Legal Definitions - alternative dispute resolution

Alternative dispute resolution (“ADR”) refers to any method of resolving disputes without litigation. ADR includes processes and techniques of conflict resolution that occur outside of any governmental authority. The most famous ADR methods are mediation, arbitration, conciliation, negotiation, and transaction. All ADR methods have common characteristics – i.e., enabling the parties to find admissible solutions to their conflicts outside of traditional legal/court proceedings, but are governed by different rules.

• Negotiation: Two parties meet to settle a dispute. This is the preeminent mode of dispute resolution.
• Mediation: A mediator brings opposing parties together and attempts to work out a settlement or agreement that both parties accept or reject. Mediation is not binding.
• Arbitration: Parties agree to submit their dispute to an arbitrator or panel of arbitrators who render a binding decision. Arbitration is more formal than mediation and has a lot of similarities with traditional court proceedings.

For instance, in negotiation, there is no third party who intervenes to help the parties reach an agreement, unlike in mediation and conciliation, where the purpose of the third party is to promote an amicable agreement between the parties. In arbitration, the third party (an arbitrator or several arbitrators) will play an important role as it will render an arbitration award that will be binding on the parties. In comparison, in conciliation and mediation, the third party does not impose any binding decision.

If all the ADR methods are different, they should not be compared and confronted because in practice, the parties combine the use of these different ADRs. For instance, the parties may stipulate in their contracts that in the event of a dispute they will first submit to an attempt at amicable settlement (conciliation/mediation) and only in the event of failure will they resort to a judicial method of settlement, which may be arbitration or recourse to the State justice system. ADRs therefore come into play at different levels and have a complementary character.

The main advantages of ADR are rapidity, confidentiality, and flexibility. Public courts may be asked to review the validity of ADR methods, but they will rarely overturn ADR decisions and awards if the disputing parties formed a valid contract to abide by them.