Alternative Dispute Resolution | When, Where Why?
Alternative Dispute Resolution (“ADR”) is a voluntary mechanism that seeks to resolve disputes outside of the courtroom without long and sometimes costly litigation. Methods of ADR include methods such as mediation, arbitration, and conciliation. In this essay (1) I will explain those methods briefly and use five different scenarios to highlight some of the pros and cons of ADR. Moreover, I will try to provide some general principles that can be used to determine which ADR method should you use (if you choose to use ADR). (2) I will share some of my thoughts and possible criticisms on ADR:
(1) Mediation, arbitration, and conciliation are the main ADR mechanisms which are generally adopted by parties to resolve their disputes in an informal manner. They try to reach a solution by settlement or negotiation with the assistance of a third neutral party and have turned out to be an effective alternative to the litigation process. Meditation encourages a search for the solution by the parties who are involved in the dispute themselves. The basic motive of mediation is to provide opportunities for parties to negotiate and come to a final solution catering to the needs of both sides. It is an assisted negotiation and an informal process in which parties are aided by a third impartial person, who is the mediator. Arbitration is a method of dispute resolution in which the parties avoid court proceedings and instead decide to resolve their dispute through appointing a third person, who is known as an arbitrator. Conciliation is a type of ADR where the settlement is made out of court. The dispute is settled by a neutral third party, who is the conciliator (an expert in the matter at hand). The conciliation process is voluntary as it is at the mutual discretion of the parties to choose conciliation as a method of resolving their dispute with the assistance of the conciliator; also, the proposal is not binding upon the parties. The main differences between the methods of ADR mentioned in this essay are: mediation and conciliation both are an informal process, whereas arbitration is more formal in comparison. In mediation, the mediator generally sets out alternatives for the parties to reach an agreement. Arbitration, unlike mediation, is a process where the parties submit their case to a neutral third party, who on the basis of discussion, determines the dispute and comes to a solution. Dispute resolution through conciliation differs from mediation and arbitration because conciliation involves the assistance of a neutral third party who plays an advisory role in reaching an agreement.
The five scenarios that I will talk about in this essay are (A) family matters (divorce and child custody), (B) employer-employee relationships, (C) disputes between neighbors, (D) disputes between landlord and tenant, and (E) copyright disputes. The key principle for determining which ADR method, if any, is the best option to resolve the dispute is to ascertain whether the parties will continue to encounter one another even after the resolution of the dispute. So, in cases where the relationship will continue, for example in the case of a child custody dispute, using ADR is for most cases better than taking the matter to court. In scenarios A-D, usually the relationship between the parties will continue even after the dispute has been resolved – if the parties come to an agreement by using ADR it will be better and more sustainable than going to court. ADR allows both parties in those types of relationships to not engage in a zero-sum game, nor get a binary solution from the court, but rather they can “expand the pie” and find a solution that will be beneficial to both parties. On the other hand, in cases that the parties do not have a future relationship, using the court, and on some occasions, conciliation (when the fear of providing information to the other party is not great), can be in most cases the preferred way of resolving these disputes. From the general rule to the specific scenarios: in the case of a divorce with a child custody dispute (family disputes), using ADR can benefit the divorced couple as well as the children both financially and emotionally (as ADR is usually less expensive and shorter process than filing a lawsuit in court). Divorce is not a simple process in itself, so combined with the question of child custody, it makes the divorce issue emotionally charged in addition to the economic “blow” created by the divorce. The preferred method to resolve such a conflict is to use ADR, and specifically mediation. The rationale behind this is that in mediation the mediator helps the parties to navigate the conflict to a solution that the parties themselves come up with. The moderator’s job as a neutral third party is to help them find a solution that both parties want, in contrast to a binary court decision or arbitration (if binding) forced upon both parties (which means that one party has to lose), or a conciliation where a third party “tells” the parties what is better for them. By finding the interest of the parties, the mediator can bridge the gap in the disagreement and help the parties reach a better and more sustainable agreement then the alternative methods. Despite the aforementioned, conciliation is still better than taking the matter to court in this scenario. The reason that court or arbitration is less effective specifically in a family dispute, and generally in a lasting relationship dispute, is because in those methods, the parties “agree” to the solution because they are bound to the court decision (and in arbitration, only if the parties agreed to be bound), and not because the parties reached a solution on their own as with mediation or consultation. With ADR, more creative solutions can be formed, solutions that can cater to the needs of the parents (for example, which parent will pick up the kids from school when they both work?), for the parents to have quality time with the children as well as having time for themselves.
