What is ADR? Thoughts on Alternative Dispute Resolution

The terms court, judge, defendant, plaintiff, etc., certainly sound familiar, but do you know that we have other options in order to resolve and close legal disputes and disagreements apart from litigation? The new professionals appearing during alternative dispute resolution are called, for example, mediators or arbitrators. Mediation, arbitration, litigation? In the following, we will explore these ideas and learn about the similarities and differences.

We would like to present the above three methods from the perspective of a business owner who needs to solve a problem or disagreement as cost-effectively and quickly as possible. In the rapidly changing economic; these are the two most decisive factors; to which we can also add the issue of the enforceability of the decision. Of course, it is worth taking into account the seriousness of the given case and the tasks to be performed in connection with it.

1. Mediation

Mediation is an informal and confidential way for the parties to settle their disputes with the help of a third party who is completely neutral towards both parties. It is extremely important to choose a neutral mediator; as this is the only way to avoid one-sided negotiations.

In this method of dispute resolution; the mediator does not decide who is right or wrong but tries to help the parties discuss their differences and find possible solutions.

If from this mediation method no settlement was reached; the process can be continued through arbitration or litigation. In many cases; this is sufficient to solve a problem, since during the mediation process all participants want to resolve the problem as soon as possible and in the most cost-effective way; so they do not have to start a negotiation lasting several years.

Successful mediation means that the parties have met and settled the issue with the help of the mediator.

2. Arbitration

This procedure is conducted by an ad hoc or institutional arbitral tribunal. If we tried mediation first and failed to find a solution; then in most cases arbitration may be the next step. Arbitration is usually a voluntary procedure; but in some cases, it can also be a requirement (e.g., a clause in a contract).

In this proceeding, the arbitrator is the decision maker. If both parties agree to be bound by the arbitrator committee’s decision; then that decision will be binding.

Unlike the mediation discussed in the first point; both in arbitration and litigation they provide evidence to the arbitrator or judge to make an award / decision. The scope of an arbitration award is the same as that of a final court award.

The arbitration process can primarily, but not exclusively, be useful to those who work in special industries and require special expertise to resolve the problem that arises. Another difference compared to mediation is that there one person plays the role of mediator, but here, the parties can freely agree on the number of arbitrators.

The number of arbitrators can only be odd and must be at least three.

3. Litigation

Litigation is reserved for more serious and complex dispute resolution cases where the decision is in the hands of a judge. In this article; we will not discuss civil procedure in detail, but it is important to point out that although litigation and arbitration cases are similar in many respects; there is a significant difference. If we are not satisfie; an appeal may be lodged against the decision in the case of litigation; but there is no right to appeal against the arbitral award. In this last case, we have to continue our procedure at the court.

No appeal may be lodged against the award of an arbitral tribunal. The arbitral award can only be reviewed in ordinary court proceedings.