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The Alternative dispute resolution

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Alternative dispute resolution (ADR) (also known as External Dispute

Resolution in Australia) includes dispute resolution processes and
techniques that fall outside of the government judicial process.

The term “alternative dispute resolution” or “ADR” is often used to

describe a wide variety of dispute resolution mechanisms that are
short of, or alternative to, full-scale court processes. The term can refer
to everything from facilitated settlement negotiations in which
disputants are encouraged to negotiate directly with each other prior to
some other legal process, to arbitration systems that look and feel very
much like a courtroom process. Processes designed to manage
community tension or facilitate community development issues can
also be included within the rubric of ADR.

Alternative Dispute Resolution provides an alternative to going to court

to settle disagreements. Methods include arbitration, where
disagreeing parties agree to be bound by the decision of an
independent third party, and mediation, where a third party attempts to
arrange a settlement between the two sides. ADR law in Australia
involves federal and state enactments reflected in a range of schemes
that are specific to particular industries, organizations and enterprises.

ALTERNATIVEDISPUTERESOLUTIONPRACTITIONERS’ GUIDE – March

1998 (Technical Publication Series, Center for Democracy and
Governance

Bureau for Global Programs, Field Support, and Research) 1-4

http://www.hg.org/adr.html

National regime
At a national level the International Arbitration Act 1974 (here) reflects
the UNCITRAL Model Law on International Commercial Arbitration
(here) about procedures for international arbitration, covering all
international commercial arbitration conducted in Australia unless
otherwise agreed.

The Act also adopts the Convention on the Recognition & Enforcement
of Foreign Arbitral Awards – aka ‘New York Convention’ – (here) and
1965 International Convention on the Settlement of Investment
Disputes between States and Nationals of Other States (Washington
Convention). It sets out the institutions and procedures that are
available for the conduct of international arbitration.

It does not deal with other alternative dispute resolution processes for
resolving private international commercial disputes.

State/territory
Each State/Territory has uniform Commercial Arbitration Acts dealing
with domestic arbitration –

New South Wales Commercial Arbitration Act 1984 (here)

Victorian Commercial Arbitration Act 1984 (here)

Queensland Commercial Arbitration Act 1990 (here)

South Australian Commercial Arbitration Act 1986 (here)

Western Australian Commercial Arbitration Act 1985 (here)

Tasmanian Commercial Arbitration Act 1986 (here)

ACT Commercial Arbitration Act 1986 (here)

Northern Territory Commercial Arbitration Act 1985 (here)

2 methods of Alternative Dispute Resolution

are:
Arbitration
Arbitration is an out of court procedure designed to resolve disputes
with one or more neutral third parties involves. Arbitration utilizes rules
of evidence and less formal procedures than what a trial court would
utilize, leading to a resolution that is usually much quicker and more
cost effective than taking a dispute resolution to court. There are
numerous different types of arbitration including binding arbitration,
non binding arbitration and hi-lo arbitration. With access to information
and resources about arbitration and arbitration law, you can get the
most out of an arbitration process, often allowing the resolution to rule
in your favor.

Arbitration is a legal mechanism used to resolve disputes through the

aid of a neutral third-party who is given the authority to make a legally
binding decision.  The weight of this decision is what distinguishes
arbitration from mediation.  The parties are not obligated to follow a
mediator’s decision.  In arbitration, both parties must agree to be
bound by the arbitrator’s decision before entering into the process. 
The arbitration process consists of written submissions from each
party and an evidentiary hearing to establish the facts of the case.
Arbitration can be either voluntary or mandatory and can be either
binding or non-binding.

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http://www.lawfirms.com/resources/lawsuits-and-disputes/arbitration
/basics-arbitration.htm

http://www.hg.org/arbitration-definition.html
Advantages of Arbitration:
Speedier resolution; however, there can be exceptions due to multiple
parties, arbitrators, lawyers and litigation strategy.

Less costly; however, there can be exceptions due to multiple parties,

lawyers, arbitrators and litigation strategy.

Exclusionary rules of evidence don’t apply; everything can come into

evidence so long as relevant and non-cumulative.

Not a public hearing; there is no public record of the proceedings.

Confidentiality is required of the arbitrator and by agreement the whole
dispute and the resolution of it can be subject to confidentiality
imposed on the parties, their experts and attorneys by so providing in
the arbitration agreement.

From defense point of view, there is less exposure to punitive damages

and run away juries;

The ability to get arbitrators who have arbitrator process expertise and
specific subject matter expertise.

Limited discovery because it is controlled by what the parties have

agreed upon and it is all controlled by the arbitrator.

Often, the arbitration process is less adversarial than litigation which

helps to maintain business relationships between the parties.

The arbitration is more informal than litigation.

