The basic principles of alternative dispute resolution (ADR) are reviewed and discussed in relation to actual business disputes that were resolved through ADR.
Alternative Dispute Resolution
After a review of the usefulness and purpose of alternative dispute resolution (ADR), this paper examines represenative examples of business disputes that were resolved without recourse to court proceedings. The sample cases are examined by way of illustrating the fundamental principles of ADR.
An Alternative to What?
Even when all the participants act in good faith and none has dishonorable intentions, business contracts and transactions lead to conflict from time to time. Most conflicts are the result of differing interpretations of contractual obligations, differing assumptions that were inadequately addressed in the contract, implied responsibilities, or the scope of activities covered by a contract. Misunderstandings are common because of people's differing perceptions, backgrounds, assumptions, and priorities, as well as the natural ambiguity of human language, however carefully worded a contract might be (AAA, 2000).
It is safe to say that dispute resolution is a good thing for business, since it allows business relationships to continue without the distraction of the dispute. So, why alternative dispute resolution? Historically, the standard mechanism to resolve business disputes was to go to litigation. While this guarantees a resolution - or at least, an end - to a dispute, it tends to be time-consuming and expensive. It can also leave both parties dissatisfied, even if the dispute is technically resolved according to the letter of the law.
Hostile litigation can take so much time and use so many resources that neither side "wins" in a meaningful sense of the word. The prevailing disputant often enjoys only a Pyrrhic victory, since the cost of victory can be staggering (Corley, et al, 2001, p. 89). It is perhaps poetically just...