The use of the expression ‘ADR’, as short for alternative dispute resolution, is the starting point of a misconception of what ADR really is. Alternative to what, you may ask? And if you do, you will soon find that the alternatives raise an issue of client choice. Increasingly, a key feature of client choice is the degree of opportunity to affect or control the outcome of a dispute.
A simplistic approach to the question is to ask whether you want an independent person to determine the answer, which means abrogating the right to direct involvement, or whether you want to preserve some control over the outcome.
Generally speaking, the choice of litigation involves the abrogation of the right to retain control. Litigation and arbitration can be further distinguished by issues concerning the proper law of the dispute, choice of venue and, within arbitration, the choice of arbitrator. Given the inflexibility of most litigation processes around the world, it is easy to understand why disputants should seek to opt out of litigation. But into what? Arbitration or ADR/mediation? To take this further, what if the dispute is on an international scale?
Arbitration offers parties the opportunity to affect and control the procedure that will determine the outcome and has long been a preferred means of dispute settlement internationally. It offers advantages that cannot be matched by litigation before local courts. It is possible to select decision makers who are specialised in international trade and commerce and equipped to deal with parties and counsel drawn from diverse legal and cultural backgrounds. Flexible procedures can be specially tailored to accommodate legal pluralism and to give priority to approaches that are practical and economic. In arbitration, parties are not constrained by local particularisms, especially rules of evidence and procedure. Arbitral independence is increasingly accepted as illustrated by the speech of Lord Steyn in the recent decision by the House of Lords in Lesotho Highlands Development Authority v Impneglio Spa & ors (2005).
Arbitration proceedings are held in private. When the parties have ongoing commercial relations that might be damaged if their dispute were public or where commercially sensitive information is involved – for example, trade secrets – arbitration may assist to protect confidentiality.
Finality of decisions and enforceability of arbitral awards across borders are, of course, also key attractions of arbitration, which is supported by a system of international treaties.
Turning to ADR, the process which preserves the greatest degree of client control over outcome, the most common form is mediation. Like arbitration, it transcends international boundaries and offers potential for the quickest route to a solution to any given dispute.
A broad approach
So why has mediation developed such a broad approach to dispute resolution in such a relatively short space of time?
Some reasons for the appeal are simple and obvious. Forum is not an issue. Proper law is not an issue. Venue is not an issue. Cost is not an issue, when even the most complicated issues of fact and law can be resolved in a matter of days. Methods of enforcement can be built into settlement agreements. Informality of procedure means that clients are not intimidated by the ‘system’. Outcomes are fashioned by the clients to suit their needs and wants, not what an independent decision maker says the parties ‘shall do’. The opportunity for preserving or creating a meaningful relationship for the future is a realistic one in mediation.
With these actual and perceived benefits of mediation, it is worth spending a few moments to look at the world ADR stage. A convenient starting point is New York, where the UN passed Resolution 57/18 ‘A Model Law on International Conciliation’ – in other words, mediation. It spells out in 14 short articles what mediation is all about. All member states are urged to adopt it. Since 19 November 2002, more and more countries worldwide have recognised the applicability of mediation and its availability to their own circumstances. Some have passed mediation acts of parliament, others have adjusted their rules of court to accommodate the use of ADR. For example, Nigeria has adopted a multi-door courthouse system with a high court judge who is empowered to make non-court-based mediation settlement agreements into enforceable orders of court – a system which works very effectively. In fact, every continent in the world has some of its countries using mediation.
The US, where modern mediation had its birth 30 years ago, South America, Australia, New Zealand, Asia, the Middle East, Africa and Europe, all have countries that are either using mediation or are well down the path to setting up mediation systems. This involves not only the training of mediators, but the willingness of judges and lawyers in practice to allow space for and to use mediation. These aspects take time to develop, but progressively the pace of growth of mediation is accelerating. There is increasing institutional support for mediation. The International Chamber of Commerce’s ADR (amicable dispute resolution) rules introduced in 2001 is one example of this.
The one disappointing note is the missed opportunity within the EU to adopt a more positive attitude towards ADR for cross-border disputes. It is anticipated that it will still be left to individual countries to decide how to run their own mediation ‘course’. But with so many countries already within the EU – and note that Bulgaria and Romania are taking a leaf out of the EU book with their own ADR strategies before accession – the chance is there. Is it too late for another look at the draft directive?
So what conclusions can we draw from this? One thing is certain, while litigation retains its own particular national style in any jurisdiction, arbitration and ADR/mediation are separate, individualistic and have that essential feature of the state of globalisation in which we now live – cross-border application wherever you are.
Ronald Bradbeer is head of ADR and & Stewart Shackleton is head of arbitration at Eversheds