The finality of the arbitration award and the fact that normally there is
no right of appeal to the courts to change the award.

http://www.diac.ae/idias/services/diac/advantages/

Disadvantages of Arbitration:
There is no right of appeal even if the arbitrator makes a mistake of
fact or law. However, there are some limitations on that rule, the exact
limitations are difficult to define, except in general terms, and are fact
driven.
There is no right of discovery unless the arbitration agreement so
provides or the parties stipulate to allow discovery or the arbitrator
permits discovery.

The arbitration process may not be fast and it may not be inexpensive,
particularly when there is a panel of arbitrators.

Unknown bias and competency of the arbitrator unless the arbitration

agreement set up the qualifications or the organization that
administers the arbitration, has pre-qualified the arbitrator.

There is no jury and from the claimant’s point of view that may be a
serious drawback.

An arbitrator may make an award based upon broad principles of

“justice” and “equity” and not necessarily on rules of law or evidence.

An arbitration award cannot be the basis of a claim for malicious

prosecution.

The possibility of compromise or splitting of baby awards.

Business Contracts often Require Arbitration:

Typically, many business throughout virtually all industries use
arbitration as a means of rectifying outstanding business disputes,
however, for individuals embroiled in a dispute, the need for an
arbitrator may not prove necessary, efficient, or cost effective. 
Personal disputes, between two individuals, often times are best
served through the judicial system and the civil courts, given the costs
associated with brining in an arbitrator to a given situation. Though for
larger, more complex cases requiring esoteric knowledge regarding the
dispute at hand, arbitration produces serious benefits; personal
disputes involving a limited scope of impact will not require the
expertise, impartiality, or knowledge of an arbitrator. Typically, these
cases are better served through mediation, or if truly necessary, a jury
trial in the civil courts. 

Arbitration is Most Often Binding:

Arbitration also leaves no room for an appeals process in the
overwhelming majority of instances.  This is a risk parties and
individuals should seriously assess prior to engaging in arbitration, as
well as when considering the methods for resolving their disputes. 
Most individuals would like the option for an appeal in the event a
ruling is not in their favor, which is more than probable in the course of
a civil court trial, however, with arbitration, the options for appeals are
virtually nil, not to mention the costs associated with an appeals
process may not even be worth the amount being disputed between
two parties. 

Also, in the arbitration process, there is a limited period of discovery,

which can lead to surprise evidence or testimony occurring during an
arbitration process, which a party may or may not be able to effectively
refute at the time of their arbitration hearing.  Likewise, there is no jury
to decide the outcome of a dispute, but rather, the decision rests solely
in the hands of the arbitrators, whom usually consist of one individual
or a panel of three persons, that may or may not be able to remain
entirely impartial during all proceedings regarding all matters. 

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Although usually thought to be speedier, when there are multiple

arbitrators on the panel, juggling their schedules for hearing dates in
long cases can lead to delays.

http://www.lawfirms.com/resources/lawsuits-and-disputes/arbitration
/disadvantages-arbitration.htm

Mediation
Mediation, a form of alternative dispute resolution (ADR) aims to
determine the conditions of any settlements reached — rather than
accepting something imposed by a third party. Mediation is a
nonbinding dispute resolution technique in which the disputing parties
voluntarily attempt to reach a mutually agreeable resolution of their
dispute with the assistance of an impartial third person, who is called
the “mediator.”

Even though related to negotiation, mediation may be more effective

than direct negotiations between the parties. Mediation had commonly
been used to resolve disputes in the labor-management and family law
fields. Disputants, both public and private, have successfully used
mediation to resolve a wide variety of disputes. Both businesses and
the courts have discovered that mediation can resolve many disputes
faster and less expensively than the more traditional alternatives of
litigation and arbitration.

Mediators use appropriate techniques and/or skills to open and/or

improve dialogue between disputants, aiming to help the parties reach
an agreement on the disputed matter. Mediation is the only way
assisted by one third, which promotes freedom of choice of
protagonists in a conflict

Types of cases

An American Arbitration Association publication lists, under the

heading “What types of cases are suitable for mediation,” further
examples of successful mediations of disputes involving banks. For
example, a claim of fraud, negligence and mismanagement of a bank
by its president was settled for $3.4 million following 21 hours of
mediation. A multi-party construction dispute in which the bank had
threatened foreclosure was settled for $2.8 million after 36 hours of
mediation.

Among the best known of all mediated settlements involving banks

was the settlement of a series of consumer class actions against
Wells Fargo and other California banks. After 13 years of litigating
allegations of unconscionable fees for bounced checks, the multi-
million dollar dispute was submitted to mediation and was settled in a
short time.

http://www.hg.org/mediation-definition.html

Advantages of Mediation:
One of the hallmarks of mediation, and one of its important
advantages, is mediation’s generally private, confidential nature.
Mediation’s confidentiality may be one of the main reasons for its
success in creating settlements. Parties are often unwilling to disclose
confidential information about their view of the case to the opposing
party during direct negotiation.

