This essay has been submitted by a law student. This is not an example of the work written by our professional essay writers.
Methods of Dispute Resolution
From the beginning of civilization and organized society negotiations have occurred to solve disputes. If negotiation between the parties failed to resolve the dispute methods of alternative dispute resolution (ADR) have been developed involving a third party to resolve disputes. The absence of formal law left alternative dispute resolution as the main means to resolve conflicts. Litigation and the traditional court systems as they are known today began in Rome then flourished in England around 1292 under rule of King Edward-I (Pakistan, 2006). Negotiation, mediation, arbitration, and litigation are potential methods of dispute resolution in order of ascending formality. Mediation and arbitration are considered methods of alternative dispute resolution. ADR has been used to settle disputes between employee and employer to solve labor disputes, business to business disputes, and consumer to business. Generally ADR is faster and less expensive than litigation. It is possible for parties to contract to meet in mediation or arbitration or agree to it as the dispute arises (Reina, 1999). To best utilize company resources and relationships it is important to pursue the correct avenue to dissolve a dispute.
Collective bargaining agreements commonly arise in large industries. They provide employees and employers the rights and terms of condition for employment. It helps to ensure employees are treated consistently and cannot be taken advantage of by the company. According to the United States Department of Labor collective bargaining is “an industrial relations mechanism or tool" (Solis, 2010). The National Labor Relations Act of 1935 provided employees with the right to organized and bargain as a collective unit (Cross & Miller, 2009). Collective bargaining agreements are used by unions to guarantee fair treatment of the employees. The Labor-Management Relations Act of 1947 established certain union practices that were considered unfair and thus not allowed. It prevented closed shop practices but allowed the legality of union shops. Union shops do not require a union membership as a condition to be hired but may require the joining of the union after a certain amount of time working there (Cross & Miller, 2009). Unions always have a collective interest in negotiations because the terms of the agreement affect several employees (Solis, 2010).
Negotiations are the least formal of the proceedings. Negotiations take place regularly between two companies when conducting business. Negotiations could arise over shipping or billing terms, prices, terms of service, durations of a contract, or any other aspect of the business transaction. Negotiation takes place between the two parties absent a third neutral party. Without the need to pay a third party the costs are only the time of the personnel devoted to the negotiations. The two party involvement limits outside influence and allows parties to focus of the problem solving at hand. Potential disadvantages to negotiation include lack of motivation by the parties involved to come to an agreement in a reasonable timeframe. If opposing-party viewpoints are highly varied from one another reaching a conclusion without assistance becomes difficult or impossible. In complex disputes, such as collective bargaining agreements, the assistance of a third party can help to reach a solution to the problem. To establish and renew a collective bargaining agreement negotiations are a necessary factor.
An example includes the National Football League and the National Football League Players association meeting to establish a new collective bargaining agreement before it expires. The parties began with negotiations between representatives of each of the organizations. The agreement was complex and included how to divide the league’s $9 billion dollars in revenue, whether or not to expand the amount of games, and a new salary scale for rookies. The meetings progressed and no new settlements had been reached. As the deadline approached the two organizations agreed to mediation to see if a third party could help them reach a decision. The NFLPA and the NFL owners agreed to mediate with the Federal Mediation and Conciliation Service, an independent U.S. government agency, for seven day. No decision was reached as a result of these meetings (Gates, 2011).
Mediation is defined by the U.S. Equal Employment Opportunity Commission as, “an informal and confidential way for people to resolve disputes with the help of a neutral mediator who is trained to help people discuss their differences" (Equal Employment Opportunity Commission, 2011). Mediation is a voluntary procedure. An agreement to mediate may, or may not be specified in a contract. The goal of a mediator is to assist the disputants reach an acceptable decision for both parties. Mediation may be used as a voluntary measure to resolve a dispute or may act as a formal step prior to arbitration.
Mediation benefits both parties because it allows discussion to take place in a friendlier environment than arbitration or litigation. It allows for both parties to attempt to meet their individual needs without lengthy investigation and arbitration or litigation (EEOC, 2011). Until the point where an agreement has been made and agreed upon by the parties the mediation can be terminated and the process made during the mediation is considered nonbinding. Mediation is far more cost effective than litigation costing an average of one-tenth the cost of litigations (EEOC, 2011).
