Alternative Dispute Resolution

ADR Report

SUBMITTED TO;
Krishna Bhandari

SUBMITTED BY;
Nischal Budhathoki
 Chapter 1
Introduction to Alternative Dispute Resolution

1. Concept of Alternative Dispute Resolution;

As per the nature of a human and the way of thinking he or she holds, many
disputes have been arising since the beginning of mankind. The only
difference that can be laid down is that in the past, it used to be solved or
resolved by the use of force or any other measures of violence whereas
nowadays it is solved through more peaceful ways.
Alternative dispute resolution (ADR), or external dispute resolution (EDR),
typically denotes a wide range of dispute resolution processes and techniques
that parties can use to settle disputes with the help of a third party.1
"Modern systems of alternative dispute resolution, commonly referred to as
ADR, are designed to help parties solve disputes efficiently without resort to
formal litigation and with a minimum of judicial interference."2
Alternative Dispute Resolution (ADR) is a collective term for the ways that
parties can settle disputes, with or without the help of a third party. It is a
practice that became prevalent in the legal profession as a means to resolve
disputes, in a manner that is considered to be more efficient and less
adversarial than traditional litigation. ADR is a fast-growing field within the
justice system. The rising costs, delays, and complexities of traditional court
litigation have made ADR an attractive alternative. It is often faster, less
expensive, and more private than litigation. It allows the parties involved to
have more control over the resolution of their dispute and can offer more
creative, customized solutions that are tailored to their unique needs and
circumstances.

1
https://en.wikipedia.org/wiki/Alternative_dispute_resolution

2
Hilmond Investments v CIBC 1996 135 DLR (4th) 471 (1996, Ontario Court of Appeal)

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 However, ADR is also increasingly being adopted as a tool to help settle
disputes within the court system.3
The cost of access to justice for citizens is an important issue to consider. The
Competition Authority in its 2005 Study of Competition in Legal Services
noted that ―Access to justice requires not only that the legal advice given is
sound but also that it is provided in a cost effective and client responsive
manner. High quality legal services are important to society, but of limited
value if available only to the very rich or those paid for by the State.4
The goal of ADR is not only to resolve disputes in a quick and cost-effective
manner, but also to do so in a way that helps maintain or even improve the
relationships between the parties involved. This is particularly important in
situations where the parties have ongoing relationships, such as in business or
family matters.
Furthermore, ADR can be divided into different types which include namely,
Negotiation, Mediation, Conciliation, Good Office, Arbitration etc. Thus,
these means helps in finding a good and a reasonable way of settling a dispute
so that both the parties to the conflict can capitalize to the award and either
continue with the relation or the contract or bring a good end to the contract
without having any loss to both the parties.

In conclusion, ADR is not a single method, but a range of options for

resolving disputes. These methods can be used in almost any type of dispute,
including business, community, family, and consumer disputes. They can be
used at any stage in a dispute, but are often most effective when used early on,
before the dispute escalates.

3
J. Pirie, Andrew (2000). Alternative dispute resolution : skills, science, and the law. Toronto, Ontario: Irwin
Law. p. 5. ISBN 9781459313477
4
Study of Competition in Legal Service: Preliminary Report (The Competition Authority, February 2005).
Available at www.tca.ie.

2
 2. History of Alternative Dispute Resolution,
Alternative Dispute Resolution, as it is known now, originated in England as
early as 1066. English citizens held their own informal court to solve private
disputes. Often these informal meetings were led by respected male members of
the community. Sometimes, instead of trying a case in king’s court, the king
would adopt the decision of the citizens. This is one of the first forms of
arbitration created. In the American Colonies, mediation was more popular than
traditional lawyers and courts. After the United States gained independence,
arbitration was mainly used for patent claims until the 19th century when the
Federal Mediation and Conciliation Service (FMCS) was created. Then, in the
1920s congress enacted the “Federal Arbitration Act”. Throughout the 20th
century it grew in popularity in America..5

Early in the 20th Century, states began taking a concerted interest in systematic
ADR as

In the 1920s, over a dozen states passed modern arbitration laws and Congress
enacted a federal cognate, the Federal Arbitration Act. All of these laws
significantly improved the nature of U.S. arbitration by:

• Making agreements to arbitrate future disputes legally valid and enforceable

and revocable only as any contract could be revoked;

• Closing the court to parties to an arbitration agreement by requiring them to

comply with their agreement;

• Authorizing courts to enforce arbitration awards; and

• Authorizing courts to appoint arbitrators and otherwise expedite arbitration

when one party has failed to move forward with the agreement to arbitrate.

