What is dispute resolution management?
Every commercial relationship and dispute is unique. It becomes further unique when it involves cross- border relations. The legal culture in every jurisdiction is different. Therefore, it is important to identify your interests and to plan a "custom- built" dispute management strategy. Although dispute management is generally perceived as a process relevant to a specific dispute, an efficient strategy encompasses further jurisdictional and business considerations. This starts at the very beginning- at the stage of business/ partnership or commercial negotiations. Consequently, dispute resolution management may be a process relevant at the negotiation stage or post- dispute stage.
What are the different types of dispute resolution?
Generally, disputes may be settled in courts through litigation or outside the courtroom through an alternative dispute resolution (ADR) mechanism. The widely accepted methods are arbitration and mediation. However, ADR is not limited to arbitration and mediation. Depending on the dispute or jurisdiction, conciliation, neutral evaluation, expert determination or other conflict resolution method may be used as an ADR tool.
One method is not necessarily preferable over the other. It all depends on the unique circumstances. The most important and crucial question to address is "What outcome best serves the interest?"
What is arbitration?
The traditional definition of arbitration is that it is an out-of-court, flexible, voluntary dispute resolution mechanism. It can be ad hoc or institutional. An arbitrator is a third- party neutral usually appointed by the parties to render a decision on the dispute. The decision of the arbitral panel is binding and usually final.
Depending on the specific circumstances, arbitration could be an alternative to traditional litigation. However, it is important to strategize beforehand- If the parties have agreed to arbitrate a dispute in the contract terms, when the dispute arises, the parties should seek arbitration as agreed.
What is mediation?
The traditional definition of mediation is that it is an out-of-court. voluntary, flexible, non- binding dispute resolution mechanism. It is usually ad hoc or presumptive (court- annexed), depending on the dispute. Contrary to arbitration, mediation is not really institutionalized internationally yet. However, the main difference between arbitration and mediation is that, the mediator is not a "decision- maker"; rather the mediator facilitates the process, so that parties may reach an outcome on their own.
Mediation is generally preferred because it is cost- effective, less time consuming and less disruptive. It also empowers the parties in the sense that the parties are "their own decision- makers". However, not all disputes or commercial relationships are "fit" for mediation. In a given specific circumstance, arbitration, litigation or another ADR method may be a more suitable avenue to pursue.