Dispute Resolution oralternative dispute resolution, appropriate dispute resolution or ADR refer to several processes used to resolve a dispute between parties.ADRis usually an alternative tolitigationand can be used to resolve any type of dispute including family, neighborhood, employment, business, housing,personal injury,securities, consumer, and environmental dispute. Parties can on their own choose to resolve their dispute viaADR, or dispute resolution might be prescribed by the court in early stages of litigation to give parties a chance to resolve their dispute before going totrial.
There are many types of dispute resolution processes, but arbitration; mediation; and negotiation are the three most common types of alternative dispute resolution.
- Negotiationis the least formal type of ADR. The goal of negotiation is to help parties to come to a consensus on their own, parties can involve a neutral third party into their negotiation to help facilitate an agreement. The outcome of the negotiation is usually not binding; however, parties can initiate litigation to resolve their dispute and get an enforceable judgment.
- Mediationis the process where a neutral third party (usually a professionalmediator) helps disputants to resolve their dispute. Mediation is usually more formal than negotiation but less formal than arbitration. The outcome of mediation is not binding, however, after the end of the mediation parties can still initiate litigation to resolve their dispute and get an enforceable judgment.
- Arbitrationis one of the most formal types of ADR, even though it is less formal than a traditional trial, arbitration is usually performed by professionalarbitrators(one or a panel) acting as ‘judges’ and parties have to follow the rules predetermined in their arbitration agreement. The outcome of the arbitration is usually binding, unless the court finds violation of the arbitration agreement.
Dispute resolution has several advantages:
- It is usually cheaper and faster than litigation;
- ADR is less formal and has more flexible rules than litigation (ex.Rules of Evidenceare more relaxed in ADR);
- In certain cases, parties have greater participation in reaching a solution, as well as more control over the outcome of the dispute;
- As discussed earlier, some types of ADR (like mediation and negotiation) preserve an opportunity for the parties to proceed with litigation if they are not able to resolve their dispute via dispute resolution.
[Last updated in September of 2022 by the Wex Definitions Team]