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Alternative Dispute Resolution
Alternative Dispute Resolution [ADR] is actually a catchall term used to describe a variety of methods that parties to a dispute can resolve that dispute without resorting to litigation - meaning without filing a lawsuit. The goal of ADR is to settle disputes without resorting to costly and time-consuming litigation before a court. There are several advantages of ADR over civil litigation including:
- Lower costs,
- A shorter timeline between the time the matter is submitted to ADR and a decision is made,
- The possibility of resolving a dispute with destroying the business relationship between the two parties.
The most common forms of ADR are Mediation and Arbitration which are described below:
Mediation: Mediation is a dispute resolution technique in which a neutral third party tries to negotiate a resolution to a dispute between two parties. Mediation can be useful when the parties are not making progress between themselves. The mediator does not have the authority to impose his or her decision about the merits of the case on the parties. A mediator does not issue a finding of fact.
Arbitration: There are two fundamentally different types of arbitration. There is binding arbitration, and non-binding arbitration. An arbitration hearing is something like a trial. The arbitrator [or arbitrators] will review written evidence and hear from witnesses. Witnesses can be cross-examined. After the hearing, the arbitrator[s] will issue a finding or an award. If the parties submit to binding arbitration, the disputing parties are bound by the decision of the arbitrator[s]. In non-binding Arbitration, the parties can agree to accept the decision, or they can continue to pursue their respective positions by filing a lawsuit.
Of course, there are a number of downsides associated with ADR. For example, if binding arbitration is selected or specified contractually, the losing party may not have any right to appeal what they believe is an unjust ruling by the arbitrator. Another example of a problem associated with ADR and specifically with binding arbitration is that the discovery process may be limited.
In a dispute between a buyer and seller, the seller usually wants to try to preserve the possibility of doing business again with the customer in the future. This is unlikely of the creditor sues the debtor or places the account for collection, but it is possible IF the dispute is submitted to mediation or arbitration and the matter is settled to the satisfaction of both parties.
© 2009 by Michael C. Dennis. All Rights Reserved. Mr. Dennis is the author of "1001 Collection Tools and Tips" and he can be reached by email at mcdennis13@yahoo.com