Alternative Dispute Resolution

1 Paper Outline I. Disadvantages of using ADR in business contracts II. Types of ADR IV. Scott v Avery clause in business contracts V. Advantages of using ADR in business contracts VI. Alternative dispute resolution (ADR)

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2 Alternative Dispute Resolution Alternative dispute resolution (ADR) Alternative dispute resolution is the process by which people use to resolve legal problems without recourse to the court. The court has been used as a place of resolving conflicts for a long period of time. In the recent past people found out better methods of resolving minor disputes without recourse through the court. The aim of introducing ADR was to reduce the bulk of cases at the courts and to provide quick solution to conflicts. Only major conflicts are resolved through the court 1. ADR has been identified to have advantages and disadvantages depending on the type of conflict being resolved.

Types of ADR Arbitration Arbitration is the process by which a third neutral party is used to resolve disputes between the conflicting parties2. The arbitrator acts as a private judge and his role is to impose a resolution when parties fail to come into consensus.

Arbitration is explained in the content of Scott v Avery clause. An example is when resolving conflicts relating to consumer agreements such as credit card agreements.

The parties should use an arbitrator who imposes a resolution to the conflict 3.

Mediation This is a dispute resolution mechanism where a third party, a mediator facilitates the parties to come into a resolution. The mediator cannot impose the

Albert K. Fiadjoe. Alternative dispute resolution: a developing world perspective. Routledge, 2004.

ISBN 1859419127, 9781859419120. p. 16.

2 Alan, Branch and Samuel Richardson. Australia: Arbitration Clauses. 06 April 2009. Retrieved November 16, 2010 from; http://www.mondaq.com/australia/article.asp?articleid=77516. para. 5.

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Damany Ransom. Legal Affairs alternative dispute resolution. Smart Business Atlanta | May 2008.

Retrieved November 16, 2010 from; http://www.sbnonline.com/Local/Article/14407/66/7/Alternative_dispute_resolution.aspx. para 2.

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3 resolution and his task is to help the parties resolve their conflicts 4. An example is a case where government leaders disagree over an issue, such as the post election conflicts experienced in Kenya in 2007/2008. The former UN secretary general, Kofi Annan was invited to help the two political parties to resolve their conflicts 5.

Negotiation Negotiation is a process whereby the conflicting parties agree about resolving their conflicts without the use of a third party. The parties in conflict come into consensus about the best action to be taken 6. An example of negotiation is a case where neighbors resolve their disputes by discussing among themselves instead of resolving the disputes through the court. There is no third party involved in resolving the conflicts during a mediation process.

Scott v Avery clause in business contracts Scott v Avery clause in business contracts means that parties in a dispute must resolve the problem by the use of arbitration before proceeding to the court process. This implies that arbitration should be used as the primary dispute resolution mechanism. After the parties fail to resolve the dispute by the use of arbitration then they can use the court 7.

Advantages of using ADR in business contracts ADR is cost efficient because there are few charges involved. The parties agree on the most convenient place and time to resolve their disputes. The parties agree on the process which will minimize costs because they have the freedom to Allan Stitt. Mediation: a practical guide. Routledge, 2004. ISBN 1859418449, 9781859418444. p. 74.

Japhet Biegon. Electoral violence and fragility in Africa: drawing lessons from Kenya's experience in the 2007/2008 post-election violence. Paper for presentation at the poster session of the conference on 'Financial Markets, Adverse Shocks and Coping Strategies in Fragile Countries', Accra, Ghana, 21-23 May 2009. para 14.

6 Nieuwmeijer, L. Negotiation: methodology and training. HSRC Press, 1992. ISBN 079691303X, 9780796913036. p. 8.

7 Duhaime. Scott v Avery Clause definition. Retrieved November 16, 2010 from; http://www.duhaime.org/LegalDictionary/S/ScottvAveryClause.aspx. para. 1.

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4 decide how to resolve the dispute. The process saves time of resolving disputes.

Compared to courts, the parties can resolve the dispute as fast as possible without use of many processes. There is greater satisfaction on the judgment because the entire process involves dialogue between the parties. The parties participate equally in the dispute resolution process and this satisfies their needs. In some cases courts worsen a situation that could have been resolved by the use of a ADR. ADR allows the parties in a conflict to discuss and come into a consensus while a court only makes judgment depending on the ability of the parties to defend the case. There is flexibility when using ADR because the conflicts can be resolved according to the terms agreed upon by the conflicting parties 8. A win/win solution can be obtained when ADR is applied because the parties discuss a range of alternatives which can be used to resolve the conflicts. ADR are more private and parties can discuss in confidential places without exposing themselves to the public. Litigations are open to the public and the parties to a conflict expose their private issues. Additionally, ADRs are not formal and the parties discuss with freedom compared to court cases where strict formalities are applied9.

Disadvantages of using ADR in business contracts ADR cannot be applied in all cases because there are some conflicts which require the use of courts. Mediation and negotiation do not create legally binding contracts and this makes them less effective in solving serious cases. The solutions obtained in mediation or negotiation cannot be used as precedents in the future.

Differences in power between the conflicting parties may hinder ADR because one 8

Adrnow. Pros and cons of ADR. 2009. Retrieved November 16, 2010 from; http://www.adrnow.org.uk/go/SubSection_41.html. para 4.

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Damany, Ransom. Legal Affairs Alternative dispute resolution. Smart Business Atlanta | May 2008.

Retrieved November 16, 2010 from; http://www.sbnonline.com/Local/Article/14407/66/7/Alternative_dispute_resolution.aspx.

5 party feel inferior while the other feel superior and this may affect the results of dispute resolution. There is no regulation on the people offering ADR services and this creates a risk of offering poor services to the clients. This makes it impossible for the conflicting parties to decide the best ADR providers to use. It may be impossible to come into a consensus during negotiation or mediation because the parties are not bound to resolve the conflict10.

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Adrnow. Pros and cons of ADR. 2009. Retrieved November 16, 2010 from; http://www.adrnow.org.uk/go/SubSection_41.html. para. 3.

6 Bibliography Adrnow. Pros and cons of ADR. 2009. Retrieved November 16, 2010 from; http://www.adrnow.org.uk/go/SubSection_41.html.

Biegon, Japhet. Electoral violence and fragility in Africa: drawing lessons from Kenya's experience in the 2007/2008 post-election violence. Paper for presentation at the poster session of the conference on 'Financial Markets, Adverse Shocks and Coping Startegies in Fragile Countries', Accra, Ghana, 21-23 May 2009.

Branch, Alan and Samuel Richardson. Australia: Arbitration Clauses. 06 April 2009.

Retrieved November 16, 2010 from; http://www.mondaq.com/australia/article.asp?articleid=77516.

Fiadjoe, Albert K. Alternative dispute resolution: a developing world perspective.

Routledge, 2004. ISBN 1859419127, 9781859419120 Duhaime. Scott v Avery Clause definition. Retrieved November 16, 2010 from; http://www.duhaime.org/LegalDictionary/S/ScottvAveryClause.aspx.

Nieuwmeijer, L. Negotiation: methodology and training. HSRC Press, 1992. ISBN 079691303X, 9780796913036.

Ransom, Damany. Legal Affairs Alternative dispute resolution. Smart Business Atlanta | May 2008. Retrieved November 16, 2010 from; http://www.sbnonline.com/Local/Article/14407/66/7/Alternative_dispute_resolu tion.aspx.

Stitt, Allan. Mediation: a practical guide. Routledge, 2004. ISBN 1859418449, 9781859418444.