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ADR stands for Alternative Dispute Resolution. It offers conflicting parties the opportunity to resolve their differences without having to take the matter to court.

People planning to undergo ADR have a number of options available to them in terms of what process they choose and how they proceed in finding a fair solution that everyone can agree to.

To explain the intricacies of ADR further, this article looks at what kinds of alternatives people and companies can explore if they want to avoid full-on litigation.

What Different Types of ADR Exist?

Dissenting parties can bring grievances against another party using a number of possible ADR methods. In each case, an independent authority oversees the case and passes judgment on the disagreement.

In many of these situations, there are usually hearings, the evidence is gathered and a decision is formally made on the outcome much like a regular trial. However, these methods offer greater flexibility and privacy than most court cases.

Different kinds of ADR broadly fall into two categories: Binding and non-binding. Binding processes allow the outcome of the case to be legally binding. Non-binding ADR on the other hand is usually voluntary and any decisions made are not legally enforceable.

The three most common forms of ADR are the following:

  • Arbitration: This functions in a similar way to a court case and often has a binding outcome, yet does not have the same powers as a full civil or federal hearing.
  • Mediation: This is a non-binding procedure where both parties can meet with an independent mediator and explain their cases. It is usually intended to intervene and facilitate communication in a dispute before it escalates.
  • Adjudication: This type of ADR is often used to resolve construction contract disputes. It is also binding.

When Do People Seek ADR?

ADR is highly useful when disagreeing parties want to resolve a dispute without going through long and costly litigation, whilst still getting independent oversight. People might resort to ADR if they are seeking to settle a dispute regarding:

  • A divorce
  • Personal injury
  • A contractual dispute
  • Employment issues
  • Merger and acquisition disagreements

When Should Disputing Parties Seek ADR?

As already mentioned, most people look to ADR to avoid prolonged and expensive civil or federal court cases. Legal cases are also a matter of public record making ADR a much better option for parties that want to keep their disputes private.

ADR is usually only possible if the dispute has not hardened the position of one or both of the parties. Otherwise, if communication has broken down completely, litigation may be the only other option.

When Shouldn’t Disputing Parties Seek ADR?

Sometimes communication between disputing parties collapses to such an extent that it is impossible to get individuals or representatives into a room. At this point, it’s time to turn to the courts as only a judge and the legal system can usually resolve the problem.

Additionally, ADR shouldn’t be used if there is a clear power imbalance between both of the interested parties. This might occur if there is a contractual disagreement between a single-owner LLC and a larger corporation.

Finally, ADR cannot be considered if a criminal offense has been committed or a need for legal precedent must be set. For example, if an NDA has been violated by one of the parties or intellectual property from a patent or copyright has been contravened, then only a civil, state, or federal court case will resolve the issue.

ADR can help people and companies tackle serious disputes without bringing lawyers and court officials into the picture. It takes many different forms and gives both sides a chance to make their case, get heard, and get clear clarification on the issues they are facing.

Read more: (American Arbitration Association)