A common guideline for commercial mediation has been established by the American Arbitration Association (AAA). Under the section M-1 of the Commercial Mediation Procedures of the AAA any party may initiate mediation by requesting it to the AAA regional offices and notifying the other parties involved. The initiation should include the provisions of the contract, key indentifying and contact information for all parties involved, a brief description of the dispute and the remedy desired, as well as any qualifications the mediator should possess. The Commercial Mediation Procedures also include sections for the appointment of the mediator, the mediators’ duty to be impartial and disclose any potential conflicts of interest. The duties of the mediator are laid out in section M-7 (American Arbitration Association, 2009). These duties include utilization of the party self-determination principle. The self-determination principle is defined as, “Self-determination is the act of coming to a voluntary, uncoerced decision in which each party makes free and informed choices as to process and outcome" (AAA, 2009). M-7 also permits mediators to conduct separate meetings with the parties or parties’ representatives. Parties are encouraged to exchange all documents relevant to resolving the issue; however any documents the party wishes to be kept confidential can be exchanged with the mediator in a separate meeting with the mediator. This section also establishes the mediator does not have the authority to “impose a settlement on the parties" but will help the parties reach a decision (AAA, 2009).
The commercial mediation procedures proceed to establish privacy and confidentiality characteristics, method for termination of mediation, exclusion of liability for the mediator, ability to request a deposit, and the costs of mediation. Mediation procedures are private proceedings and may only be viewed by outside parties with the consent of the mediator. The information volunteered by the parties to the mediator during the mediated sessions will not be expressed by the mediator and said mediator will not be “compelled to divulge such records or to testify in regard to the mediator in any adversary proceeding or judicial forum" (AAA, 2009). Mediation may be terminated by a completed settlement between the disputants, written or verbal declaration of the mediator further mediation efforts would not be contribution to a resolution, or by the parties that the mediation is terminated. It also establishes that if 21 days pass after mediation meetings and no communication has been made between mediator and the parties involved the mediation is considered terminated. The AAA relieves itself and the mediator from liability for potential error or omission in the mediation (AAA, 2009).
All expenses of the mediation including expenses of the mediator are to be divided equally among the parties unless agreed contrary. There is no filing fee for mediation rather the cost of mediation is based on the hourly rate of the mediator. Mediation rates in 1999 averaged between $150 and $200 per hour (Reina, 1999). There is a four-hour minimum for a mediated conference. If settlement of the dispute is reached after the agreement to mediate but prior the actual mediation a $250 fee plus any time already incurred by the mediator is assessed (AAA, 2009).
General Civil Litigation Roster a mediator must have a minimum level of initial training followed by continuing education. The CADRES Operation Rules (2001) states the training must include a combination of 100 hours divided accordingly:
1. At least 40 hours of mediation process training, involving lectures, role plays and mediation theory, with at least 15 hours completed within two years of application;
2. At least 20 hours of experience as a mediator or a co-mediator; and
3. At least 10 hours of training or experience in general civil law and court procedure.
The operational rules also layout the methods of application for a mediator, qualifications for more specialized roster lists, the methods available for complaints, reviews, and appeals processes as well as how to be removed from the mediation lists (2001).
Parties engaged in mediation are assumed to be acting in good faith to resolute the issue at hand. Arbitration is a more formal method of dispute resolution and places more power in the hands of the arbitrator opposed to the disputants or a mediator. A mediator’s job is to help assist the progression of a decision and do not serve as a judge on the case (Reina, 1999). Mediation can be highly beneficial to those parties who desire a quick resolution of issues; it may be beneficial for the party to be releasing a certain product at a particular time, or with general time constraints.
Arbitration is a meeting of two or more parties to discuss Arbitrators act in a capacity similar to a judge. Arbitration may be conducted with one arbitrator or could be conducted with three arbitrators issuing a binding decision. Usually each disputant selects an arbitrator, and then the arbitrators select an additional arbitrator to resolve the case (Reina, 1999).
The Uniform Arbitration Act of 1955 provided minimum standard of rules and procedures. The Act addresses the validity of arbitration agreements and “which court actions in violation of agreements to arbitrate may be stayed." Modern laws have remained structured similarly in content and intent to the Uniform Arbitration Act of 1955. Chapter 706: Uniform Arbitration Act of the Maine Revised Statutes Section 5927 establishes that a written contract to arbitrate and any written contract established through arbitration by the parties or parties representatives (1967). The rules established by the American Arbitration Association are a prime example.
Under the Commercial Arbitration rules established by the American Arbitration Association, any parties agreeing to arbitration are subject to the rules established unless expressly contracted otherwise. By unitizing the AAA for arbitration the parties arbitrating agree to follow the rules and procedures established in the rules and procedures. Disputes involving claims of $75,000 or greater are subject to additional expedited rules, and claims of over $500,000 are subject to the procedures for Large, Complex Commercial Disputes. Large commercial disputes include additional provisions for a the qualifications of those arbitrating the case, a mandatory preliminary hearing via telephone, increased authority for discovery on behalf of the arbitrator, and the hearings will proceed consecutively or in sections (American Arbitration Association, 2009).
