than ensuring justice. Since Alternate Dispute Resolution allows for procedural flexibility, limiting the number of experts a party can bring will go a long way in saving time and money. For example, instead of allowing parties to retain opposing experts with conflicting testimonies, both parties should be mandated to agree on a single, neutral expert[6]. This neutral expert’s opinion will ensure that the parties negotiate, rather than fuelling hardened stances with divergent opinions.
In addition to these steps, the last and most important step is for companies to boost commitment to Alternate Dispute Resolution and avoid the hostile trap of litigation as an essential step in replacing animosity and hostility with compromise and cooperation. By following these simple steps companies can ensure that Alternate Dispute Resolution is the new “normal” whereby parties can reduce costs, save time and ensure a well preserved relationship.
[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, What is Alternative Dispute Resolution?, FindLaw, (Jun. 20, 2016, 4:56 PM), https://hirealawyer.findlaw.com/choosing-the-right-lawyer/alternative-dispute-resolution.html.
[3] Editor, Negotiation, Mediation and Arbitration, Calgary Legal Guidance, (Apr. 9, 2020, 11:58 AM), https://clg.ab.ca/programs-services/dial-a-law/negotiation-mediation-and-arbitration/.
[4] 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.
[5] Advice Services Alliance, Why use ADR? Pros & Cons, ASAUK, (Apr. 30, 2020, 8:37 PM), https://asauk.org.uk/wp-content/uploads/2013/08/Why-use-ADR.pdf.
[6] 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.
- Alternate Dispute Resolution
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