Bottom Line

The parties also may be reluctant to disclose their true “bottom-line”

settlement position, or to disclose special concerns to the opposing
party. A mediator can avoid this communication roadblock to
settlement. The mediator may be told these things in confidence, and
he or she can use them in directing the negotiations without disclosing
them to the opposing party. This might facilitate a settlement that
would not have been possible in direct negotiations.

Low Risk

The voluntary, confidential, and inexpensive characteristic of mediation

makes it almost risk-free. Attempting mediation is low-risk; if
mediation fails to bring about a resolution to the dispute, the parties
can still submit the dispute to any other dispute resolution process,
including arbitration or litigation. However, many parties deem this risk
acceptable when compared to the cost and time savings of mediation,
as well as its confidentiality.

Flexible

Other hallmarks of mediation are its informality and flexibility. There

are almost no formal rules of procedure, and the process itself is
flexible. This informality allows the disputants and the mediator to
control and design the process. Mediation’s informality often results in
cost savings to the disputants.

Mediation is generally far less adversarial than litigation or arbitration,

and is therefore far less likely to damage business relations.
Mediation’s informality generally allows for greater client participation
in the settlement than is allowed in almost any other dispute resolution
process.

QUICK AND INEXPENSIVE

When parties want to get on with their business and their lives,
mediation may be desirable as a means of producing rapid results. The
majority of mediations are completed in one or two sessions.

CONFIDENTIAL

Mediation is a confidential process. The mediators will not disclose

any information revealed during the mediation. The sessions are not
tape-recorded or transcribed. At the conclusion of the mediation,
mediators destroy any notes they took during the mediation session.

http://www.osc.gov/adrabout4.htm

http://www.abanet.org/publiced/courts/mediation_advantages.html

Disadvantages of Mediation:

The voluntary, nonbinding nature of mediation can be a disadvantage

when one or more parties are recalcitrant or cannot be trusted to honor
a voluntary settlement agreement. When coercive methods are likely
necessary to force a party to honor a settlement agreement or reward,
an adjudicatory dispute resolution process, such as binding arbitration
or litigation, may be more appropriate than mediation.

Enforceable

Disputants and their counsel sometimes seek to avoid mediation

because it is not final or binding. They are worried that any mediated
agreement will not be enforceable in the same ways as court
judgments or arbitration awards are. However, mediated agreements
may have an advantage over court judgments and arbitration awards
because mediated agreements are the product-at least theoretically- of
the mutual agreement and understanding of the parties. Thus,
disputants can structure a mediated agreement to meet the needs of
both sides. Moreover, mediated settlement agreements can, and
generally should, be executed and signed at the end of the mediation
session. This produces an enforceable settlement agreement.
“http://www.robertmsmith.com/about_adr/mediation_overview.asp”

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Time
Mediation is an extremely quick process or it can be an extremely
quick process if the parties involved make it quick. Why? There is no
judge, no court date and no lawyers involved. Because the parties
involved with mediation make their own decision on the outcome, this
makes the process quite quick.

Having a Lawyer
Mediation does not require a lawyer to be present during one or more
of the sessions. Instead, if the parties involved wish to have their
lawyer present it must be approved by the other party in the case.
Many people, when negotiating a settlement, want their lawyer present
at all times. Litigation requires the presence of a lawyer or attorney.
With mediation, only a mediator is required.

The Agreement Is Legally Binding

Even though there are normally no lawyers present at mediation, the
agreement between the parties involved is legally binding in most
judicial systems. The agreement is documented with the written word.
Because there are no lawyers present, some people might be hesitant
to sign the agreement without having their lawyer review it.

Anything can be Mediated

With mediation, anything can be mediated. That means the smallest of
disagreements, such as, a dispute over a water bill can be mediated.
There is no limitation on the amount of money involved in mediation or
the topic that is being mediated. As long as the topic does not require
statutory, judicial or regulatory case law to resolve, then it can be
mediated.

The Mediator Is an Outside Party

With mediation, the mediator that is hired is an outside party. He or she
has no previous knowledge of the case and has never previously met
the parties involved. This can be somewhat of a hindrance in the
process. A lawyer usually has some knowledge of the case and more
than likely knows the party or parties involved because that lawyer has
been working with that party for a couple of years.

There Is No Judge
Most people that want to settle an argument or disagreement use
litigation because they want the end result to come from a judge. In
mediation, the mediator does not render a verdict in favor of one side
or the other. In litigation, the judge reviews each side of the case and
then makes an informed decision. Granted, one side is not happy
because they lost and the other side is satisfied because they won. In
mediation, it is a win-win situation but not everyone leaves happy.

Either Party Can Withdraw

Another disadvantage of mediation is that either party can withdraw
from the proceedings at any time. In litigation, the only party that can
withdraw is the plaintiff, if they drop the suit. This means that even the
party that is ‘at fault,’ can withdraw if they are not happy with where the
mediation process is headed.

http://www.lawfirms.com/resources/lawsuits-and-disputes/mediation
/mediation-disadvantages.htm