Alternate dispute resolution (ADR) is a process parties can go through before going to court. These ways are cheaper and more informal. The different types of ADR available are negotiation, mediation, conciliation, and arbitration.
Normally a negotiation is taken place between two or more parties and does not need the use of a third party however if a decision cannot be made, a third party may be brought in. A decision is normally made between the parties involved. In most instances, verbal contracts can be entered into and are legally binding, though this excludes contracts involving deeds and credit agreements as they are only binding when written.
A negotiation is a cheaper and quicker alternative to court. This is due to the lack of personnel involved in the process. However if one party has less knowledge on the subject than the other this can be taken advantage of.
Mediation is an arrangement between two or more parties used to settle disputes, this involves a third party, also known as a mediator, who oversees the dispute, helping to ensure that communication is effective and aids all parties involved to be satisfied with a proposed resolution. The mediator is unbiased and does not take sides during the dispute. The parties involved will propose ideas similar to that of a negotiation but the mediator will ensure all parties involved are professional and benefit from the agreement. The process becomes legally binding once a document with the written out terms is signed by all involved. Until this point it has no legal standing.
Mediation is a voluntary process meaning that a party is not forced to participate. This can make a party feel more comfortable and make the meeting less formal. However this also means a party has the opportunity to turn down a mediation making the process longer.
Conciliation, a lot like mediation, involves two or more parties involved in the dispute and a third party, known as a conciliator. The conciliators role is the same as the mediators however they will propose a settlement agreement. The agreement is non-binding and has no legal standing in court unless both parties agree on the settlement. A document would have to be wrote up and signed by both parties. This is the point that the settlement becomes legally binding.
Conciliation gives all parties the choice of time, place and structure of the meeting; meaning it can have an informal setting, making some parties more comfortable. However a proposed format of the meeting may not suit the needs of all parties.
Arbitration are also known as “arbitral tribunals”. The parties involved will present in writing their side of the dispute which will be reviewed by up to three arbitrators, the parties agree to abide by the arbitrators decision, whatever the result may be. The arbitrators will then solve and conclude the dispute for the parties involved. The decision made is solely made by the arbitrators and is completely legally binding, even if a party does not agree with it. The decision made has a strong legal standing which means if one party does not fulfill their side, it can be enforced upon them.
The arbitrators are all experts in dispute solving and will have many years’ experience. The means less errors will be made and the decision will be thoroughly reviewed before being enforced.