Introduction to Alternative Dispute Resolution

Alternative dispute resolution (ADR) refers to the methods that individuals use to resolve disputes without resorting to civil litigation (i.e., without going through a trial). ADR includes any method or procedure for achieving this purpose; however, there are two commonly recognized processes: arbitration and mediation. Employing these resolution methods may be mandatory or voluntary. Further, these methods may not be exclusive. That is, the parties may employ mediation, arbitration, and litigation, all within the realm of a single dispute. There are unique procedures and general legal principles applicable to each of these processes.

Check Your Knowledge

Question 1
Which of the following is the best definition of a "settlement"?
Settlement means that the parties to a legal dispute work out their differences and enter into an agreement to resolve the situation.
Settlement is the process by which parties to a legal dispute employ a third party to assist in resolving the dispute.
Settlement is a form of alternative dispute resolution in which the parties choose to forgo litigation and solve their problems through a third-party decision maker, known as an arbitrator.
Settlement is when a judge or jury makes a decision resolving a legal dispute.
Question 2
Which of the following is not an advantage of mediation?
The parties to mediation generally have more control over the process than they have in court.
The dispute is more private when resolved through mediation than in court.
The costs are typically when pursuing mediation than when pursuing litigation.
A jury composed of normal citizens during mediation allows for a fair outcome.
Question 3
Which of the following is the key characteristic of arbitration?
The key characteristic of arbitration is that the parties are hiring an unbiased third party to help facilitate a resolution to their dispute by trying to help the parties reach agreement.
The key characteristic of arbitration is that the parties are hiring one or more unrelated and unbiased third parties to decide the legal dispute.
The key characteristic of an arbitration is that the parties are given the opportunity to present evidence in front of a jury of citizens.
The key characteristic of an arbitration is that it is utilized by many popular reality court television shows to bind the parties who appear on the shows.
Question 4

Which of the following is not an advantage of arbitration?

There may be significant cost savings associated with arbitrating, rather than litigating, a dispute.
Arbitrators are generally chosen based upon their expertise in the subject matter of the dispute.
Parties to an arbitration maintain more control over the process than they do in litigation or mediation.
The dispute is more private when resolved through arbitration than in court.
Question 5
In which of the following circumstances does the Federal Arbitration Act (FAA) apply?
The FAA applies when the dispute is subject to mandatory federal arbitration, or when there is a voluntary arbitration agreement, and the dispute involves federal law.
The FAA applies to all arbitrations within the United States.
The FAA applies to all arbitrations worldwide, so long as a US party is involved.
The FAA applies when a dispute arises under state law, federal law, or if a dispute is initiated voluntarily within a federal jurisdiction.

Licenses and Attributions

Business Law: An Introduction, by TheBusinessProfessor.com, Jason M. Gordon & Colleagues has been adapted with permission from Jason M. Gordon. © Business Professor, LLC.