What are the main types of Alternative dispute resolution methods “ADR”? The main types of Alternative dispute resolution methods are Adjudication, Mediation, Conciliation, and Arbitration. They have a lot of similarities with the main purpose is providing less time-consuming resolution pathways than litigation. The main purpose of ADR methods is to reach a settlement and not direct enforcement of rights. Each method has its advantages and disadvantages.
Read more about ADR and arbitration in Arbitrability Concept, Restrictions, and the Applicable Law, Binding and non-binding arbitration, Online and Offline Arbitration: What is the Difference? and the pros and cons of ADR in Alternative dispute resolution (ADR) and it’s advantages and disadvantages.
On another note, detailed analysis and review of ODR platforms such as the EU ODR platform can be read in EU ODR Platform: The Ultimate Guide for Successful Dispute Resolutions
What is Alternative dispute resolution?
Alternative dispute resolution is a term that covers a wide range of techniques and processes for conflict management in place of traditional litigation. In general, ADR processes are voluntary and use a third-party neutral entity, such as a facilitator, a mediator, or an arbiter.
There are multiple types of ADR – mediation, arbitration, mini-trial, early neutral evaluation, and expert determination, with the most popular over time being mediation and arbitration.
The released 2018 International Chamber of Commerce (ICC) statistics on its cases demonstrates the continuing popularity of arbitration with a 20% increase in final awards and with a new record being set with the number of construction and engineering cases; reaching 224 new cases, i.e. 27% of the caseload in 2018 (International Chamber of Commerce, 2019).
While the statistics are unique to the ICC, they are likely to reflect broader trends as the ICC is a global arbitration institution.
The main difference between ADR methods such as mediation and conciliation with arbitration is that an independent third party facilitates negotiations between disputants in order to settle a dispute but does not decide the matters in conflict, unlike the case in arbitration.
The properties of the main ADR techniques are elaborated in the forthcoming subsections.
There are two types of Adjudication – Statuary, and Contractual. Statuary Adjudication was adopted by the United Kingdom as a consequence of the Housing Grants, Construction and Regeneration Act in 1996 (Housing Grants, Construction and Regeneration Act 1996, 1996).
In light of the recommendation of the notable report Constructing the Team, famously known as the Latham Report. Sir Michael Latham was commissioned by the UK government to review and recommend proposals for the existing procurement and construction issues affecting the UK construction sector (Cahill & Puybaraud, 2008).
Adjudication is the end result of the report’s recommendations on the necessity of a fast and inexpensive method of resolving construction disputes.
The Housing Act allows each party in the construction contract to opt for an independent third party with the aim of obtaining a rather fast decision for a dispute that might arise throughout the work’s progress.
Simultaneously, it ensures that the losing party has the chance to get the dispute reheard by the court of jurisdiction or an arbitral tribunal.
The intent is to also reduce the obstacles and expenses arising from legal procedures and arbitration on sub-contractors and other lower-tier parties involved in the construction project.
The original purpose of adjudication was to provide interim relief and protection of cash flow by avoiding the exhaustive durations of dispute resolution methods such as arbitration.
However, as time passed the process was “hijacked” as explained by Judge H.H Toulmin (Coulson, 2011) wherein adjudicators’ decisions are not being honored by the parties and more confrontations are escalated to court.
This abuse of the process opposes the original intent of adjudication.
The Fédération Internationale des Ingénieurs-Conseils (Fidic) – The international association of consulting engineers based in Geneva has combined the idea of DRBs and adjudication in its Conditions of Contract.
Dispute Adjudication Board “DAB” provisions were added to the 1999 edition of the Fidic Red Book. This was of paramount importance as earlier versions of the FIDIC Conditions of Contract provided that the Engineer had to render decisions on a preliminary basis in disputes between the employer and the contractor.
While engineers were supposed to be neutral, Contractors tend to regard them as biased as they only had contracts with the Employer.
Therefore, FIDIC established DABs in its 1999 Conditions of Contract as an ADR mechanism preceding the arbitration proceeding under the contract (Mahnken, 2019).
Currently, the standard forms of construction contracts prepared by the International Federation of Consulting Engineers that include Dispute resolution clauses are widely used and are required as a necessary part of the construction project commercial and financial arrangements of many agencies such as the World Bank.
The latest version of the Fidic Red Book form of contract outlines the procedure for Adjudication under Sub-clause 21 – Disputes and Arbitration.
In mediation, parties who are unable to resolve a dispute for themselves rely on an independent third person, or mediator, who will carefully listen to an outline of the dispute and then meet each party separately.
The purpose of the mediator is to encourage the parties to reach a reasonable agreement with the primary focus on the real interests of both parties, instead of what is considered to be a contractual or legal entitlement.
Mediation affords parties a high degree of control over the process and the agreement.
In addition, it allows the customization of the process and hence the scope of the agenda of the discussions can be extended beyond the dispute into communications and relationship issues.
The International Chamber of Commerce (ICC), recommends mediation in the absence of a specified settlement technique.
There are several types of mediation. Many scholars have identified four to eight models of mediation. The main models of mediation are;
- Settlement mediation,
- Facilitative mediation,
- Transformative mediation,
- Expert advisory mediation,
- Wise counsel mediation,
- Tradition-based mediation.