The procedures establish the authority and duties of the AAA when conducting arbitration are laid out in Section R-2. The AAA charges a filing fee to initiate a claim to arbitrate. The rules establish the possibilities of initiating arbitration whether through a contracted provision or agreement of the parties, and how to make changes to a claim. The parties have the right to conduct a mediated conference during arbitration. The conference will be mediated by someone other than the arbitrator(s) of the case (AAA, 2009).
Section R-7 of the commercial arbitration rules includes the provision that an arbitration clause of a contract exists as its own separately enforceable contract, not reliant on the other provisions of the contract (AAA, 2009). This proves important when a party attempts to avoid litigation claiming the contract has been voided by a violation of that contract. The arbitration clause will remain intact so the parties would still be required to arbitrate to assess the condition and validity of the contract. When choosing an arbitration location the parties have the right to mutually agree on a location. If one party requests a venue and the other party does not accept or deny the request within 15 days the venue is assumed to be accepted (AAA, 2009).
Parties have a right to request a specific arbitrator. The arbitrator must meet the standards for impartiality and independence. If parties fail to appoint an arbitrator the AAA will appoint one. A case will be heard by one arbitrator unless the parties had agree to meet before three arbitrators or one party requests it and the AAA feels three arbitrators would be able to better decide the case (AAA, 2009). The commercial arbitration rules establish ground for disqualification of the arbitrator and how the parties may communication with said arbitrator.
The time and date of the hearing are set by the arbitrator and the parties must be notified at least 10 days prior to the being of the case. Any party has the right to be represented at the hearing by an authorized representative as long as intending party notifies the other party at least three days prior to the case. The hearings are confidential; the arbitrator has the authority to determine who has an interest in the case and thus may be allowed to attend the hearing (AAA, 2009).
Pursuing dispute resolution through litigation has advantages over arbitration. The courts decide cases based on law and precedence, not a mutually beneficial and equitable to both parties. The rules of evidence do not exist in the same manner as litigation potentially allowing for claims to be proved by means that would be inadmissible in court. The predictability of court cases makes it possible for parties to research passed cases and use grounds established in prior cases to its current situation. The initial decision of a judge may be appealed and the case may be heard again by a different judge, with arbitration a reversal is unlikely. (Reina, 1999).
Litigation is more expensive and time consuming than alternative methods of resolving disputes. Issues of jurisdiction and lack of commercial expertise of the judge may prevent the finer details of a case from being addressed. The business relationship between the disputants is often damaged. The decision of the court will benefit one party above the other and make a future business relationship troublesome. The amount of claims proposed to the court creates an initial delay between the time someone make a claim and the time the case can be heard and decided in court. Upon the conclusion of a case the documents becomes part of a public record. The public knowledge of the documents may pose a competitive disadvantage to the parties involved (Reina, 2009).
It is possible for an individual to contractually waive their right to litigation in substitution for arbitration. In 14 Penn Plaza v. Pyett (2008/2009), the Supreme Court reversed the decision of the district and appellate court’s which denied employers’ motion to compel arbitration. Multiple employees of complained to a union claiming the employer violated the antidiscrimination terms of the collective bargaining agreement. The union requested arbitration then later withdrew the claims. Upon the withdrawal the court filed suit, the court examined the Age Discrimination in Employment Act of 1967, and the NLRA. Application of the NLRA included,
The Union and the RAB, negotiating on behalf of 14 Penn Plaza, collectively bargained in good faith and agreed that employment-related discrimination claims, including ADEA claims, would be resolved in arbitration. This freely negotiated contractual term easily qualifies as a “conditio[n] of employment" subject to mandatory bargaining under the NLRA, 29 U. S. C. §159(a)."
Both of which affirmed that a union agreeing to employee arbitration as the sole means to seek remedy as was within the rights of the union and within the bounds of the NLRA. However, the decision was not unanimous, dissenting opinions referenced the issues of preceding case of Gardner-Denver. The Gardner-Denver case reject the premise that individuals covered under a collective bargaining agreement waive their right to litigation solely by being covered under such CBA. The court ruled that individuals who had waived their right to litigate could be compelled to arbitration (Cornell University, 2009).
In conclusion, it is usually in the best interest of the parties involved to seek methods of alternative dispute resolution contrary to litigation. However, dispute’s should be decided on a case by case basis determining the nature, complexity of the problem, and the intent and beliefs of the parties involved. The best way to maintain a good relationship is to pursue the least formal method of alternative dispute resolution, negotiation, and then progress to mediation and finally arbitration to resolve a dispute if necessary. On complex issues such as collective bargaining agreement’s having a neutral third party present can often help to resolve such disputes. Use of a mediator keeps the decision in the hands of the disputants, while arbitrating give authority to the arbitrator to issue binding decision. Litigation should usually be the last possible means of resolution because it is often most expensive, time consuming, and stressful to the business relationship and company reputation.
Cite This Essay
To export a reference to this article please select a referencing style below: