What is ADR?

What is ADR?

Alternative Dispute Resolution

Introduction to ADR

Popular television shows depict trials as the climatic event – an intellectual sparring of wit and strategy – and the whole dispute is over within an hour. In reality, legal disputes drag over months or years before a trial may take place. Preparation can be tedious and insipid, while 95% of lawsuits will settle and never even go to trial, which has led some lawyers to write about the phenomenon of the “Vanishing Trial”.[1]

Most lawsuits today are resolved through Alternative Dispute Resolution (ADR). ADR refers to various processes to resolve disputes outside of the formal public courts system. The main forms of ADR are negotiation, mediation, and arbitration, although there are also hybrid processes such as the minitrial, med-arb, and early neutral evaluation.

A Spectrum of ADR Options

ADR options are organized along a spectrum, from negotiation, which is the least formal process, to arbitration, which is the most formal process and therefore, the most similar to a trial. The more informal the process, the more control the parties have. In more formal processes such as arbitration, the parties have less control because the outcome is determined by a third party. Mediation falls somewhere in between. These processes are by no means mutually exclusive, and parties may pursue these options in sequence, or even at the same time.

Negotiation is the most informal process and has the fewest rules and procedures. Parties may negotiate directly with each other, or through their lawyers. Mediation involves a neutral third-party who does not impose a solution but helps the parties reach a resolution by facilitating more structured negotiations. The parties retain control over the final agreement. Arbitration is the most formal process where a third party adjudicator has the power to impose a binding solution on the parties after hearing each party’s position.

Key Differences Between ADR and the Traditional Trial

Trials are open, so all members of the public, including journalists, are welcome to attend (with a few exceptions in special cases). Furthermore, trial decisions are published and establish a precedent for future cases. In contrast, ADR is private and the result remains confidential between the parties.

The courts system is a formal process with rules of civil procedure and statutory deadlines. ADR is crafted to suit the needs and demands of the parties, and may take many different forms.

Trials are adversarial, where each party advocates that the law favours its position, and the judge ultimately rules in favour of one party. Although in ADR each party is seeking to maximize personal gains, the parties accomplish this through cooperation and compromise, rather than a winner-takes-all situation. Especially in non-adjudicative options such as mediation, “a mediator can often persuade the parties to resolve their dispute without determining which of their positions is ‘right’”. [2] Because ADR is less adversarial, it is better suited when parties want to continue their relationship beyond the present dispute.

Advantages of ADR

Some of the advantages that make ADR appealing are:

1.     Cost

The cost of a trial has made it prohibitive. In 1995, it cost each party over $40,000 in legal fees to go to trial, and in 2011, this estimate was close to $60,000.[3] This astronomical cost is out of reach for many people and even corporations, and is often disproportionate to the amount in dispute. Moreover, since the losing party is often required to pay part of the winning party’s legal fees on top of its own, this penalty serves as a looming risk and a deterrent for parties to go to trial.

The cost of resolving a dispute informally through ADR is much lower, and parties have more control over the process and the resulting legal fees. For smaller disputes, parties may choose less costly mediators, but select specialized mediators at a higher price for more complex disputes. A dispute over a $100 million may be resolved in a single day, negating the need to spend months of expensive preparation for a trial.

2.     Speed and efficiency

A backlog in the court system has meant when litigants request a trial date, they have to wait one or two years from that point, and even longer in some jurisdictions. Even after trial, parties may wait weeks or months for a decision to be released.

In contrast, a mediation or arbitration can be scheduled within a few months, and can be resolved fairly quickly. While courts usually discourage forum-shopping, which is choosing one court over another, ADR allows the parties to choose a decision-maker who best fits their schedule and needs. In mediation, the mediator does not make a decision, rather helping the parties come to a solution collaboratively. ADR may also remove the need for pre-trial procedures such as examinations-for-discovery and motions, which may be time-consuming and cause further delays. Instead, if there is a dispute about evidence or submissions, the parties may informally negotiate a mutually acceptable solution.

