Alternative Dispute Resolution

Author:Anthony Connerty
Profession:Barrister and member of WIPO arbitration panel
Pages:267-292
SUMMARY

1) Introduction. -2) ADR: An Overview. -3) Institutions Offering ADR Systems: Introduction. i) The CPR Institute for Dispute Resolution. ii) The American Arbitration Association. iii) The International Chamber of Commerce. iv) The London Court of International Arbitration. v) The China Council for the Promotion of International Trade / China Chamber of International Commerce. vi) The Mediation... (see full summary)

 
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Page 267

1) Introduction

"God did not decree that the job of a litigator is to lay waste to the adversaries and win all for client.

"Our system of civil litigation was crafted by men, incorporating a Hegelian dialectic of thesis - antithesis - synthesis; both sides beat themselves bloody, and a judge or jury decides what truths have emerged from the process.

"In the economic and cultural milieu in which this system was developed hundreds of years ago, it worked reasonably well. Times change. Today it can be described as functional only by a definition of 'functional' that countenances clients routinely billed more in transactional costs for the litigation process than the amount of the settlement or judgement, and society taxed with the collateral costs and disruption of protracted and proliferating litigation.

"We might want to pause before we drag this time-hallowed system with us - or let it drag us with it - into the new millennium."

This quotation is taken from an article by Antonio C Piazza, a partner in the San Francisco firm of Gregorio, Haldeman and Piazza.91 His telling and graphic description of what many see as the defects in the litigation system serves as a fitting introduction to this chapter of the Manual on alternative dispute resolution (ADR).92

The chapter looks at what ADR is, its development and types; ADR in an international context; ADR as a pre-arbitral dispute mechanism; using a combination of mediation and arbitration; institutions offering ADR systems, including the Netherlands Arbitration Institute's Minitrial Rules; the UN Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Conciliation and the UNCITRAL Conciliation Rules; the future development of international ADR; and ADR in action.

2) ADR: An Overview

What is ADR?

ADR is generally taken to cover all forms of dispute resolution other than litigation and arbitration. The reason for this is clear: both litigation and arbitration operate regardless of the will of the parties and result in a binding and enforceable outcome. The Defendant / Respondent against whom litigation / arbitration proceedings are launched has noPage 268 choice as to whether to participate and may be faced with a judgment / award that can be enforced in the national courts. In litigation the process is imposed by the State. In arbitration the result follows from the parties' agreement to arbitrate, coupled with the State's support of the arbitral system.

But ADR in its various forms - the most familiar being mediation and conciliation - is a consensual process: The parties do not have to take part in it. And if they do, they do not have to abide by the outcome. Generally speaking, national courts will not enforce ADR agreements and the ADR process - unlike arbitration - is not subject to any statutory code (in England at any rate).

The development of ADR

There is nothing new in the concept of ADR: Mediation and conciliation have been used in the East for centuries. What is new is the kind of techniques that have been developed in the United States, which has led the way in developing new methods of dispute resolution other than by way of litigation and arbitration.

This writer's view on the topic was set out in an article entitled 'The Role of ADR in the Resolution of International Disputes', published in 1996 in Arbitration International, the Journal of the London Court of International Arbitration (LCIA):

"Alternative Dispute Resolution (ADR) has developed alongside litigation and arbitration as a means of resolving commercial disputes in accordance with procedures aimed at avoiding the inherent costs and delays of the adversarial process. Those costs and delays have been felt most acutely in the United States, where pre trial obligations are the most burdensome. The United States has accordingly led the way in developing innovative ways of keeping parties away from the courts and arbitration.... But the methods used are not always new. The philosophy of the East has always been in favour of a non-contentious approach to dispute resolution.... The pressures resulting from litigation and arbitration are far from unique to the United States and recent years have seen the English courts take active steps to promote the use of ADR alongside the formal court system."

This writer's conclusions in that article were that ADR

"in its various forms is emerging as a genuine complement to arbitration and litigation, both through increasing support in domestic courts for its active consideration and, more significantly, through increasing initial recourse to non-binding dispute resolution techniques in major international contracts. Whilst recourse to ADR in contracts is likely to lead to a multi-stage process which may, in certain circumstances, lead to increased delay, the hope is that the vast majority of disputes will be filtered out at the ADR stage of the process, thereby saving the costs, time and antagonism which usually accompany formal litigation or arbitration." 93

Since 1996 when that article was published there has been an increasing interest in ADR in England, particularly by the English courts. Lord Woolf's reform of the Civil Procedure Rules in 1998 laid great emphasis on ADR.

Page 269

Types of ADR

Mediation and conciliation

The terms 'mediation' and 'conciliation' tend to be used interchangeably, notwithstanding the fact that some commentators have sought to give them different meanings. It will be seen later that the UNCITRAL Model Conciliation Law attributes the same meaning to both terms, as does the CPR Institute for Dispute Resolution. The Permanent Court of Arbitration (PCA) - considered in Part III of the Manual - also takes the view that there is no real difference between the two.

Both expressions refer to a system that involves the use of a third party neutral who seeks to bring the parties to a settlement, but who has no power to impose this. The use of the term 'mediation' would seem to be taking the lead, at any rate in the commercial context in countries like England and the United States.

The process of 'caucusing' is perhaps (at any rate in the experience of this writer) the most significant feature of mediation and is the mechanism that is most likely to produce a successful outcome. The mediator holds a series of separate meetings with the parties in dispute in order to identify any hidden agendas and explore problem-solving proposals. The mediator may only divulge what has been said to him by one party in a caucus session if express permission is given. As the American Arbitration Association (AAA) explains, caucusing enables the mediator to "selectively use the information derived from each side to:

* reduce the hostility between the parties and help them to engage in a meaningful dialogue on the issues at hand;

* open discussions into areas not previously considered or inadequately developed;

* communicate positions or proposals in understandable or more palatable terms;

* probe and uncover additional facts and the real interests of parties;

* help each party to better understand the other parties' views and evaluations of a particular issue, without violating confidences;

* narrow the issues and each party's positions, and deflate extreme demands;

* gauge the receptiveness for a proposal or suggestion;

* explore alternatives and search for solutions;

* identify what is important and what is expendable;

* prevent regression or raising of surprise issues; and

* structure a settlement to resolve current problems and future parties' needs."94

Minitrials

The minitrial is often used in disputes between corporations. A 'hearing' takes place before a neutral third party and senior executives of the business organisations involved. Those executives will not have been concerned in the dispute itself. Each side presents its case. It is open to the third party neutral to indicate the consequences in terms of time andPage 270 money should the minitrial process fail. This system has enjoyed considerable success in the United States.

The CPR Institute and the Netherlands Arbitration Institute both have a set of Minitrial Rules, which are considered later in this chapter.

ADR in an international context

Although ADR in its present form developed in the United States, it is now in use worldwide. ADR in the context of international dispute resolution was considered in the Arbitration International article.

Many of the major international arbitration institutions, such as the LCIA, the ICC and the American Arbitration Association (AAA), offer a wide range of dispute resolution processes that include both arbitration and ADR.

ADR as a pre-arbitral dispute mechanism

Construction projects

ADR has been used with great success as a pre-arbitral dispute mechanism in major construction projects around the world as it is of particular use in contracts involving a considerable number of...

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