While all of these were positive developments, the most innovative was the
expressed authorization for courts to enforce ADR remedies.

5
McManus, M., & Silverstein, B. (2011). Brief History of Alternative Dispute Resolution in the USA. Cadmus:
Promoting Leadership in Thought That Leads to Action, 1(3), 100-105.

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 3. Types of Alternative Dispute Resolution,

There are many means of Alternative Dispute Resolution, it includes,

3.1 Negotiation;

Negotiation means discussions at different levels of authority with a view

to achieving common understanding or agreement. Negotiation is a
performance, with two or more participants trying to reach a win-win
agreement. It is an art that affects all human activities from commercial
transactions to personal affairs and this implies that it calls for strategic
thought, compassion, and transparency.
Negotiation is an interactive process between two or more negotiators or
parties seeking to find common ground on issues of mutual interest, where the
negotiators or parties seek to make a mutually acceptable agreement that will
be honored by all.
The parties to any dispute, the continuance of which is likely to endanger the
maintenance of international peace and security, shall, first of all, seek a
solution by negotiation, enquiry, mediation, conciliation, arbitration, judicial
settlement, re-sort to regional agencies or arrangements, or other peaceful
means of their own choice.6
For example; U.S. Secretary of State John Kerry and his Russian counterpart,
Sergey Lavrov, announced a deal to prevent the United States from entering
the Syrian War, it was contingent on Syrian President Bashar al-Assad’s
promise to dismantle his nation’s chemical weapons. Like other real-life
negotiation case studies, this one highlights the value of expanding our focus
in negotiation.

3.2 Mediation;
Mediation is derived from a latin term “mediare” which means “to be in
middle”.

6
UN Charter, Article 33(1)

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 Mediation is a practice under which, in a conflict, the services of a third party
are utilized to reduce the differences or to seek a solution.7
Mediation is the form of Alternative Dispute Resolution resolving the
disputes between two or more parties with concrete effects to reach a mutually
accepted resolution. It is a structured interactive process where a trained
impartial third party assists disputing parties in resolving conflict through the
use of specialized communication and negotiation techniques.
Mediation involves the intervention of a third person, or mediator, into a
dispute to assist the parties in negotiating jointly acceptable resolution of
issues in conflict. The mediator meets with the parties at a neutral location
where the parties can discuss the dispute and explore a variety of solutions.8
However, this doesn’t mean that this will result into a conclusion. It is because
the mediator may not be able to bring down both the parties to a common
ground which means the dispute is not settled and they have to move to other
means of ADR for the further process of settling the dispute.
Mediation thus helps achieve the ultimate ends of a dispute settlement process,
that is restore the order in the society in such a way that it not just resolves
disputes but mends the conflicting relationships and create a win-win
situation.9

7
Britannica, The Editors of Encyclopaedia. "mediation". Encyclopedia Britannica, 30 Nov. 2023,
https://www.britannica.com/topic/mediation-international-relations. Accessed 4 August 2024.

