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The Basic Principles Of Alternative Dispute Resolution

4367 words - 17 pages

AbstractThe basic principles of alternative dispute resolution (ADR) are reviewed and discussed in relation to actual business disputes that were resolved through ADR.Alternative Dispute ResolutionAfter a review of the usefulness and purpose of alternative dispute resolution (ADR), this paper examines represenative examples of business disputes that were resolved without recourse to court proceedings. The sample cases are examined by way of illustrating the fundamental principles of ADR.An Alternative to What?Even when all the participants act in good faith and none has dishonorable intentions, business contracts and transactions lead to conflict from time to time. Most conflicts are the result of differing interpretations of contractual obligations, differing assumptions that were inadequately addressed in the contract, implied responsibilities, or the scope of activities covered by a contract. Misunderstandings are common because of people's differing perceptions, backgrounds, assumptions, and priorities, as well as the natural ambiguity of human language, however carefully worded a contract might be (AAA, 2000).It is safe to say that dispute resolution is a good thing for business, since it allows business relationships to continue without the distraction of the dispute. So, why alternative dispute resolution? Historically, the standard mechanism to resolve business disputes was to go to litigation. While this guarantees a resolution - or at least, an end - to a dispute, it tends to be time-consuming and expensive. It can also leave both parties dissatisfied, even if the dispute is technically resolved according to the letter of the law.Hostile litigation can take so much time and use so many resources that neither side "wins" in a meaningful sense of the word. The prevailing disputant often enjoys only a Pyrrhic victory, since the cost of victory can be staggering (Corley, et al, 2001, p. 89). It is perhaps poetically just that the Pyrrhic War itself arose in part because one party in a contract dispute refused to accept a straightforward resolution. On their way to aid Greek city-states in resisting barbarian incursions, some Roman vessels passed too close to Tarentum, technically in violation of the treaty of 302 BC. Rome sent an embassy of apology to Tarentum, but while the ambassador was reciting the apology in the theater of Tarentum, he was ridiculed and his robe intentionally soiled. He vowed the robe would one day be cleansed in blood. Tarentum requested the aid of Pyrrhus of Epirus to fight Rome, who promptly imposed martial law on Tarentum iteself before carving his own niche in history (Gowen, 2001). How much simpler it would have been to accept the apology and be done with it!Litigation may not be quite as bloody as war in all cases, but nonetheless commercial enterprises (and individuals) prefer to resolve disputes quickly and cheaply, so they can return to business as usual. Given that the disputants in most cases are not "out...

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