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Alternative Dispute Resolution (ADR)
What is alternative dispute resolution?
Alternative Dispute Resolution (ADR) is a group of processes such as arbitration, mediation, or negotiation, in which the parties work to resolve their dispute outside of litigation. ADR procedures are usually less costly and faster. They are increasingly being used in disputes that would otherwise result in litigation, including labor cases, divorce actions, and personal injury claims. The two most common forms of ADR are mediation and arbitration.
What is mediation?
Mediation is an interactive process where a trained neutral third party—the mediator -- assists disputing parties in resolving conflict through the use of productive communication and negotiation. Mediation’s goal is for the parties to voluntarily settle their dispute; a successful mediation produces a settlement agreement. Mediation is a "party-centered" process in that it is focused primarily upon the needs, rights, and interests of the parties. The mediator uses a wide variety of techniques to guide the process in a constructive direction and to help the parties find their optimal solution.
Mediators are trained to work in difficult situations. The mediator helps the parties think outside the box for possible solutions to the dispute, broadening the range of possible solutions from those that could be provided by a court could. Participants may mediate disputes in a variety of settings, such as commercial, legal, diplomatic, workplace, community and family matters.
The benefits of mediation include:
Fees are generally split by the parties. But while a mediator may charge a fee comparable to that of an attorney, the mediation process generally takes much less time than moving a case through court. Taking less time means spending less on attorney fees and costs. Mediation further reduces costs because the mediated agreement is created by, rather than imposed upon, the parties. That means that compliance is usually high and parties are saved from having to pay an attorney to force compliance in court.
While court hearings are public, mediation remains strictly confidential. No one but the parties to the dispute and the mediator or mediators know what happened. Confidentiality in mediation has such importance that in most cases the legal system cannot force a mediator to testify in court as to the content or progress of mediation. Many mediators destroy their notes taken during a mediation once that matter has settled or otherwise concluded. The only exceptions to such strict confidentiality usually involve child abuse or actual or threatened criminal acts.
Mediation increases the parties' control over the resolution. In a court case, the parties obtain a resolution, but control resides with the judge or jury. But a mediator will not compel the parties to reach an agreement. Mediation also allows parties to be more creative and reach solutions that are better suited to what they need and who they are than what would be ordered in a courtroom.
Compliance and Enforcement
Parties usually comply with the mediated agreement because they work together to shape the result. So parties who construct their own agreement usually don't need a court’s enforcement powers. The mediated agreement, however, is binding and fully enforceable in court if it satisfies the requirements for a contract. If a party fails to abide by the mediated agreement's terms, the other party has the choice to seek to enforce the agreement in the court system or re-mediate.
What is Arbitration?
Arbitration is more formal than mediation, but less formal than going to court. Arbitration is a private hearing and can be speedy and economical. It may be binding or non-binding, as the parties decide at the start of the proceedings.
At the arbitration hearings all parties give evidence, either written or through witnesses, to neutral decision makers called arbitrators. The arbitrators then decide the outcome of the dispute. The arbitrators are selected by the parties or appointed from a preselected list. The parties present written and oral evidence, as in court. The proceedings are informal, however, and are often held in a conference room rather than in court. The disputants are not involved in fashioning their own resolution as in mediation, but, instead, have a resolution imposed on them by the arbitrators. The arbitrators usually decide a case by issuing a written decision or award following the arbitration hearings.
Arbitration costs include the fees of the arbitrators, administrative fees and attorneys' fees. Parties pay their own attorney's fees, but usually split the administrative and arbitrators' fees. Companies will often pay for the costs of internal employment arbitration programs, as do some companies that sell consumer goods and services.
While court hearings are public, the American Arbitration Association and American Bar Association have developed and revised ethics rules governing the obligations of arbitrators to maintain the confidentiality of the proceedings. In addition, the parties may enter into a confidentiality clause as part of the arbitration agreement. Confidentiality is not mandatory, but parties often require it as a condition of using the process.
Binding means the decision is final--no appeal is allowed--and enforceable in court. Non-binding means that if you or the other party does not like the decision, you still have the opportunity to go to court and have your dispute litigated.
If the parties have agreed to a final and binding award, the award will be legally enforceable in the New York state courts or in the federal courts. An arbitration award is as effective as a decision made following trial because New York state law and federal law allow a party to confirm an arbitration award into a court judgment. An attorney can advise you further on enforcing an award.
Does the other side have to agree to mediation or arbitration?
For mediation, yes, both parties must agree. In arbitration, no. Both parties instead agree, by entering into arbitration, that the arbitrator’s decision will be final. This, for example, is the nature of New York City Small Claims Court’s arbitration option. Private arbitrations generally are contractual, and enforced in terms of the original contract agreement.
How is the Mediator or Arbitrator chosen?
It depends on the situation. When in New York State Court, the court maintains a roster of individuals who have training in mediation (and oftentimes experience in the subject matter) and the court chooses the mediator. In private litigation, the parties choose the mediator. Arbitrators are usually chosen by the terms of commercial contracts, but in New York courts, particularly in small claims cases, arbitrators may be available to help decide your case. See “A Guide to Small Claims in the NYS City, Town and Village Courts,” New York State Unified Court System (available at http://bit.ly/2g3H7bH).