In the case of an employer-employee relationship, often the “talks” between an employer and an employee regarding a salary increase or termination of employment could reach a better outcome through mediation compared to other ADR mechanisms or court proceedings. For example, in a case where the employee is asking for a raise, the employer can decline the rise for many reasons: “the company is not in a ‘good’ place right now”; “if you get a raise I will have to raise the salary of all the workers”. Using mediation allows for the interests of the parties to surface in a beneficial way. For example, if the employee needs the raise to pay for the day-care costs for his new baby, through mediation, the parties can reach a more interesting solution: if the employer is afraid to raise the salary of the employee because the rest of the workers will demand a rise as well, he could instead provide a day-care service in the workplace for all the employees (assuming it costs the employer less than raising the wages of all employees).
The argument that mediation is a better method for family disputes and employer-employee relationship disputes can also be made for disputes between neighbors and disputes between landlord and tenant. The reason for this is the fact that the parties have to maintain some sort of relationship – although the tenant and the neighbor could move, and the landlord could just wait and not renew the tenant’s lease – it is safe to say that even if the mediation does not result in the parties “living happily ever after”, mediation can at least allow the parties to coexist with each other better.
Contrary to the scenarios mentioned in A-D, using ADR in a copyright dispute (scenario E), where the relationship between the parties will end with the dispute, can be unbeneficial to the parties. Turning to a more traditional procedure such as filing a lawsuit or binding arbitration (with the risk of not being able to appeal) can be more beneficial. The reason for this can best be explained using an example: in the event that parties having a copyright dispute take part in ADR methods with an open environment such as mediation or conciliation, these could provide the opposing side information that could potentially be used against them if the parties do not reach an agreement. Even if there is a confidentiality agreement between the parties, information leaks cannot be undone and could cause a major disadvantage to the parties who share the information in a mediation or conciliation. Moreover, in some occasions, the parties only use ADR as a way to stall time or gain information. Thus, a person who knows that his case is “not strong” and that he will likely lose in court can use mediation or conciliation to gain more time and information before he will be obliged by law to stop its infringement of the other party’s copyright.
In conclusion, to part one of this essay, many scenarios can be solved more elegantly using ADR. At the same time, one must take into consideration the importance of the relationship, the information that will have to be shared with the opposing parties, and the trust in the other parties to use ADR in good faith. For these reasons, I will conclude and argue that usually in scenarios A-D, mediation foremost and subsequently conciliation are superior from the other methods of ADR because the parties accept the solutions rather than having a solution forced upon them, which leads me to my thoughts and possible criticisms on ADR:
(2) In the second part of this essay, I would like to share with you some of my thoughts and criticisms of ADR. I think there are many advantages to using ADR, but at the same time, we should not forget that there are many disadvantages, ones that need to be considered. I will start with the common criticisms of (A) power relations in society. As a supplementary criticism, I will talk about (B) the lack of ability to appeal and to avoid ADR by providing an Israeli law example. Then finally I will end with my concerns of (C) legal stagnation in the face of multiple ADR uses – in my opinion, this is the biggest concern from multiple ADR uses.
(A) Power relations in society are extremely influential, as the saying in business goes “to make money you need to have money”; in my opinion, a lack of resources could undermine negotiation power for the weaker party. For example, a desperate need for money could make a person sell his vehicle significantly below market price. Of itself, this is not a negative, but in ADR, especially in mediation and conciliation, if the parties have accepted the solution at hand due to power imbalance, the weaker party may be able to “live” with it, however society misses out in terms of justice. One can argue that there are different types of “powers”, for example, the power of the weaker party to sway public opinion through the media. That being said, the public could be less inclined to believe the weaker party due to growing mistrust of the media. Moreover, the weaker party’s lack of funds may prevent him from utilizing those different types of “powers”. In my opinion, ADR is useful but we have to make sure that the “neutral” third party in ADR will take the power imbalance into consideration; for that to happen, we have to use external incentives (for example a bonus if the agreement was held for a certain amount of time).