What is Facilitative mediation? Facilitative mediation is that carried out by a facilitative mediator who understands both parties and has good knowledge of the subject (good technical experience) and is often appointed for that reason, particularly in the complex construction field;
The mediator who facilitates assumes that the parties are intelligent, able to work with their counterparts, and capable of understanding their situations better than the mediator and, perhaps, better than their lawyers. Accordingly, the parties can develop better solutions than any the mediator might create.
Thus, the facilitative mediator assumes that his principal mission is to clarify and enhance communication between the parties in order to help them decide what to do.
On the other hand, what is evaluative mediation? Evaluative mediation is often described as mediation that requires the mediator to undertake tasks such as fact-finding, judging, and allocating the burden of proof. The mediator is also required to take relevant laws and customs into consideration.
Furthermore, hybrid mediation models such as med-arb are also emerging as the preferred ADR method. Med-arb is essentially a combination of mediation and arbitration as a hybrid mechanism of dispute resolution.
As a first attempt, the disputing parties try to settle the dispute by mediation. In the case mediation fails in finalizing a settlement, the agreement allows for the mediator to be assigned as an arbitrator and advance to resolve the dispute via arbitration.
You may read more about other disputes resolved by mediation, such as family disputes, in Family Disputes Mediation: Resolving Inheritance, Business, Property Conflicts, and More.
Conciliation is a dispute resolution process that is based on creating a positive relationship between the disputing parties. This requires a conciliator, who is an impartial person that supports the parties by managing the negotiations and steering it on to a reasonable and adequate agreement.
Usually, conciliation is a preventive measure applied once a disagreement or misunderstanding comes up via a conciliator that works to stop a conflict from reaching a developed dispute (Sgubini et al., 2004). Moreover, the conciliator impartially helps the parties achieve an amicable settlement.
Based on the literature discussed above, Table 2 summarizes the main differences between Mediation and Conciliation.
Table 2: Comparison between Mediation and Conciliation
|Purpose||After a dispute arises.||Preventive measure. (Before a dispute arises)|
|Process||Customizable with party High control.||Third-party guides the negotiation and settlement process.|
|Authority of third-party/facilitator||None – Guidance only||Yes|
|Nature||Focus on the real interests of both parties with less focus on legalities.||Less adversarial – seeks to resolve issues amicably.|
The process of arbitration has existed for hundreds of years; arbitration is commonly defined as when two or more parties, encounter a dispute which they are not able to resolve by themselves, agree that a private third party will resolve it for them by a decision and not compromise.
Outside of courts, Arbitration is commonly accepted as an alternative dispute resolution and is also commonly the final process in lieu of litigation, found in the majority of Contract Clauses.
The disputing parties submit their disagreement to an Abirtrator whose expertise or judgment they have confidence in. Afterward, each party demonstrates their case to the appointed Arbitrator who then studies the facts and arguments to make a decision.
The parties are bound to the Arbitrator’s decision not because of the coercive power of any state but because the parties agreed it should be.
Put simply, the main principle of arbitration is to obtain a binding decision in a dispute without resorting to court. comparative study on Arbitration and mediation can be read in What are the differences between arbitration and mediation? All you need to know about arbitration and mediation
Problems with arbitration
The literature extensively covers the problems with arbitration. The prime focus of this article is on the problems that can possibly be resolved by integrating technology in the process of ADR of which arbitration is a part.
- The arbitration process is not as fast at it is intended to be and not necessarily an inexpensive option in comparison with litigation. This shortcoming is more critical for small value claims. In addition, if the dispute is technically complex but the amount of money dispued is relatively low, the arbitrator’s fee may be too much in comaprison renderrring the process uneconomical.
- The arbitrator may consider and ultimately base his decision on evidence that would have not been considered by court due to the rules of evidence.
- The arbitrator might consider the apparent fairness in determining a dispute instead of strictly following the law, which might disadvatange one of the parties relying on the strict reading of law.
- Similar to the drawbacks of ADR procedures discussed previously, power imbalances might disadvantage one party as disputants do not always have identical power in the arbitration process. On the other hand, litigation assures that legal entitlements are asserted which minimizes such imbalances.
Among the problems with arbitration is that the goal of ADR procedures is compromise which might result in rights being abrogated.
Thus these disputes cannot, or should not, be settled by Arbitration. Another example for ADR shortcomings is for disputes that are related to the interpretation of a certain clause in a standard form contract.
This is due to the fact that interpretation of the clause may affect numerous other contracts, as the dispute is regarding a standard form of contract. Last but not least, a further problem described in the literature is the intentional delay or refusal to come to any agreement to settle the dispute.
This may be in the best interest of one of the parties—particularly if the business relationship has deteriorated with no prospect of renewal.
More on arbitration; here.
 Dispute Review Boards (DRBs), also referred to as Dispute Resolution Boards, originated in the 1970s in the United States. DRBs have been used primarily in large infrastructure projects where there can be complex conflicts (Hunt, 2020).
 Prior to that, the Fidic Red Book1996 version was supplemented with DAB provisions in which it can be adopted by parties on an opt-in basis.
 The DABs under the 1999 Yellow and Silver Book were not permanent and were only set up on an ad hoc basis when a dispute arose.
 UNCINTRAL is the abbreviation for United Nations Commission On International Trade Law.