Alternative Dispute Resolution (ADR)
Posted on 22nd October 2024 at 15:47
Harris and Christian have known one other since childhood. After graduating, they founded a modest engineering firm together. The employee count has reached more than 12. Harris married early and has three children. Christian is still unmarried and spends a lot of time at work, including handling the majority of the managing, which he dislikes. He is bitter about his unequal contribution to the company and wishes to leave. Harris doesn't want to lose his companion. They are not able to reach a consensus on the buyout amount.
In this situation, an ADR process of Mediation can be applied as an alternative to the traditional court procedure of a ‘Binding Business Appraisal’ costing between $3,000 to $30,000.
What is ADR?
ADR refers to various methods and techniques that seek the settlement of disagreements and disputes without resorting to the outcomes decided by jury and court. Unlike traditional litigation, where recourse to the outcomes decided by jury and court is necessary, the approaches within ADR afford parties other means for disposing their disputes in a more agreeable and cooperative manner.
Accordingly, the essence of ADR is to assist the parties in effective communication, better understanding, and mutually acceptable solutions without entering into a lengthy and costly legal battle.
Let’s look into the types of ADR-
● Mediation: In this a third party joins and helps the parties reach an acceptable settlement. The mediator facilitates communication, looks into the points of agreement, and helps the parties generate options for a settlement. This method is highly acceptable in family disputes, job disputes, and community issues.
● Arbitration: In this, both parties are heard, then the arbitrator(s) gives its decision on the basis of evidence and arguments presented. Arbitration is used time and time again as a means that allows for efficiency and finality, at least in economic disputes.
● Negotiation: Negotiation is a process of informal and direct discussion between parties in order to reach a decision that is acceptable to all parties. It is the simplest form of ADR and often precedes the more formal procedures. This approach enables the parties to communicate their interest, needs, and concerns in such a manner that may result in a satisfactory agreement.
● Conciliation: Conciliation is a form of alternative dispute resolution, where a collaborative and supportive process is employed in resolving disputes with the assistance of an independent neutral party called the conciliator.
ADR procedures are generally less costly than going to court that may be completed faster than traditional litigation; hence, privacy in proceedings is maintained and, unlike the courts, allows for creative solutions and individualized outcomes. They can be much less adversarial and may assist in maintaining personal or professional relationships.
However, they have some limitations, such as the absence of formal discovery processes in mediation or arbitration and the varying enforceability of ADR rulings.
By evaluating all the above points, one should meticulously choose between going to court or resorting to ADR methods and that to the right ones.
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