(B) In Israel, once a mediation or conciliation agreement has been made, it is validated in court. Therefore, in order to cancel an ADR agreement, the party that is interested in nullifying the agreement must show that at the time of agreement, there were reasons that compromised the consent (coercion, pressure, etc.), a difficult burden to prove when a supposedly “neutral” third party was in charge of the proceedings. Thus, as a society that wants to achieve justice, we may need to consider a better supervisory system to oversee procedures such as mediation and conciliation. In arbitration the problem is greater, especially in cases where the court, for “efficiency reasons”, compels the parties to use arbitration, because it de facto revokes the right of the parties to have their day in court. On that note, because the court and the law compel parties in certain cases to use ADR, the state loses some of the benefits derived from ADR being a voluntary procedure. Moreover, this is paternalistic for the state or the court to compel the parties and make ADR procedures mandatory. In contrast to what I have stated in the first part of this essay in family matters (why it is better to use ADR and not take the matter to court), I do not believe that the state should compel the parties to mediation. In Israel (a religiously influenced country), a person must get married under his religion laws (e.g. Judaism, Islam, etc.), so a Jewish person can only get married and divorced using the Old Testament rules. This makes Israel interesting and a touch different from other parts of the world. For example, in the Jewish religion a descendant of a priest of the Temple (today usually with the last name of Cohen) is prohibited from marrying a woman that was married in the past (even if the descendant himself is the one who divorced her). Now to the matter at hand, in July 2016, when the Family Dispute Settlement Law (Temporary Order) came into effect in Israel (also known as the Mandatory Mediation Act), a compulsory proceeding was created requiring a party to a family dispute to file a dispute resolution request (in Hebrew, the procedure is called: ”בקשה ליישוב סכסוך”) and not to file for divorce in the family court. As I mentioned in the first part of this essay, due to the nature of family disputes, ADR procedures can help the parties to reach an agreement which benefits both parties, and not necessarily constitute a zero-sum game that each party wants to win. That being said, in my opinion, courts should not have the role to compel parties to use ADR involuntarily as it is paternalistic and can lead to a slippery slope if the court increasingly redirects disputes to ADR for “efficiency reasons”.
(C) The issue of legal stagnation may arise in the face of multiple ADR uses. The common law system is the system of jurisprudence based on the doctrine of judicial precedent, the principle under which the lower courts must follow the decisions of the higher courts, rather than on civil code. In common law systems, the effect of ADR is greater than in civil law which does not follow the doctrine of precedent. If most of the disputes are occurring with returning players, then the law will not evolve and improve, and this can also deter rightful claims from being filed because the law will provide a misrepresentation of reality due to the fact that ADR agreements are not published and not accessible to the general public. In terms of particular justice, a weak and righteous party, for example, a private person that sues a factory for noise nuisance (Ata v. Schwartz) can get a better deal “under the table” if the details of the agreement remain between the parties and no precedent is set. But systemic justice, which takes into consideration not only the parties of the dispute but also the future impact of the decision (especially in a common law system that based on of judicial precedent), will require the decision-maker (in court, the judge, and in ADR, the neutral third party) to not only consider the matter at hand, but also to see the system as a whole. In my opinion, the stagnation of the law is also greatly connected to the lack of ability to appeal in ADR (as mentioned previously), so that even if every ADR agreement was accessible to the public, we must also provide a way to appeal an ADR agreement.
In conclusion, although that ADR has its flaws, in my opinion using ADR is beneficial if it is used in cases where the relationship will continue after the dispute has ended. In addition, as long as we are aware of the criticisms against ADR and we put checks and balances on the state’s power to compel the parties to use ADR, the parties that use ADR, and in my eyes, mediation foremost and subsequently conciliation in particular, can “expand the pie” and avoid engaging in a zero-sum game.
Returning players is a game theory and a behavioral economics term for “players” that perform the same act repeatedly, meaning that the returning players have more information and the same procedure would usually cost less than it would cost to a one-time players – for example, an insurance company in an insurance claim against a private person.
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Alternative Dispute Resolution | When, Where Why?