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The Alternative dispute resolution

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02/02/18 Free Law Essays Reference this

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The Alternative dispute resolution

Alternative dispute resolution (ADR) (also known as External Dispute Resolution in Australia) includes dispute resolution processes and techniques that fall outside of the government judicial process.

The term “alternative dispute resolution” or “ADR” is often used to describe a wide variety of dispute resolution mechanisms that are short of, or alternative to, full-scale court processes. The term can refer to everything from facilitated settlement negotiations in which disputants are encouraged to negotiate directly with each other prior to some other legal process, to arbitration systems that look and feel very much like a courtroom process. Processes designed to manage community tension or facilitate community development issues can also be included within the rubric of ADR.

Alternative Dispute Resolution provides an alternative to going to court to settle disagreements. Methods include arbitration, where disagreeing parties agree to be bound by the decision of an independent third party, and mediation, where a third party attempts to arrange a settlement between the two sides. ADR law in Australia involves federal and state enactments reflected in a range of schemes that are specific to particular industries, organizations and enterprises.

ALTERNATIVEDISPUTERESOLUTIONPRACTITIONERS’ GUIDE – March 1998 (Technical Publication Series, Center for Democracy and Governance

Bureau for Global Programs, Field Support, and Research) 1-4


National regime

At a national level the International Arbitration Act 1974 (here) reflects the UNCITRAL Model Law on International Commercial Arbitration (here) about procedures for international arbitration, covering all international commercial arbitration conducted in Australia unless otherwise agreed.

The Act also adopts the Convention on the Recognition & Enforcement of Foreign Arbitral Awards – aka ‘New York Convention’ – (here) and 1965 International Convention on the Settlement of Investment Disputes between States and Nationals of Other States (Washington Convention). It sets out the institutions and procedures that are available for the conduct of international arbitration.

It does not deal with other alternative dispute resolution processes for resolving private international commercial disputes.


Each State/Territory has uniform Commercial Arbitration Acts dealing with domestic arbitration –

New South Wales Commercial Arbitration Act 1984 (here)

Victorian Commercial Arbitration Act 1984 (here)

Queensland Commercial Arbitration Act 1990 (here)

South Australian Commercial Arbitration Act 1986 (here)

Western Australian Commercial Arbitration Act 1985 (here)

Tasmanian Commercial Arbitration Act 1986 (here)

ACT Commercial Arbitration Act 1986 (here)

Northern Territory Commercial Arbitration Act 1985 (here)

2 methods of Alternative Dispute Resolution are:


Arbitration is an out of court procedure designed to resolve disputes with one or more neutral third parties involves. Arbitration utilizes rules of evidence and less formal procedures than what a trial court would utilize, leading to a resolution that is usually much quicker and more cost effective than taking a dispute resolution to court. There are numerous different types of arbitration including binding arbitration, non binding arbitration and hi-lo arbitration. With access to information and resources about arbitration and arbitration law, you can get the most out of an arbitration process, often allowing the resolution to rule in your favor.

Arbitration is a legal mechanism used to resolve disputes through the aid of a neutral third-party who is given the authority to make a legally binding decision.  The weight of this decision is what distinguishes arbitration from mediation.  The parties are not obligated to follow a mediator’s decision.  In arbitration, both parties must agree to be bound by the arbitrator’s decision before entering into the process.  The arbitration process consists of written submissions from each party and an evidentiary hearing to establish the facts of the case. Arbitration can be either voluntary or mandatory and can be either binding or non-binding.

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Advantages of Arbitration:

Speedier resolution; however, there can be exceptions due to multiple parties, arbitrators, lawyers and litigation strategy.

Less costly; however, there can be exceptions due to multiple parties, lawyers, arbitrators and litigation strategy.

Exclusionary rules of evidence don’t apply; everything can come into evidence so long as relevant and non-cumulative.

Not a public hearing; there is no public record of the proceedings. Confidentiality is required of the arbitrator and by agreement the whole dispute and the resolution of it can be subject to confidentiality imposed on the parties, their experts and attorneys by so providing in the arbitration agreement.

From defense point of view, there is less exposure to punitive damages and run away juries;

The ability to get arbitrators who have arbitrator process expertise and specific subject matter expertise.

Limited discovery because it is controlled by what the parties have agreed upon and it is all controlled by the arbitrator.

Often, the arbitration process is less adversarial than litigation which helps to maintain business relationships between the parties.

The arbitration is more informal than litigation.

The finality of the arbitration award and the fact that normally there is no right of appeal to the courts to change the award.


