Court Process or Alternative Dispute Resolution - Coursework Example

Running Header: Court Process or ADR Court Process or ADR Author’s Name Instructor’s Name Course Number Date of Submission It is more effective to resolve disputes in domestic and international business, consumer and commercial matters through court proceedings rather than alternative dispute resolution (ADR) Introduction In an attempt to resolve disputes in domestic and international business, consumer and commercial matters, firms will have to consider whether they want to submit to alternative dispute resolution (ADR) mechanism or pursue the traditional court proceedings/litigation. Both the dispute resolution mechanisms are popular although ADR’s popularity has greatly increased over the years. However, whatever dispute resolution method is chosen, parties have to understand their pros and cons while understanding that poorly managed disputes will most likely lead to lengthy delays as well as increased costs. The dispute resolution mechanism adopted is largely influenced by the particular circumstances of the case as well as the relationship between the concerned parties (Richard, 2001). However, many cases will start with ADR ending with court proceedings if a compromise cannot be reached. Traditionally, ADR was seen as the best dispute resolution alternative as it was cheaper and faster. However, as the cost of ADR continue to rise, court proceedings are also finding interest among many parties. Thus, it could be argued that both methods of dispute resolution have increasingly become popular. But which is the more effective dispute resolution route between the two? This essay there is no one best way for resolving commercial disputes and that the process chosen should depend on the facts of the case as well as the urgency involved. Comparison of court proceedings with alternative dispute resolution (ADR) Court proceedings or litigation involves the parties to a dispute bringing the dispute before the court of law where it is decided upon by the jury after hearing the arguments between the two parties through their lawyers. The main features of the court proceedings are that it may result in an all or nothing decision. It is focused on the facts given to the court and is past oriented. The court process aims at determining the dispute parties’ legal rights and involves a judge or jury appointed to determine the outcome on the basis of law and legal precedents. Once the legal proceedings are initiated, it calls for mandatory participation in a highly formalized and structured environment. However, litigation has been blamed for long delays and increased costs. On the other hand, alternative dispute resolution involves means such as negotiation, mediation and arbitration that are aimed at dispute resolution other than court proceedings (Thomas, 2004). ADR allows for a custom made win win outcome for all the parties to the dispute. It is mainly focused on consensus building while being future oriented. ADR aims at determining the interests of the parties and involves the participation of a neutral and impartial ADR practitioner who is selected or agreed upon by all the parties to the dispute whose aim is to facilitate the parties to participate in negotiations and discussions regarding the dispute. Except where the court has advised for ADR, participation in the process is voluntary and the parties can withdraw from the proceedings at any stage. The process is flexible, less formal and less structured and its main emphasis is mutuality over self-interest and aims at reconciliation as opposed to termination. Why parties may opt for alternative dispute resolution (ADR) There are many reasons why parties to commercial disputes may subject themselves to ADR. One of the major reasons for parties to a commercial dispute include the fact ADR is viewed as being less costly compared to litigation which is an important factor for business. Many studies have been conducted to explore the effectiveness of ADR in reducing the cost of dispute resolution relative to litigation. Though the estimates vary from one study to the other and depending on the type of ADR adopted, the type of case, the type of intervention and the local conditions, the total costs incurred by firms that use ADR processes range from 3 to 50 percent of the costs that firms that go through litigation incur. However, for cases which fail to reach resolution through ADR, the costs may be higher since some of the cases using ADR end up in courts. Another reason why people may opt for ADR is the fact that the time it takes to resolve a dispute through an ADR process relative to litigation is less. This includes the time taken in filing the case up to the time the case is settled. Several studies conducted to evaluate the effectiveness of ADR in saving the time of dispute resolution indicate that the differences in time between ADR and litigation range from one month to a year depending on the type of ADR process adopted. Parties to a dispute may also wish to subject it to ADR owing to their ability to choose the decider as opposed to litigation where the judge is chosen by the court (Carol, 2003). Furthermore, the arbitrators selected in case of ADR are professionals with experience in the area of dispute. As such, they have greater capacity to comprehend the issues hence arising at a decision that is more accepted than trial judges. In court proceedings, the judge is not informed of complicated and technical issues that are not understood by many people outside the industry relevant to the dispute. Thus, a great deal of time may be spent in trying to educate the judge and the jury to enable them make informed decision. This investment in time also means a lot of money is spent while the parties to the dispute may be forced to call expert witnesses who may also charge fees for their time. However, ADR involves experts in most cases and hence less time is spent in understanding the issue and hence the case is decided faster (Lisa and Tina, 2004). ADR offers considerable flexibility in considering evidence that is deemed relevant to the dispute and the decision is made on the basis of fairness or equity as opposed in litigation where the judges’ decisions are based on statutory and case law and the established rule of evidence. Despite the above factors, there are a number of factors that may make court proceedings more preferable. One of the major reasons why parties opt for court proceedings is appeal rights. In many jurisdictions, an arbitration award is final and binding and there is limited right of appeal. For an aggrieved party, the right to appeal which is provided for in litigation is important. However, it is difficult to obtain a review of arbitration awards and in this case, the parties must show the award was arrived at through corruption, undue means or fraud (Terk Techs v Dockery, 2001). It must also be shown that the process was impartial and that the decider exceeded their powers. The aggrieved party may also argue that the decider refused to postpone proceedings owing to an insufficient cause and refused to hear material evidence. Thus, the fact that it is very hard to obtain an appeal may make many parties to prefer litigation as opposed to ADR. In addition, the scope of ADR is limited. For instance, arbitrators can only resolve disputes that involve money but cannot order one to do something or to refrain from doing something (Bonar v. Dean Witter Reynolds, 1988). In other words, they cannot issue injunctions and cannot change title to property. Furthermore, the safeguards designed to protect parties in a court process such as the rule of evidence may not be available in the case of ADR. At the face of it, it may be easier for parties to choose ADR instead of traditional litigation. However, the limited opportunity for judicial review of the ADR decision may make litigation more preferable. Although some ADR providers may have some kind of internal appeal processes, the decisions of the ADR processes are usually final and binding with limited opportunities of review by courts of law. As explained above, this can only happen if the courts find the ADR decisions invalid (Fiadjoe, A2004). This is for instance when the aggrieved party proves that his consent to enter into the ADR process was obtained by force since both parties must agree to voluntarily enter into the arbitration process. In addition, courts will not enforce ADR decisions where the decision is patently unfair. These conditions are hard to meet and hence parties in a dispute may not obtain justice after all. Furthermore, the time taken to resolve disputes through ADR and the cost involved keep on increasing and the difference between ADR and court proceedings is increasingly being blurred. Furthermore, the decisions made through ADR processes though binding may lack legal backing and hence the aggrieved party may end up not getting justice. Conclusion This essay has reviewed the reasons why parties to a commercial dispute might decide to apply either the traditional court proceedings or litigation or subject the dispute to ADR in trying to resolve it. The ADR process has been found to be more effective as far as saving on time and cost is concerned. The flexibility of the ADR process and the ability to subject the dispute to a professional as the decider have been found as some of the factors that make ADR an effective dispute resolution mechanism compared to litigation. However, it has been found that court proceedings may be preferred especially since they provide an opportunity for appeal if one is not satisfied with the decision. Furthermore, the ADR process has been found to lack some aspects that the court proceedings has. In this regard, this essay concludes that no one dispute resolution mechanism is better than the other and that the dispute resolution method chosen will depend on the facts of the case and the urgency involved. As such, the essay does not agree that It is more effective to resolve disputes in domestic and international business, consumer and commercial matters through court proceedings rather than alternative dispute resolution (ADR). References: Richard, W2001, Representing the corporate client: Designs for quality, New York, Prentice Hall. Terk Techs v Dockery, 3 Fed. Appx. 459 (6th Cir.2001) Bonar v. Dean Witter Reynolds, Inc. 835 F.2d 1378 (11th Cir. 1988) Thomas, S2004, ADR and the vanishing trial: The growth and impact of Alternative Dispute Resolution, Journal of Empirical Legal Studies, vol. 1, no. 3, pp. 843-912. Carol, D2003, Alternative dispute resolution rather than litigation? Judicial Studies Institute Journal, vol. 4, no. 2, pp. 182- 199. Fiadjoe, A2004, Alternative dispute resolution: A developing world perspective, London, Rutledge. Lisa, B&, Tina, N2004, Dispute resolution and the vanishing trial: Comparing federal government litigation and ADR outcomes, Ohio State Journal on Dispute Resolution, vol. 24, no. 2, pp. 1-38. Read More