The picture at the right shows dispute resolution processes ordered by the degree of control that is vested in the parties. Unassisted negotiation is on the left side. As the label implies, this process does not use any kind of third party, whether it is a judge, arbitrator, mediator, or whatever. In unassisted negotiation, the parties control all aspects of their interaction:
- The information exchanged
- The methods of communication
- The factual conclusions
- The legal conclusions
- The outcome (including no resolution)
On the other end of the spectrum is litigation. Here, the parties have very little control and rely on the government to solve their problems. In litigation, the court or administrative forum:
- Controls the information exchange (usually using discovery or later at a trial or hearing)
- Orders communication through subpoenas, summons, rulings on admission of evidence and briefing orders
- Either the judge or a jury decides factual questions
- The judge makes the legal conclusions
- The judge decides the outcome.
ADR processes lie between these extremes. The table below gives some general details regarding the degree control retained or surrendered for each process.
|| Powers the Parties Retain
|| Powers the Parties Surrender
||Decisions and assessments about facts, law, outcome. Unilateral action is discouraged, however.
Unless otherwise provided by contract, the parties retain the power to end the process at any time.
|Some degree of the communication process. The neutral can raise issues, and press for answers.
The power of unilateral action is surrendered. An effective partner acts collaboratively to help the other partners satisfy their interests.
|This is a very good method to assure that disputes are addressed early, and at the lowest level. See Ch.06, Partnering.
||Decisions and assessments about the facts, law and outcome.
The parties retain the power to end the mediation at any time.
|The mediator has authority to control the communication process. The mediator may also make suggestions regarding possible solutions.
||This is also good very early in a dispute, before the parties have built a high level of distrust.
||Decisions about the fact, law, and outcome.
||The mediator controls the communications process, and is given freedom to assess the strengths and weaknesses of factual and legal issues.
||Evaluative mediation is often the most effective form of ADR when contract performance is over. In such cases, the dispute is often about money or time, with little opportunity for creative solutions. See Ch.28, Creative Resolutions.
||They define the extent of information exchange procedures in the Arbitration Agreement.
They retain the decision about ultimate outcome.
|The arbitrator enforces the information exchange process that the parties outlined in the Arbitration Agreement.
The arbitrator has the power to make findings about the facts and law.
|Arbitration comes in many forms. The degree of latitude to accept or reject the arbitrator’s award may be adjusted in the Arbitration Agreement. The parties could do pure reject or accept, or they could establish parameters for the decision to reject.
| Binding Arbitration
||The parties define the procedures in their Arbitration Agreement, but then retain little more.
The parties have limited rights to have the matter reviewed by a court.
|The arbitrator has the power to make findings of fact, law, and decide the outcome.
||Binding arbitration is good when further negotiation will be fruitless, and where the parties want either a faster, simpler, or less costly process than litigation. It is also good if the parties want a subject matter expert (like an engineer) decide the case. See Ch.21, Arbitration.
With a firm understanding the differences between the processes, the next question becomes how to select a process. Continue.