Disadvantages of Arbitration:

There is no right of appeal even if the arbitrator makes a mistake of fact or law. However, there are some limitations on that rule, the exact limitations are difficult to define, except in general terms, and are fact driven.

There is no right of discovery unless the arbitration agreement so provides or the parties stipulate to allow discovery or the arbitrator permits discovery.

The arbitration process may not be fast and it may not be inexpensive, particularly when there is a panel of arbitrators.

Unknown bias and competency of the arbitrator unless the arbitration agreement set up the qualifications or the organization that administers the arbitration, has pre-qualified the arbitrator.

There is no jury and from the claimant’s point of view that may be a serious drawback.

An arbitrator may make an award based upon broad principles of “justice” and “equity” and not necessarily on rules of law or evidence.

An arbitration award cannot be the basis of a claim for malicious prosecution.

The possibility of compromise or splitting of baby awards.

Business Contracts often Require Arbitration:

Typically, many business throughout virtually all industries use arbitration as a means of rectifying outstanding business disputes, however, for individuals embroiled in a dispute, the need for an arbitrator may not prove necessary, efficient, or cost effective.  Personal disputes, between two individuals, often times are best served through the judicial system and the civil courts, given the costs associated with brining in an arbitrator to a given situation. Though for larger, more complex cases requiring esoteric knowledge regarding the dispute at hand, arbitration produces serious benefits; personal disputes involving a limited scope of impact will not require the expertise, impartiality, or knowledge of an arbitrator. Typically, these cases are better served through mediation, or if truly necessary, a jury trial in the civil courts. 

Arbitration is Most Often Binding:

Arbitration also leaves no room for an appeals process in the overwhelming majority of instances.  This is a risk parties and individuals should seriously assess prior to engaging in arbitration, as well as when considering the methods for resolving their disputes.  Most individuals would like the option for an appeal in the event a ruling is not in their favor, which is more than probable in the course of a civil court trial, however, with arbitration, the options for appeals are virtually nil, not to mention the costs associated with an appeals process may not even be worth the amount being disputed between two parties. 

Also, in the arbitration process, there is a limited period of discovery, which can lead to surprise evidence or testimony occurring during an arbitration process, which a party may or may not be able to effectively refute at the time of their arbitration hearing.  Likewise, there is no jury to decide the outcome of a dispute, but rather, the decision rests solely in the hands of the arbitrators, whom usually consist of one individual or a panel of three persons, that may or may not be able to remain entirely impartial during all proceedings regarding all matters. 

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Although usually thought to be speedier, when there are multiple arbitrators on the panel, juggling their schedules for hearing dates in long cases can lead to delays.



Mediation, a form of alternative dispute resolution (ADR) aims to determine the conditions of any settlements reached — rather than accepting something imposed by a third party. Mediation is a nonbinding dispute resolution technique in which the disputing parties voluntarily attempt to reach a mutually agreeable resolution of their dispute with the assistance of an impartial third person, who is called the “mediator.”

Even though related to negotiation, mediation may be more effective than direct negotiations between the parties. Mediation had commonly been used to resolve disputes in the labor-management and family law fields. Disputants, both public and private, have successfully used mediation to resolve a wide variety of disputes. Both businesses and the courts have discovered that mediation can resolve many disputes faster and less expensively than the more traditional alternatives of litigation and arbitration.

Mediators use appropriate techniques and/or skills to open and/or improve dialogue between disputants, aiming to help the parties reach an agreement on the disputed matter. Mediation is the only way assisted by one third, which promotes freedom of choice of protagonists in a conflict

Types of cases

An American Arbitration Association publication lists, under the heading “What types of cases are suitable for mediation,” further examples of successful mediations of disputes involving banks. For example, a claim of fraud, negligence and mismanagement of a bank by its president was settled for $3.4 million following 21 hours of mediation. A multi-party construction dispute in which the bank had threatened foreclosure was settled for $2.8 million after 36 hours of mediation.

Among the best known of all mediated settlements involving banks was the settlement of a series of consumer class actions against Wells Fargo and other California banks. After 13 years of litigating allegations of unconscionable fees for bounced checks, the multi-million dollar dispute was submitted to mediation and was settled in a short time.


Advantages of Mediation:

One of the hallmarks of mediation, and one of its important advantages, is mediation’s generally private, confidential nature. Mediation’s confidentiality may be one of the main reasons for its success in creating settlements. Parties are often unwilling to disclose confidential information about their view of the case to the opposing party during direct negotiation.

Bottom Line

The parties also may be reluctant to disclose their true “bottom-line” settlement position, or to disclose special concerns to the opposing party. A mediator can avoid this communication roadblock to settlement. The mediator may be told these things in confidence, and he or she can use them in directing the negotiations without disclosing them to the opposing party. This might facilitate a settlement that would not have been possible in direct negotiations.

Low Risk

The voluntary, confidential, and inexpensive characteristic of mediation makes it almost risk-free. Attempting mediation is low-risk; if mediation fails to bring about a resolution to the dispute, the parties can still submit the dispute to any other dispute resolution process, including arbitration or litigation. However, many parties deem this risk acceptable when compared to the cost and time savings of mediation, as well as its confidentiality.


Other hallmarks of mediation are its informality and flexibility. There are almost no formal rules of procedure, and the process itself is flexible. This informality allows the disputants and the mediator to control and design the process. Mediation’s informality often results in cost savings to the disputants.

Mediation is generally far less adversarial than litigation or arbitration, and is therefore far less likely to damage business relations. Mediation’s informality generally allows for greater client participation in the settlement than is allowed in almost any other dispute resolution process.


When parties want to get on with their business and their lives, mediation may be desirable as a means of producing rapid results. The majority of mediations are completed in one or two sessions.


Mediation is a confidential process. The mediators will not disclose any information revealed during the mediation. The sessions are not tape-recorded or transcribed. At the conclusion of the mediation, mediators destroy any notes they took during the mediation session.



Disadvantages of Mediation:

The voluntary, nonbinding nature of mediation can be a disadvantage when one or more parties are recalcitrant or cannot be trusted to honor a voluntary settlement agreement. When coercive methods are likely necessary to force a party to honor a settlement agreement or reward, an adjudicatory dispute resolution process, such as binding arbitration or litigation, may be more appropriate than mediation.


Disputants and their counsel sometimes seek to avoid mediation because it is not final or binding. They are worried that any mediated agreement will not be enforceable in the same ways as court judgments or arbitration awards are. However, mediated agreements may have an advantage over court judgments and arbitration awards because mediated agreements are the product-at least theoretically- of the mutual agreement and understanding of the parties. Thus, disputants can structure a mediated agreement to meet the needs of both sides. Moreover, mediated settlement agreements can, and generally should, be executed and signed at the end of the mediation session. This produces an enforceable settlement agreement. “http://www.robertmsmith.com/about_adr/mediation_overview.asp”

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Mediation is an extremely quick process or it can be an extremely quick process if the parties involved make it quick. Why? There is no judge, no court date and no lawyers involved. Because the parties involved with mediation make their own decision on the outcome, this makes the process quite quick.

Having a Lawyer

Mediation does not require a lawyer to be present during one or more of the sessions. Instead, if the parties involved wish to have their lawyer present it must be approved by the other party in the case. Many people, when negotiating a settlement, want their lawyer present at all times. Litigation requires the presence of a lawyer or attorney. With mediation, only a mediator is required.

The Agreement Is Legally Binding

Even though there are normally no lawyers present at mediation, the agreement between the parties involved is legally binding in most judicial systems. The agreement is documented with the written word. Because there are no lawyers present, some people might be hesitant to sign the agreement without having their lawyer review it.

Anything can be Mediated

With mediation, anything can be mediated. That means the smallest of disagreements, such as, a dispute over a water bill can be mediated. There is no limitation on the amount of money involved in mediation or the topic that is being mediated. As long as the topic does not require statutory, judicial or regulatory case law to resolve, then it can be mediated.

The Mediator Is an Outside Party

With mediation, the mediator that is hired is an outside party. He or she has no previous knowledge of the case and has never previously met the parties involved. This can be somewhat of a hindrance in the process. A lawyer usually has some knowledge of the case and more than likely knows the party or parties involved because that lawyer has been working with that party for a couple of years.

There Is No Judge

Most people that want to settle an argument or disagreement use litigation because they want the end result to come from a judge. In mediation, the mediator does not render a verdict in favor of one side or the other. In litigation, the judge reviews each side of the case and then makes an informed decision. Granted, one side is not happy because they lost and the other side is satisfied because they won. In mediation, it is a win-win situation but not everyone leaves happy.

Either Party Can Withdraw

Another disadvantage of mediation is that either party can withdraw from the proceedings at any time. In litigation, the only party that can withdraw is the plaintiff, if they drop the suit. This means that even the party that is ‘at fault,’ can withdraw if they are not happy with where the mediation process is headed.


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