Alternative Dispute Resolution (“ADR”) is a phrase used to describe several different ways for resolving legal disputes out of court. The continued rising costs of litigation, when coupled with backlogged civil court dockets, are making traditional lawsuits more and more impractical for many individuals and businesses. As a result, new types of proceedings have been developed in response to the rising costs of litigation and delays in bringing civil cases to an effective end. These new proceedings are proving beneficial for individuals and businesses alike, saving time and money for all those involved. These newly developed out-of-court proceedings include arbitration, mediation, and other kinds of ADR designed for specific cases and/or subject matters.
Binding and Non-binding Arbitration
Arbitration is most often used to settle commercial disputes; however, it may also be employed to resolve consumer and employment disputes, where arbitration may be mandated by the terms of an employment or commercial contract. Arbitration can be either voluntary or mandatory and binding or non-binding depending on the parties’ wishes or upon a contract or statute directing the arbitration proceedings.
Non-binding arbitration is similar to mediation on account of the fact that any decision of an arbitrator cannot be forced upon the parties. However, unlike mediation, where the mediator attempts to help the parties find a middle ground on which to compromise, a non-binding arbitrator remains totally removed from any settlement negotiations and instead will only provide the parties with a determination of liability and, if appropriate, will determine an amount of damages.
Binding arbitration, like the title says, is binding on the parties, either by choice of the parties or by statute or contract. In other words, except under very limited circumstances, decisions made in binding arbitration by the arbitrator—including awards of damages—must be honored and cannot be appealed to a court of law.
The rules and procedures governing binding arbitration are usually found in the parties’ arbitration agreement. An arbitration agreement should set forth how the arbitrator will be chosen, what procedural rules will apply during the arbitration, and the laws of which state will apply to the dispute being arbitrated. Once an arbitrator is chosen by the parties, the parties may be given an opportunity to engage in discovery regarding their dispute. However, court-ordered arbitration will likely not allow for discovery unless the court orders the parties to arbitration without the opportunity for formal discovery. After discovery is complete, a hearing on the dispute will be held before the arbitrator, which will act as a neutral party in deciding the dispute.
Prior to the formal arbitration proceedings, the parties may be allowed to submit a statement of the case to the arbitrator, which outlines the party’s view of the facts and arguments in support of their respective position. During the arbitration proceedings, the arbitrator will likely allow the parties to present opening statements, present evidence and testimony of witnesses, and conclude with a final argument. In the time after the arbitration proceedings, the arbitrator will issue his or her decision.
Once the arbitrator has issued his or her decision, the parties will be almost certainly bound by the arbitrator’s decision. The enforcement of binding arbitration decisions is supported by the Federal Arbitration Act (“FAA”), or in Utah by the Utah Uniform Arbitration Act (“UUAA”), which generally prevents courts from reviewing most arbitration decisions or even hearing cases that are supposed to be arbitrated pursuant to an arbitration agreement. However, a court can enforce an arbitration agreement and arbitration decisions if a party seeks court assistance.
Mediation
Mediation is different from arbitration. Unlike arbitration, mediation does not involve an adversarial proceeding in front of a neutral arbitrator (or panel of arbitrators). Instead, the parties to a mediation are brought together, with a neutral facilitator (mediator) acting as a go-between among the assembled parties. The mediator’s job is to assist the parties in coming to a compromise agreement regarding their dispute. For those parties and their attorneys who have come to a seeming impasse or standstill in litigation, mediation may be an advantageous way to break through the conflict and come together to resolve a case in a less adversarial setting than a courtroom.
Some mediations may begin with the parties in the same room, with each party giving a short presentation of their case. However, more commonly now, the parties are separated early on and will have previously submitted their position in writing to the mediator ahead of the mediation. The mediator then goes back and forth between the parties via caucus meetings, relaying the parties settlement offers and responses. The parties can share confidential information with the mediator without worrying that it will be relayed to the other party. The mediator may also give the parties his or her own thoughts about the case. In the end, the goal is for the parties to agree on how the case should be resolved.
