Alternative Dispute Resolution (ADR), including arbitration and mediation is not new.

It has
been used successfully for hundreds, if not thousands, of years. However, in recent years, it has
been growing in use with more companies choosing to use arbitration in commercial and
consumer disputes. With this increased usage, the methods for conducting ADR have expanded
making it an even more practical and cost-effective solution for many types of disputes.

Difference between ADR & Litigation

Arbitration vs Litigation

Simply stated, litigation is formal, generally public process which resolves disputes through a
court with a judge or jury. It is subject to strict rules imposed by law governing the conduct of
the proceeding, such as the formal rules of evidence.

Arbitration is private process whereby parties work with a neutral third party to hear both sides
and make a final and binding decision, using agreed-upon rules governing how the process will
work.

Advantages of ADR

1. The resolution of disputes takes place usually in private-helping maintain confidentiality.

2. It is more viable ,economic and efficient.

3. Procedural flexibility saves valuable time and money and absence of stress of a
conventional trial.

4. Parties can set terms in their arbitration contract governing how the process will work.
This includes establishing rules regarding discovery, hearings, time limitations and other
matters. In addition, parties can schedule hearings and deadlines to accommodate their
needs.

5. The possibility of ensuring that specialized expertise is available on the tribunal in the
person of the arbitrator, mediator, conciliator or neutral adviser.

6. Less time spent to resolve a dispute means lower costs for attorneys’ fees. In addition,
discovery is much more limited in arbitration, and appeals are very limited, so those costs
are all saved.
7. Typically, there are limits on the nature and scope of discovery and time limits on how
long the process can take. Issues are handled through phone calls rather than multiple
hearings, depositions, interrogatories and also strict rules of evidence don’t apply.

8. It offers greater direct control over the outcome. Personal relationships also suffer less.

9. Parties can choose an arbitrator with subject matter expertise as opposed to being
assigned a judge randomly. This is particularly important in complex cases requiring
specialized knowledge.

10. Appeal rights are very limited in arbitration, so disputes are finally resolved more
quickly.

11. ADR permits more participation by the litigants. ADR gives the opportunity to parties to
tell their side of the story and have more control over the outcome than normal trials
overseen by a judge. Many parties desire the opportunity to speak their piece and tell
their side of the story in their own words rather than just through counsel.

Disadvantages of ADR

1. ADR is not suitable for every dispute.

2. ADR methods are not certain ,there is no certainity of rules and regulation which must be
followed.

3. ADR may not be effective as court proceedings.

4. There is no guaranteed resolution, with the exception of arbitration, alternative dispute

resolution processes do not always lead to a resolution. That means it is possible that you
could invest the time and money in trying to resolve the dispute out-of-court and still end
up having to proceed with litigation and trial before a judge or jury. However, you will
certainly better understand the other side’s position.
5. Limits on arbitration awards,arbitrators can only resolve disputes that involve money.
They cannot issue orders compelling one party to do something, or refrain from doing
something (also known as injunctions). For example, Arbitrators generally cannot change
title to real property. Of course this is subject to the specific language of the arbitration
clause.

6. Precedents are not followed in ADR ,there is no rule in ADR that the judgments of one
case to be followed in other similar cases.

7. The neutral mediator or arbitrator charges a fee for his or her services. Depending on the
arbitrator or mediator selected, the fees can be substantial (of course the parties typically
agree to divide the fees between themselves). Depending on the contract language and
state law, a prevailing party can be awarded fees and costs. A judge on the other hand,
charges no fees for his services.

8. Non-binding arbitration,Sometimes the court may order non-binding or Judicial

Arbitration. This means that if a party is not satisfied with the decision of the arbitrator,
they can file a request for trial with the court within a specified time period after the
arbitration award. Depending on the process ordered, if that party does not receive a more
favorable result at trial, they may have to pay a penalty or fees to the other side.

9. May have no choice, Often the contract in dispute contains a broadly worded mandatory
arbitration clause. Many lease agreements and employment contracts, for example
contain mandatory arbitration provisions, as do operating agreements and other types of
business contracts. Unless both parties waive arbitration, most states will compel
arbitration at the request of any party.

10. Delay in resolving the disputes ,If the issues are not resolved in ADR the parties must opt
for the Law suit where the court procedure starts from then onwards .Hence there will be
lot of wastage of time and also there will be delay in the disputes.

11. Limited Scope for appeals.