ADR fundamentals and features

A financial dispute can be resolved through both litigation and alternative conflict resolution techniques (ADR). If you are seeking out-of-court alternatives for resolving an international dispute, this article can be of assistance.

What is the ADR?

Alternative dispute resolution offers the chance to resolve a conflict situation beyond the court. ADR is a quicker and less expensive alternative to litigating a business dispute. The procedure is collaborative and permits sides to comprehend one another's positions.

The principal forms of alternative dispute resolution in international business include:

• Arbitration. 
• Mediation. 
• Negotiation. 
• Early neutral assessment.

What is Arbitration?

Arbitration is an alternative way of resolving business disputes outside of court. The process entails the participation of an unbiased arbitrator, who renders a final and compulsory solution to resolve the sides' conflict.

Arbitration is legally enforceable - this is its main difference from other ADR methods. The parties refer the dispute to an impartial mediator who hears the parties and makes a decision. The parties agree in advance to abide by this decision.

Arbitration Agreement

This may be either a separate agreement or a contractual provision, on the basis of which the parties agree to submit any disputes between them for a binding decision by an arbitrator or arbitration panel. The contract contains all of the essential aspects of the procedure.

The main advantages of arbitration as a way to resolve a corporate dispute

1. Arbitrators are appointed according to the particulars and complexity of the conflicts' specialization.
2. Arbitration is more expedient than litigation (this is especially important during pandemics).
3. Less expensive.
4. Arbitral awards are kept private.
5. In other nations, it is easier to enforce arbitral awards.
6. The parties have the right to choose the arbitral tribunal's composition and location.
7. The arbitral decision is final and cannot be appealed.

What is mediation?

Mediation is a procedure in which a neutral person assists the parties in resolving their conflict. The mediator does not make a decision on the case, his main function is to help the parties to the conflict in establishing relations in order to reach an agreement in the dispute. The mediation decision does not have legal force, but the parties can formalize the decision made during the process in the form of an agreement.

Advantages of mediation

1. Substantial control - the parties have the right to disagree with the process's conclusion if it is not to their liking.
2. Confidentiality - the mediation process for out-of-court dispute resolution is a confidential procedure.
3. Mediation is a quicker and less expensive method of resolving disputes than litigation.
4. Amicable dispute resolution - the mediator assists the parties in developing a solution that is mutually advantageous.
5. Maintaining Relationships - Mediation assists both parties in focusing on effective communication and reaching a settlement through negotiation.

What is negotiation?

Negotiations enable the parties to make a decision that will suit all parties to the conflict. The agreement on the settlement of the dispute is discussed by the parties and fixed in the contract. The resolution of the dispute through negotiations has no legal force, but if the parties have drawn up the decision in writing and signed it, it may have the force of a contract. The parties may negotiate in person, in consultation with their lawyers or through their representatives.

The main benefits of negotiation includes: 

1. Maximum control over the decision by the participants.
2. Mutual concessions that are made by the parties to resolve the dispute.
3. Finding compromises to meet the basic needs and demands of each of the parties.
4. Preservation of further business relations between the parties.
5. Negotiation is a private and economical way to resolve disputes.

What is Early Neutral Evaluation (ENE)?

Early neutral evaluation is a method of resolving business international disputes, the purpose of which is to stimulate a way of settlement without going to court. Participants choose an independent evaluator who must assess the strengths and weaknesses of the case for each party. Expert opinion will be the starting point for negotiations to resolve differences.

ENE gives the parties an opportunity to understand what each party will receive in a full-scale litigation. Facts that were disclosed in the ENE process cannot be used as evidence in court without the permission of the participants. An early neutral assessment allows the parties to obtain information about the positions of opponents without the cost of litigation.

Conclusion

It can be concluded that saving time and control over decision making are the key advantages of alternative dispute resolution compared to traditional litigation. Before choosing one of the ADR methods, it is necessary to take into account their features. Contact IncFine specialists and they will help you understand all aspects and provide support in resolving a business dispute in the UK, EU, USA and Asian countries.