3.     Customizing the process

ADR is flexible to become whatever the parties agree to make of it. Parties may set their own procedures and decide which law applies. Most courts have judges who are generalists and must decide on cases ranging from criminal convictions to complex shareholder disputes – although there a few exceptions for Family Law Court or the Commercial List in Toronto. But in ADR, parties may choose a decision-maker who is a recognized expert in the area of the dispute.

Parties are free to use whichever form of ADR best matches their priorities. Parties may choose to air their grievances, or to never speak to each other except through a neutral third-party. They can choose whether their priority is to reconcile the parties in conflict or simply to reach a binding decision for the dispute at hand. Moreover, the parties can tailor the resolution to their own needs. Unlike court decisions, which often grant judgment in the form of a monetary payment, in ADR the parties have a greater range of options. Sometimes an aggrieved party may be simply seeking an apology or an acknowledgement that his/her actions were right. In other cases, one party may want to maintain the relationship while having a discrete issue addressed, which is easier to accomplish in an informal ADR atmosphere than in an adversarial process that pitches one party against another.

4.     Privacy and maintaining relationships

Another advantage of using ADR is that the situation giving rise to the dispute, the conflict resolution process, and the outcome all remain private and confidential between the parties and any decision maker. Typically, the decision-maker will require all participants to sign a confidentiality agreement. Privacy may be an important factor when there are claims that could significantly harm one party’s image and reputation, e.g. allegations of fraud, sexual harassment. With a private ADR resolution, the parties avoid being publicly convicted and may even agree to a no-fault settlement.

The ability to privately and quietly resolve a conflict allows parties to maintain their relationship if that is one of their goals.

When a Trial May be Preferable to ADR

ADR is not suitable for every legal dispute. Disputes involving the interpretation of a new statute or provision, the application of the Charter and Constitutional rights, and other public interest litigation require a public ruling to establish a precedent. Class actions may require litigation in order to ensure that all plaintiffs receive an equivalent remedy, rather than separate and inconsistent results. A trial is also preferable in situations where the defendant is being sanctioned, its conduct is condemned, and deterrence is a goal.[4] 

About the Author - What is ADR

Rhema - Legal Dispute Blogger

Rhema Kang is a litigation lawyer. She graduated with an Honours Bachelor of Arts from the University of Toronto in International Relations, and Juris Doctor from the University of Ottawa. She first became excited about mediation while working for the Honourable George W. Adams, a prominent Canadian mediator who handles legal disputes worth up to several hundred million dollars. Rhema was the researcher behind the book, Mediating Justice: Legal Dispute Negotiations, and won second prize in the FMC Negotiation Competition. Rhema enjoys dark chocolate with sea salt and finds it awkward to write about herself in the third person.

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[1] Robert M Ackerman, “Vanishing Trial, Vanishing Community? The Potential Effect of the Vanishing Trial on America’s Social Capital” (2006) J Disp Resol165.

[2] Frank E.A. Sander and Stephen B. Goldberg, “Fitting the Forum to the Fuss: A User-Friendly Guide to Selecting an ADR Procedure” Negotiation Journal (1994) 49 at 56.

[3] George W. Adams, Mediating Justice: Legal Dispute Negotiations, 2d ed (Toronto: CCH Canadian Limited, 2011).

[4] Sander and Goldberg at 60.


 

Labour Arbitration

Labour Arbitration

Introduction to arbitration 

Arbitration is the most common method of resolving disputes in unionized workplaces, and is called for in collective agreements – the negotiated contract between employees (represented by their union) and employers.  

Arbitration vs mediation

Prior to an arbitration process, parties may attempt to resolve their issues via an informal workplace mediation process. Read about the differences between mediation and arbitration.

Arbitration clauses

These agreements almost always contain sections that call for a third party decision maker (arbitrator) to decide the outcome of unresolved disputes between the parties, so that every little disagreement does not end in a strike or a lock-out.  Where such a provision is not in a collective agreement, the law in most, if not all, jurisdictions in Canada mandates that a section requiring arbitration be deemed to be included in the agreement.  For example, in Ontario, if an agreement does not contain such a provision, the law requires that following clause be deemed to be a part of it:

“Where a difference arises between the parties relating to the interpretation, application or administration of this agreement, including any question as to whether a matter is arbitrable, or where an allegation is made that this agreement has been violated, either of the parties may after exhausting any grievance procedure established by this agreement, notify the other party in writing of its desire to submit the difference or allegation to arbitration…”
 (Labour Relations Act, 1995, SO 1995, c 1, Sch A, s.48(2))

Grievances leading to arbitration

Where an individual employee or the union as a whole believes that the employer has violated the collective agreement, a “grievance” may be filed by the union.  The grievance will state what has been done wrong, and what the complainant believes the remedy should be if the grievance succeeds.  

