Alternative Dispute Resolution (ADR) -

is a group of processes through which disputes and conflicts are resolved without engaging legal proceedings.

The two main types of ADR are arbitration and mediation.

Arbitration - is a process whereby two parties come together before a neutral third party who is a trained arbitrator, who listens to both sides and then issues a decision which may be binding or non-binding, depending on what the parties have agreed to in advance (usually in a contract). In effect, arbitration creates a private court system. If one of the parties does not want to adhere to the terms of the decision, it might need to be enforced through the public courts.

International arbitration is used when the parties or the subject of the dispute are based in different jurisdictions. Usually the parties have entered into an agreement which indicates to which international arbitration court the case should be referred. This type of arbitration is also used by governments to resolve international disputes.

Domestic arbitration is used when the parties reside in or have a business registered in the same country and refer the dispute to an arbitration court in that country.

Mediation - is a dispute resolution method in which an intermediary (mediator) helps the parties to the conflict establish a process of communication and analyze the situation in a way that allows them to make a decision on their own that would satisfy the interests and needs of all participants to the conflict. In contrast with a formal judicial or arbitration procedure, the parties reach an agreement voluntarily during mediation, and the mediator doesn’t make the decision for them. 

Mediator is a neutral third-party to the dispute (a specially trained intermediary), who assists the parties in reaching a mutually acceptable agreement to settle the dispute, focusing on interests of the parties rather than on the legal positions or contractual rights. 

Commercial mediation is a process of resolving disputes in commercial matters between parties not subordinated to one other. These can be disputes related to corporate governance or other issues without a clear line of authority. External independent mediators are engaged to conduct commercial mediation. The parties have an equal opportunity to select an independent mediator. 

Work-place mediation is a process of resolving conflicts within a single organization. The mediator is either an in-house or external independent mediator. Workplace mediation should normally be a part of an organization’s conflict management system. 

Advantages of ADR compared to judicial proceedings:

• In subject of procedure — dominant position of the parties
• In object of procedure — main attention is given to real interests rather than dry facts
• In organization of procedure — flexibility and informality
• In results and consequences — mutually acceptable decision is jointly elaborated by the parties 

Principles of Mediation:

• Voluntary
• Confidential
• Sincere intentions to settle the dispute
• Impartial intermediary
• Competence of the parties
• Informal and flexible mediation procedure 

Advantages of Mediation:

• Saves time
• Cost efficient
• Ability to shape the final decision
• Confidentiality of the process
• Possibility to preserve or restore business relations with partners
• Possibility to prevent similar conflicts in the future
• Guaranteed execution of the decision (in case of successful mediation)

Comparison of the main dispute resolution processes