Trends of Arbitration in Todays Business

Document Type:Thesis

Subject Area:Management

Document 1

Often, parties to a dispute have been seeking their resolutions from the courts of law. This is because the courts have been known to be the most suitable neutral arbiters for years. However, the litigation process has continued to evolve in complexity. In fact, the process has become very tedious to the technicalities and procedural complexities. Since most parties have been seeking redress in the courtrooms, gaining timely audience therein has become a competitive process. This has resulted in a considerable wastage of resources especially with regard to time and money – which has been a major setback to the corporate world. Hence, it has been imperative to seek an alternative remedy. Experts have championed alternative dispute resolutions (ADR) as the remedy to the lengthy and costly litigation process. Corporates are showing a veritable explosion of interest in the Alternative Dispute Resolution. Somehow, ADR is no longer the limited and odd resolution mechanism used in the corporate world – it is alive and well. Disputes in Businesses Within the business world, dispute can occur from any area of operation. As such, it may involve any party that does business dealings ranging from the employees, contractors, competitors to the government. The disagreements that arise within the business can be a source of reputational risks if not addressed amicably (Williams, 2003 p. Although people loathe being involved in dispute, it seems to be a natural occurrence for people to disagree in various ways. Since it is inevitable to enter into dispute, the way the parties thereto resolve there issue forms the crux of the matter.

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The failure to resolve issues in an amicable and efficient way may easily jeopardize the operations of the business. Disputes will undoubtedly affect the profitability of the business and its viability. At the extremes, disputes will run companies out of business. Unresolved wrangles are a sure of undermining business operations. As Williams sums it up, “complex and serious disputes have been known to destroy important business relationships… [and] … ultimately destroy the business” (2003, p. The Vermont training module defines ADR as “a voluntary, non-adversarial problem-solving process” (2011, p. The practice is gaining prominence in the business world because of the concerted efforts by civil law reforms proponents and the businesses themselves. The idea is based on the notion that businesses need a customized dispute resolution mechanism privately operated for the benefit of the business world.

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To some, ADR thus appears to be the informal way through which companies solve their wrangles without the unnecessary involvement of the public, which is inevitable in the otherwise court process. The world bank further asserts that ADR is a means through which business can access efficient justice system that is critical to the investment climate (2011, p. The mediator is not part of the decision making process. Instead, his role is to facilitate the communication between the two parties towards helping them settle their issues on their own volition. This method is suitable for instances where the parties have a long-term relationship whose severance would be detrimental to the both of them. Hence, it would suffice as the best method whenever parties who need to preserve their relationships disagree. Besides, the method is suitable in overtly emotional cases, such as industrial actions, since the mediator helps link the parties towards a nondestructive end.

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Therefore, the ADR mechanism is appropriate in a situation where the parties do not wish to have control of the outcome. It is very necessary, especially where the area of dispute is a technical matter that may warrant the intervention of an expert. Neutral Evaluation: Similar to the previously mentioned forms of ADR, this one involves a neutral person – mostly an expert in the area of the dispute. The role, unlike in arbitration, is to give a neutral opinion based on the evidence presented. The evaluator’s opinion is not binding; rather, it is the flagship through which the parties to resolve their dispute. Therefore, companies are therefore showing an increased preference towards ADR. Changing Attitudes The use of ADR has increasingly become very popular within the business world. Both the courts and the companies have increasing tired of the tedious litigation process that is at times circumlocutious, expensive, time-consuming, and emotionally depriving.

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The conventional method of resolving disputes through the courts is expensive, disruptive, and protracted (Lucas, 2014). As such, people within the business circles have started changing their attitudes towards the court's systems. For example, to cite the United States (a high-income nation) has come up with legislation and policy framework supporting ADR. On the other hand, a low-income country such as Kenya has a constitutional provision on ADR. Therefore, the economic strength of a country notwithstanding, businesses have realized the need to formalize ADR. In fact, the courts no longer feel that their jurisdictional threats now that the process have been legitimized and formalized through legal instruments (Lucas, 2014, p. In fact, the United Nations Commission on International Trade Law (UNICITRAL) has come up with a harmonious framework for ADR, which can be used in various nations.

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The flexibility of the method has come in handy considering that it offers a wide range of choices. For instance, mediation is increasingly gaining popularity while arbitration is dwindling in its dominance. Lieberman attributes this phenomenon to the difficulties in appeal and the possibility of compromised outcome (2011). According to Lucas, there is increased interests in making the ADR a mechanism that is autonomous from the justice system (2011, p. although there had been immense fears that ADR might evolve into a private judiciary (Carver and Vondra, 1994). Although ADR is supposed to be voluntary, few companies are entering into contracts without the express provision for the same. Somehow, it is becoming obligatory. Effects of Globalizations The world has become a village thanks to globalization. “As our world is getting smaller, our disputes are becoming larger” (Glick, 2014, p.

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Cross-border commerce has aroused engagement through distant and different judicial systems. The courts have pronounced themselves on the issues of alternative dispute resolution creating landmark jurisprudence. For instance, as recited by Newman (2016, p. the courts in Dunnet v Railtrack1 had this to say about ADR: “[14] … Skilled mediators are now able to achieve results satisfactorily to both parties in many cases which are quite beyond the power of lawyers and courts to achieve. This court has knowledge of cases where intense feelings have arisen, for instance, in relation to clinical negligence claims. But when the parties are brought together on neutral soil the skilled mediator helped them resolve their differences, it may very well be that the mediator is able to achieve a result by which the parties shake hands at the end and feel that they have gone away having settled the dispute on terms with which they are happy to live.

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Available from: http://www. courts. ca. gov/3074. htm Carver, T B and Vondra A A, 1994, Alternative Dispute Resolution: Why it Doesn’t Work and Why it Does. com/docs/ADRintheBusinessWorld. pdf Lucas, B, 2014, Alternative dispute resolution for businesses in developing countries. GSDRC Available from: http://gsdrc. org/docs/open/hdq1148. pdf Newman, P, 2016, Current trends in dispute resolution. Available from: https://www. thedailystar. net/business/alternative-dispute-resolution-order-the-day-1543198 Vermont Land Use. Alternative Dispute Resolution: Why, When and How Weiss, S A, 1999 ADR: A litigator’s perspective: Viewing the pluses and minuses. American Bar Association. Available from: http://siteresources. worldbank. org/INTECA/Resources/15322_ADRG_Web. pdf.

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