Arbitration process

Where the dispute is not resolved once the employer has considered the grievance, and depending on the specific process laid out in the collective agreement, the issue will go before an arbitrator to resolve.  The arbitration process is similar to court, with one or more adjudicators hearing the case and determining the outcome.  The union and employer may have lawyers representing them.  The arbitrator(s) may be agreed upon by the parties, or may be appointed by the Minister for labour in that jurisdiction.  Evidence will be provided to the arbitrator(s) to consider, and witnesses will often be called.  

Arbitration proceedings

However, the proceedings are much more informal than in court.  An arbitration will often be held in a boardroom or office, and normal court rules are generally more lax.  An arbitrator will most often release his or her decision must faster than a court would.  Furthermore, given that the parties will likely have had a long history of bargaining together or of prior arbitrations, they may agree to certain aspects of the case without conflict so as to speed up the process, and ask the arbitrator to merely focus on one or more of the most contentious issues.

Binding decision

The decision of the arbitrator will be binding.  While the losing party may appeal the decision in court (called “judicial review”), labour arbitrators are given much leeway for their specialized knowledge in the field, and often the outcome of the arbitration will only be overturned if it is outside the scope of what could be considered a reasonable decision.

Conclusion about labour arbitration

Arbitrations in labour law are extremely common, and this method of dispute resolution has taken immense pressure off of the court system.  Most issues can be solved efficiently and cheaply in this way. 

About the blogger: workplace arbitration

Johanna Willows, Labour Law Blogger

Johanna Willows is a lawyer in Winnipeg, representing unions and individual employees. Johanna received her law degree from the University of Ottawa in 2013. She received several awards upon graduation for her work and extracurriculars in labour, employment, and human rights law, and was recently awarded the Manitoba Bar Association Pro Bono award. 

Mediation Services versus Arbitration: What’s the Difference?

Mediation Services versus Arbitration: What’s the Difference?

Mediate2go: Mediation Services versus Arbitration: What’s the Difference?

Intro - Forms of Alternative Dispute Resolution

Mediation and Arbitration are two forms of alternative dispute resolution (ADR).  This means that they are ways of settling disputes without having to resort to the court system and traditional litigation.  Remember that the starting point to both mediation and arbitration is consensual.  That is, both parties have decided to use mediation or arbitration as a “first resort” rather than simply going to court.  Some jurisdictions in Canada and the United States have mandatory mediation for certain types of disputes. 

Often, a mediation or arbitration process may arise because the parties have a contractual relationship that specifies that any disputes will be solved by such methods.  Other times, the parties voluntarily agree to do so because it appears that a mutually agreeable result might be more readily attainable, or because a more timely decision is needed than would be available through the courts.  Another major benefit is that both are private, so evidence and any settlement or order that is eventually reached need not be disclosed to the public. 

There are reasons why choosing mediation or arbitration (or neither) might make more sense than the other options, depending on the situation. This post should serve as a short guide to how and why you might consider either option.

What is Arbitration?

Traditional Process

Arbitration is more like a traditional courtroom process than mediation. Both sides and their representatives (lawyers, usually) appear before an arbitrator, who is an individual selected to resolve the specific dispute. At the outset, the parties can adjust or agree on specific rules for the arbitration. This can help speed up the process or make it more efficient for the parties.  For example, the rules of evidence or disclosure of documents may be altered from what they might be in the jurisdiction’s court system.  After a sort of “trial”, which includes different procedural stages such as submission of evidence and arguments, the arbitrator renders a final decision.  The decision of an arbitration can be enforced like a court order and is binding on both of the parties.  The parties can agree to limit the right to “appeal” the decision of an arbitrator. In such cases, unless there are obvious and serious violations of procedural rules or norms, the outcome is final.

