Alternative Dispute Resolution (ADR)

ADR, or Alternative Dispute Resolution (sometimes referred to as ‘external dispute resolution’), is a way of resolving civil disputes without the involvement of a court. This allows parties in dispute to find an agreement or solution without the costs or inconveniences of going to court. While trials are adversarial, confrontational and seek to attribute fault or liability, ADR can be more relaxed and constructive. It is more about problem-solving than apportioning blame. Non-legal methods of resolving disputes have been around for centuries. ADR as a formal process has become more popular in recent times, due to its many advantages. Governments, court administrators and the legal profession have all encouraged the use of ADR because it eases the workload on Australian courts. Both Federal and State governments have formed agencies to educate and assist members of the public who may require ADR. The National Alternative Dispute Resolution Advisory Council (NADRAC) releases biannual statistical reports which suggest between 55-75 percent of disputes are resolved by ADR without the need for a court hearing.

Alternative dispute resolution has several advantages, including:

Cost and speed. There is a general perception that ADR is cheaper and more efficient than legal action. In most cases that is probably true, though if either party engages legal representation or a third party, such as an arbitrator, then the costs may be considerable. Because the courts usually have a large backlog of cases, it might be months or even years before some civil disputes are scheduled. ADR can be organised and conducted much faster, especially if the disputing parties utilise a method that doesn’t require the involvement of a third party.

Privacy. ADR is generally conducted ‘behind closed doors’, whereas court proceedings take place in open courtrooms, where proceedings are recorded and hearings can be attended by the general public or the media. This can lead to the exposure of delicate personal information and corporate secrets, as well as media attention and embarrassment for those concerned. ADR can therefore protect the privacy and confidentiality of the parties involved.

Flexibility. In a civil trial, court procedures and processes such as discovery, the rules of evidence, standards of proof and so forth are fixed – they are determined by legislation, precedent and convention and cannot be changed. In ADR, however, the parties in dispute are in control of the process, and not bound by court procedures. This may give them more opportunity to tell their side of the story than would be available in a trial. It also allows for more creative remedies than those available to a magistrate or judge.

ADR is less adversarial. Civil trials can generate, exacerbate or heighten existing tensions and ill feeling between the disputing parties. Courts by their very nature are adversarial places, with intense scrutiny of witnesses, allegations and accusations. ADR can help reduce these tensions by providing a forum that is more informal and conducive to problem-solving. If there is extreme hostility between the parties in dispute, some methods of ADR allow for them to communicate through negotiators, avoiding face-to-face contact and thus avoiding conflict.

ADR can preserve relationships. ADR can help parties who must live or work together or communicate after the dispute is resolved. The obvious example is separated parents who are disputing custody, access or maintenance of children – but wish to avoid the potential bitterness that might arise from a court hearing. Companies who are in dispute but wish to keep trading may also find ADR an effective way of finding solutions while preserving their business relationship.

ADR has facility for multi-party disputes. Court hearings are adversarial and must always involve two individuals or groups in dispute with one another. Some civil disputes may be more complex than this, however, involving disagreement or grievances between three or more parties. Though it can be difficult, ADR methods can be adapted to include additional parties to the dispute.

Shared satisfaction. The general perception of a court trial is that there is a ‘winner’ and a ‘loser’. Outcomes from ADR are not necessarily that black and white; an agreement may be reached that is at least partly suitable to both parties. Or, if there is a ‘loser’, he or she might at least have a better understanding of how the decision has been reached.

There are also some disadvantages to ADR:

Cost. As mentioned above, some forms of ADR, particularly arbitration, can be just as costly and as drawn-out as a courtroom trial. Arbitration between corporations or unions and employers can sometimes drag on for weeks, with fees for the arbitrator, legal representatives, experts and transcribers all adding up. The only substantial difference is that unlike the courts, ADR staff and facilities are not subsidised by the taxpayer.

The risk of breakdown. As is possible with any dispute, ADR can sometimes end with a breakdown in negotiations. Forms of ADR where the disputants have personal contact or dialogue can sometimes deteriorate into an argument. This is less likely in a court, where a magistrate or judge is in control and the disputing parties do not communicate with each other.

The potential for dissatisfaction. It is quite possible that the outcomes of ADR will not satisfy either or both parties. Participants often enter into ADR without fully understanding how it works; consequently, they may expect an absolute result, such as one handed down by a court. The great risk with ADR is that there is no guaranteed resolution at the end – it may not work at all if parties cannot shift from their positions or negotiate in good faith.

No right of appeal. Depending on the terms agreed upon by both parties, there is often no right to appeal after a resolution has been reached through arbitration. This is unlike the judgement of a court, which can of course be appealed in a higher court.

ADR can be misused. Some parties enter into ADR as a pre-trial tactic, rather than in good faith. They either want to delay a court hearing or to ‘use’ ADR to obtain more information about the other party and their case. This is less a fault of ADR than with those who would misuse it for their own advantage.