8
https://www.commerce.gov/cr/reports-and-resources/eeo-mediation-guide/what-mediation

9
ERIC M. RUNESSON & MARIE-LAURENCE GUY, MEDIATING CORPORATE GOVERNANCE CONFLICT AND
DISPUTES 14 (Global Corporate Governance Forum, Focus ,2007)

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 3.3 Arbitration;
Arbitration is a procedure in which a dispute is submitted, by agreement of
the parties, to one or more arbitrators who make a binding decision on the
dispute. In choosing arbitration, the parties opt for a private dispute resolution
procedure instead of going to court.10 Arbitration simply can be said the
hearing and determining of a dispute or the settling of differences between
parties by a person or persons chosen or agreed to by them.
Arbitration is often used to resolve conflict diplomatically to prevent a more
serious confrontation. It is the privatized system of the dispute resolution.11
The Black's Law Dictionary defines arbitration as a method of dispute
resolution involving one or more neutral third parties, who are agreed to by the
disputing parties and whose decision is binding.
The Section 3 of the Arbitration Act of Nepal 2055 provides that any dispute
or civil suit of commercial nature may be settled through arbitration according
to prevailing laws.12
Furthermore, if an agreement provides for the settlement of disputes through
arbitration, such dispute has to be settled through Arbitration.13

3.4 Conciliation;
Like mediation, conciliation is a voluntary, flexible, confidential, and interest
based process. The parties seek to reach an amicable dispute settlement with
the assistance of the conciliator, who acts as a neutral third party. The main
difference between conciliation and mediation proceedings is that, at some
point during the conciliation, the conciliator will be asked by the parties to
provide them with a non-binding settlement proposal. A mediator, by contrast,
will in most cases and as a matter of principle, refrain from making such a
proposal.14

10
https://www.wipo.int/amc/en/arbitration/what-is-arb.html

11
Encyclopedia Britannica, Encyclopedia Britannica INC (1968), P 110

12
Arbitration Act 1999, Act no.1(Parliament of Nepal, 1999), Sec 3(2).

13
Id. at Sec 3 (1).

14
https://www.dispute-resolution-hamburg.com/information/conciliation

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 Conciliation is a non-binding procedure in which an impartial third party, the
Conciliator, assists the parties to a dispute in reaching a mutually agreed
settlement of the dispute.15
It is the settlement of a dispute by mutual and friendly agreement with a view to
avoiding litigation.16
The conciliator's goal is to foster open communication, build trust, and help
the parties understand each other's perspectives, ultimately encouraging them
to find common ground and resolve their dispute amicably. This approach
often leads to a more collaborative and less adversarial process, making
conciliation a valuable tool in resolving conflicts outside the traditional court
system.

4. Characteristics of Alternate Dispute Resolution;

Followings are the characteristics of Alternate Dispute Resolution;

4.1 Informality;

Most fundamentally ADR process are less formal than judicial processes. The rules of
procedure are flexible, without formal pleadings, extensive written documentations or rules
of evidence. It is important for reducing the cost and delay in dispute resolution.

4.2 Application of Equality;

ADR mechanisms are the instruments for the application of equity, rather than rule of law.
Each case is decided by a third party or negotiated between the disputants themselves based
on the principles and terms that seem equitable in particular case rather than on uniformly
applied legal standards. ADR system tends to achieve efficient settlements at the expense of
consistent and uniform justice.

4.3 Confidentiality;

Confidentiality is crucial for fostering an environment of trust and open communication

between the parties involved. So, ADR promotes confidentiality.

15
DR. PADMA T,RAO K.P.C, THE PRINCIPLES OF ALTERNATIVE DISPUTE RESOLUTION, ATL Publications,
47(2011).

“Conciliation.” Merriam-Webster.com Legal Dictionary, Merriam-Webster, https://www.merriam-

16

webster.com/legal/conciliation. Accessed 4 Aug. 2024.

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4.4 Variety of Methods;
ADR encompasses various methods such as mediation, arbitration, conciliation, negotiation,
and good office, each with its own unique characteristics and rules.

4.5 Voluntary Agreement;

The goal of ADR is to provide a forum for the parties to work toward a voluntary, consensual
agreement, as opposed to having a judge or court impose a decision.

4.6 Law is Relevant in ADR;

Alternative to the court redressal system does not deviate completely from law and legal
process. Legality is a necessary requirement, while a large forms of solutions could be
invented beyond the law and reach of enforcement regulators. Thus, the need to resort to
alternatives have emerged from the problems arising out of litigations such as inordinate
delay, escalating due, prevalent corruption and inequities in the system.