Advantages to Arbitration

There are several advantages to arbitration.  An obvious one is the ability of the parties to choose the arbitrator.  For commercial parties, this could mean picking someone with much expertise in the area of the dispute.  This can easily save time and reduce the need to introduce certain types of evidence, because the arbitrator is already familiar with the subject area and the applicable law. Arbitration can save time and can get to the final judgment stage much more quickly than a standard trial. Sometimes the benefit of having an issue decided once and for all can be a huge benefit, even for the party that loses.  Arbitration can also be less costly, especially when it does not drag on. Many of these benefits are more likely to be attained when the parties have a detailed and satisfactory “arbitration agreement”, which is the document that sets the rules for the arbitration.

Issues with Arbitration

Those considering arbitration should be aware, however, that the financial costs are not necessarily lower than relying on the court system.  Any lawyers and representatives still need to be paid, as does the arbitrator.  Depending on the rules of the arbitration agreement, it may or may not be possible to award “costs” as part of the decision.  The potential limits on the right to appeal may not sit well with parties who initially agree to such terms, but then find themselves on the losing end.

What is Mediation?

Mediation, a more flexible process

Mediation is most different from arbitration in that it never results in an “order”, though it may still result in a settlement. In a mediation, a third-party mediator prompts and guides the parties through a negotiation process. This is notably less formal than courtroom proceedings or arbitration. Mediators are not judges and they do not act like them. Instead, they help facilitate discussion in the hope that the parties may come to a mutually-agreed resolution - a consensual settlement. Mediations may take hours or days depending on the parties and the complexity of the case involved.   

Advantages to Mediation

Like arbitration, the advantages to mediation can be numerous.  By definition, any mediated settlement must be at the express consent of each side.  Thus any result is presumably more to the liking of the parties than in a case where a party is adjudged to have “won”.  For this reason mediation can be less adversarial. It is also a powerful tool to ensure that pre-existing relationships remain intact. Employer/employee relationships, for example, may be better handled through mediation. Mediations can lead to faster settlements than arbitration, and it gives the parties a high degree of control. While the mediation itself is private, the parties can and often do seek legal advice about their position, so that they can come to the mediation better informed. The relatively informal process may also put the parties at ease and remove the anxiety or seriousness of courtroom proceedings.  They can also be “paused” and resumed at a later date if the parties require additional time to consider the circumstances.

Issues with Mediation

Mediation may not be appropriate in all situations. A key factor that may hamper the effectiveness of a mediation is the status of the relationship of the parties and their willingness to negotiate. “Failed” mediations may leave parties dissatisfied and may feel like time and money has been wasted.  If the dispute has not been satisfactorily resolved, the parties may feel the need to move to arbitration or litigation.  Finally, some cases, such as where one party has a high degree of power, control, or expertise versus the other, may not be appropriate for mediation.

Mediation versus Arbitration: Conclusions

Both mediation and arbitration can be effective tools for resolving a dispute outside of the court system. Arbitration is distinctly more formal and presupposes that there is an unresolvable matter on which the parties would like to have a judgment from a neutral third party. Mediation is consensus-based and can only lead to mutually-agreed settlements, or a standstill. Each have distinct advantages and the potential to lead to cost- and time-savings versus traditional litigation. If you find yourself in the midst of an important dispute,  consider whether either arbitration or litigation may be an appropriate course of action before you jump to the conclusion that a lawsuit is the only option. 

For more information about mediation, arbitration, and other forms of alternative dispute resolution, please visit ADR Canada, or Cornell's Legal Information Institute.

About the Author

Dan Lawlor is a Mediate2go Blogger focused on estates and commercial dispute resolution. Dan is a graduate of McGill University's Faculty of Law with interests in conflict resolution, business law and writing. He played an important role as a director with Mediation at McGill, building connections with the community to improve outreach. Currently he is a lawyer with Campbell Mihailovich Uggenti LLP in Hamilton, Ontario. Dan loves team sports, reading, and traveling.