Alternative Dispute Resolution

Informal litigation system

 Uses of ADR
• Business to Business (B2B)
• Business to Consumer (B2C)
• Business to employee (B2E)
 ADR
• ADR is any means of settling a dispute outside
the courtroom. ADR can take place anytime
during a dispute – before a lawsuit is filed or
during the litigation process
• Three Types of ADR
- Negotiation
- Mediation
- Arbitration
 Advantages to ADR
• High success rate
• Speedier, less expensive, and less formal process than
litigation
• Direct involvement of parties in crafting a solution leads
to greater satisfaction with results
• Highly confidential
• Applicable for most civil matters
• Sanctioned by courts as means to resolved lawsuits
before trial
• No win-lose situation exists
 Negotiation
• Negotiation is the simplest form of ADR, in
which the parties attempt to reach a resolution
without involving third parties.
• Negotiation requires the parties to define the
conflict and agree to an outcome to resolve
those conflict
• Question of Ethics: Parties with unequal
bargaining power – can negotiation be an
effective method?
 Mediation
• In mediation a neutral third party mediator facilitates
communication between parties and guides them
towards a voluntary settlement.
• Mediators do not impose a solution on the parties –
they assist the parties in trying to reach a settlement
agreement.
• If mediation is successful, a written settlement
agreement between the parties is prepared and
becomes binding when executed. It is not successful,
the parties may proceed with litigation.
 Arbitration
• “A process by which parties consensually submit a dispute
to a non-governmental decision-maker, selected by or for
the parties, to render a binding decision resolving a
dispute in accordance with neutral, adjudicatory
procedures affording each party an opportunity to
present its case”.
• “Arbitration was mainly conceived of in the past as an
institution of peace, the purpose of which was not
primarily to ensure the rule of law, but rather to maintain
harmony between persons who were destined to live
together” – a French commentator
 Characteristics
• No arbitration agreement = no arbitration
• Article II of the New York Convention applies only to
an “agreement … under which the parties undertake
to submit to arbitration,”
• Article 8 of the UNCITRAL Model Law applies only
where there is “an agreement by the parties to submit
to arbitration all or certain disputes.”
• National courts uniformly hold that “arbitration is a
creature that owes its existence to the will of the
parties alone,”
Arbitration Provisions in Contracts
• Many contracts require that disputes related to
the contract be submitted to arbitration rather
than litigated.
• Arbitration clauses in contracts may specify
choice of arbitrators and/or location of hearing,
and may exclude some matters from the
arbitration requirement.
• Widely used in banking, credit, brokerage,
employment, and purchase agreements.
 Characteristics
• Non-governmental decision-maker selected by
or for the parties
• Arbitrators usually selected by the parties or
arbitral institutions on their behalf
• Final and binding decision – “award”
• It does not result in a merely advisory
recommendation which the parties are free to
accept or reject;
 Setting aside Arbitration Award
• If a losing party appeals an award to a court, the
court will not review the merits of the case, but
only determine whether a valid award exists – and
if so, the court will order the parties to comply
with the award.
• Public policy and illegality
• Defects in arbitration process
• - Winning party can ask court to issue an order
directing the other party to comply with the award
 Characteristics

• Arbitral award can be coercively enforced

(New York Convention)
• Adjudicatory procedure
• Impartial procedure allowing each party to
present its case
 Types of Arbitration
• Ad hoc arbitration is one which is conducted pursuant to
rules agreed by the parties themselves or laid down by the
arbitral tribunal
• Parties are free to work out and establishes rules of
procedure for themselves, so long as these rules treat the
parties with equality and allow each party a reasonable
opportunity of presenting its case
• Alternatively and more usually, the relevant arbitration
clause will provide for the arbitration to be conducted
according to an established set of rules such as the
UNCITRAL Arbitration Rules
• The principal disadvantage of ad hoc
arbitration is that it depends for its full
effectiveness on cooperation between the
parties and their lawyers
 Institutional arbitration
• Institutional arbitration is one that is
administered by a specialist arbitral institution
under its own rules of arbitration
• There are a number of such institutions and
they are ICSID, ICC, LCIA, and others
• Institutional arbitration is more preferred
because of automatic incorporation of the
rules of that institution
• One advantage is that institution itself reviews
the AT’s award in draft form before it is sent to
the parties. This is undertaken by the ICC
• Under some institutional rules, the parties pay
a fixed fee in advance for the costs of the
arbitration
• Statutory Arbitration: It is mandatory arbitration which is imposed
on the parties by operation of law. In such a case the parties have
no option as such but to abide by the law of land.
• Domestic or International Arbitration: Arbitration which occurs in
Bangladesh and have all the parties within Bangladesh is termed
as Domestic Arbitration. An Arbitration in which any party belongs
to other than Bangladesh and the dispute is to be settled in
Bangladesh is termed as International Arbitration.
• Foreign Arbitration: When arbitration proceedings are conducted
in a place outside Bangladesh and the Award is required to be
enforced in Bangladesh, it is termed as Foreign Arbitration.
 Sources of International Arbitration Law

• Domestic arbitration law

• International legislation;
• Bilateral judicial cooperation treaty,
• International convention,
• Model law
• New York Convention
• Recognition and enforcement of arbitration agreement
• Recognition and enforcement of foreign arbitral awards
Other forms of ADR

• Expert determination
• Mini-trials
• Final-offer arbitration
 Expert determination
• Commercial contracts may also contain provisions
for the resolution of certain categories of disputes
by an expert selected by or for the parties and
authorized to render a binding decision on an issue.
• Such provisions can involve accounting (or other
financial)calculations by an accountant; quality
assessment by an industry expert; oil and gas
reserve estimates by a geologist; or construction
evaluations by an architect or engineer
 Mini Trials
• Typically involve relatively brief presentations
of each party's case to a “judge” or panel of
“judges,” who are authorized to make an
advisory decision or otherwise encourage
settlement

• Like mediation, the decisions in mini-trials are

usually non-binding.
 “Baseball” or “Final-Offer” Arbitration

• “Baseball” arbitration refers to a process

where, at the conclusion of the parties'
submissions, each side submits its “final offer”
(or “best offer”) in a sealed envelope.
• The tribunal is then authorized only to select
one or the other party's “offer” in resolution of
the dispute, rather than making an
independent determination of the “correct”
resolution under applicable law.