What is alternative dispute resolution

Articles > Small Business

What is Alternative Dispute Resolution?

November 26, 2020         Daniel Katz

Alternative Dispute Resolution (ADR) encompasses the following processes of resolving conflict in the workplace; mediation, arbitration and expert determination. ADR offers time and cost-efficient processes and can resolve disputes without the need to involve courts.

Benefits of ADR

As previously discussed, ADR offers more efficient processes than those that take place in a courtroom. There are several other advantages as well:

  • More flexible to the needs and conditions of the parties involved.
  • Though informal, the process is extremely confidential.
  • The business is able to maintain its image and reputation.
  • Awards resulting from the resolution are not subject to appeal and are final.
  • Parties can agree to resolve the matter in a single procedure and in turn, avoiding lengthy court proceedings.

Types of ADR

Mediation

Mediation occurs where a neutral third-party facilitator is appointed to help parties negotiate a solution to their conflict. In this, the mediator has no decision-making power. Rather, their duty is to identify and assess all options in resolving the conflict between parties.

Mediation is the most common form of ADR. This is because it is the most time and cost-effective out of all ADR processes. Additionally, mediators tend to adopt more of a humanistic approach to resolving workplace conflicts. This allows them to specifically narrow in on the issues of each party. 

Here are some reasons as to why you should mediate:

  • Flexible and not very complex.
  • Parties can maintain control over the settlement of the dispute process.
  • Strict confidentiality.
  • Normally a fast process, and subsequently has minimal effects on the business’s reputation and image.

Arbitration

Arbitration is a process that appoints an independent adjudicator, who makes a binding decision on issues surfaced by workplace disputes. This process is needed when there is a dispute resolution clause in a contract between the conflicting parties. Arbitration differs from mediation, as a mediator’s duty to help parties negotiate to reach an agreement. 

As arbitration is conducted outside the courtroom, it differs from the litigious process. Furthermore, a binding decision made by an arbitrator is normally final, and the grounds for appeal are narrow. Additionally, an arbitrator is appointed by:

  • The parties in dispute.
  • Existing tribunal members.
  • An external party to the company such as a court or institution.

Here are some reasons as to why you should arbitrate:

  • The process is more formal than mediation, as there is a hearing.
  • Generally a quicker process than court hearings. 
  • Like mediation, the arbitration process is extremely confidential.
  • As previously discussed, the arbitrator’s decision is essentially final. With this, the right of appeal is non-existent unless there is blatant corruption. This is beneficial as appeal hearings can be both lengthy and costly.
  • The final decision is provided with lengthy and detailed reasoning. This allows the business to understand the consequences of workplace disputes for future reference.

Expert Determination

Expert determination is essentially the process of obtaining help from an expert, external to your business. Here, the parties send oral or written submissions to this expert. The expert will then consider both sides, and make a binding decision on the matter privately.

Expert determination is available when there is an ‘Expert Determination Clause’ in the contract. Businesses should consider the following factors when determining the scope of this clause:

  • Types of issues that are subject to determination.
  • The qualifications needed by the expert.
  • Assurance that the expert will act independently, and in confidentiality.
  • All relevant information regarding costs and awards.

Expert determination is most common in building/industrial disputes, and where asset valuation is needed. Such issues are generally quite singular and simple and do not require judges or arbitrators. 

To Sum Up

The business world is constantly changing. These changes include new and efficient dispute resolution processes that do not necessarily need to be heard in a courtroom. ADR offers these types of processes and can be extremely beneficial for any type of business.

If you need any assistance in resolving a dispute, our commercial lawyers are here to help. Just call us at 1300 337 997.

About Daniel Katz

Daniel is a legal intern at OpenLegal, placed in our legal content team. He is currently studying a Bachelor of Laws at the University of Technology Sydney. Daniel's interest lies in economics and media/startup law.