What is Alternative Dispute Resolution?
Alternative Dispute Resolution, or ADR, is a set of practices designed to resolve disputes between individuals as well as businesses without the need for litigation. Since it avoids the courtroom, ADR tends to be faster and cheaper than litigation, and also offers the benefit of confidentiality. There are numerous types of ADR, including mediation, negotiation, arbitration, conciliation, and neutral evaluation or fact finding.
History of Alternative Dispute Resolution
ADR has been around for thousands of years, and its history in the United States stretches back to colonial times. However, ADR didn’t become a systemic alternative to legislation until 1925, when Congress passed the Federal Arbitration Act, or FAA. The FAA allows judgements reached through ADR, known as arbitration awards, to be recognized by both state and Federal courts. The 1920s also saw many states adopt laws legitimizing arbitration and mediation. Collectively, these laws made it clear that the courts system would consider arbitration awards just as legitimate as court judgements.
Alternative Dispute Resolution continued to grow in popularity throughout the twentieth century, and many organizations began to advocate for it and offer ADR services to their disputing stakeholders. Today, alternative dispute resolution methods are employed across the globe by local, state, and federal courts, Fortune 500 companies, government agencies, and non-profits.
As ADR has become increasingly popular, it has been applied to more and more types of disputes. Nowadays, the possible applications for alternative dispute resolution are essentially endless. As new technologies emerge and become ubiquitous, the applications for ADR expand accordingly.
Future of Alternative Dispute Resolution
Last month at the Asia-Pacific Economic Cooperation (APEC) forum in Ho Chi Minh City, the APEC Economic Committee devoted an entire day to discussing ODR, or Online Dispute Resolution. By doing business online, a company opens themselves up to a relatively new kind of business dispute – one that can involve supply chains that wrap around the globe.