5. Importance of Alternate Dispute Resolution;

The alternative dispute resolution mechanism is an innovation that stands apart from the
traditional judicial system that is enforced in a country. While litigation has been present and
popularly used before, in stark contrast to ADR, the public is aware of the disadvantages and
discrepancies presented by the traditional system, like the burden placed on concerned
parties, the long-winded resolution process, the complex procedures involved, and the
immense amount of time it takes. Due to these factors, an alternative, non-litigation, dispute
resolution process which is faster, easier, and consumer-friendly has been formulated. 17
The
importances of Alternative Dispute Resolution are as follows;18

a. Faster Resolution;

The court system is overloaded. It cannot hold a trial for every lawsuit that gets filed. As a
result, it can take several years for a legal case to go to trial. One of the benefits of ADR is

17
https://www.researchgate.net/publication/331318816_ADVANTAGES_OF_ALTERNATIVE_DISPUTE_RESOLUT
ION_ADR_OVERLITIGATION_IN_DISPUTE_RESOLUTIONS

18
https://btmediation.com/advantages-of-alternative-dispute-resolution/

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that resolution is fast. A settlement or arbitration award can be issued within a few weeks or
months of filing a lawsuit.

b. Lower Cost;

Another one of the key advantages of alternative dispute resolution is that ADR is usually a
lot cheaper than a trial. Just the discovery process for going to trial can lead to an exorbitant
total cost, including court reporter fees, attorney fees, and expenses associated with printing
and mailing documents. More importantly, a long, drawn-out court trial can require jurors,
witnesses, and the parties to remain off work for weeks. With ADR, the process is shorter,
and time is money.

c. More Flexibility;

The ADR process is less rigid. Unlike a trial date that can vary because of the backlog, ADR
can be scheduled at any time. This not only provides greater flexibility but also helps speed
up the resolution of the conflict.

d. Privacy;

For the most part, court trials are public record and can be accessed by anyone. On the other
hand, ADR is not only private but also confidential. When an arbitration award is issued, or
when both parties come to an amicable settlement through mediation, there is no public
record of what transpired during the session. The amount of the award or settlement, the
statements made, the list of participants, etc., all remain private. In summary, the public will
have no idea when the ADR took place and the eventual outcome. This level of privacy can
be very beneficial for high-profile clients, as both parties are able to maintain their
reputations.

e. No Bias;

A neutral third party is selected to preside over all cases that go through ADR. The neutral
third party should have no connections to anyone involved in the lawsuit and no interest in
the outcome of the dispute. In a court trial, the judge is not selected to preside. The judge is
assigned. This difference is critical, as clients can select a neutral third party with specific
subject-matter expertise to help facilitate or arrive at a well-informed resolution.

f. Less Friction;

Once a court verdict is delivered, it invariably leaves one side disappointed, upset, angry, and

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even bitter. With ADR, the process uses every opportunity to preserve the rapport between
the two sides. For example, if there is a child custody case being presented, the mediator or
arbitrator will not only take into account the welfare of the child, but also the relationship
between the parents. In fact, ADR can help preserve a variety of relationships, including
those between business partners, employees-employers, and even homeowners’ association
board members.

Ultimately, with alternative dispute resolution, the difference in the outcome of your client’s
case will depend on strategic timing, uncovering dispositive facts and legal issues, choosing
the right mediator or arbitrator, and preparing for all possible scenarios.

6. Conclusion;

In conclusion, Alternative Dispute Resolution (ADR) offers a dynamic and adaptable

approach to resolving conflicts outside of traditional legal proceedings. With its emphasis on
active participation, confidentiality, subject specialist involvement, and flexibility, ADR
provides parties with a range of methods to collaboratively and efficiently address their
disputes. By empowering parties to shape the resolution process and encouraging open
communication, ADR promotes greater satisfaction with outcomes and fosters a more
amicable and cooperative environment for conflict resolution. Ultimately, ADR stands as a
valuable and versatile tool in the realm of dispute resolution, offering a cost-effective,
efficient, and customized alternative to traditional litigation.

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