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What is Alternative Dispute Resolution (ADR)?

As you know, litigating a matter is costly, time-consuming, and extremely stressful. Worse yet, the outcome may not be to your liking. As a result, alternative ways of resolving disputes outside of court were developed and have even become codified in their own way. These methods are known as alternative dispute resolution (ADR), which include arbitration, mediation, and negotiation. In this article, we’ll focus on arbitration.

How does Arbitration Work?

Similar to a regular court proceeding, arbitration requires you to submit your issue to a single decision maker (an arbiter or arbitrator) or a panel of arbitrators, whose decision is final and legally binding. In arbitration, the rules of evidence and procedure, which governs normal court proceedings, are relaxed to nonexistent. You have a better chance of “telling your story” and interacting one-on-one with the arbitrator. In addition, you have more control over who the arbitrator may be. Whereas, in a legal proceeding, you have no control over who the judge would be. Also, if you’re worried about publicity, arbitration may be more private.

You may still use legal counsel in an arbitration proceeding or you can represent yourself, but your costs are reduced by avoiding the typical court procedures. