ADR (Alternate Dispute Resolution)
What is ADR, or Alternate Dispute Resolution?
ADR, or Alternate Dispute Resolution is a term that embodies a number of different methods for settling a civil matter without the involvement of formal litigation in court of law. ADR can take many forms, most popularly are arbitration, mediation, collaborative law and negotiation. ADR is a process developed so that parties contemplating litigation have an alternate route to settle their disputes. The judicial system is often clogged with pending cases and results in a strain on both the time and resources of the court system. For that reason the judicial system favors ADR in the legal process.
What are the advantages and disadvantages of ADR?
Although courts favor and encourage ADR that is all they can do. It is up to the parties involved in the dispute to decide for themselves whether or not to use ADR and abide by the results.
One difference between litigation and ADR is that, unlike litigation, ADR is not binding on the parties. The exception to this caveat is arbitration, which will be found to be binding. Of course, whether this is an advantage or disadvantage depends on what side of the ADR result a party is on.
An advantage of ADR is that it is less costly and less time consuming than civil litigation. Attorney’s fees, court costs, and numerous other financial burdens exist when parties involve themselves in litigation. On the other hand, ADR usually results in a less costly and swifter method of resolving a matter.
As mentioned arbitration is the only method of ADR that is binding on the parties, all other forms simply try to negotiate a positive settlement. The object is to either come to an amicable solution or to predict what will result from litigation in a court of law, if the matter were to proceed.
Can ADR be required?
As mentioned above, a court of law may not impose mandatory ADR. However, the parties to a contract may stipulate the imposition of ADR. This comes up most often when signing a boilerplate contract. Somewhere in a boilerplate contract will arise a subsection requiring mandatory arbitration or mediation. These sections are customary in many contracts and are a way for corporations and other entities to settle legal matters out of court. The policy behind this is not only financial but also based on public perception.
Where matters that arise in front of a court of law are not only publicized in the media and open to the public, they are also part of the public record and accessible to all. ADR, on the other hand is a private matter and the negotiations involved, and the results, are not a matter of public record and often take place in private.
Are ADR clauses enforceable?
Current Supreme Court decisions have solidified the enforceability of mandatory ADR clauses. Specifically in Buckeye Check Cashing, Inc. v. Cardegna the Supreme Court held that even if a contract is found to be completely void on its face, the mandatory ADR clause will stand. This is a prime example of how the judicial system favors ADR.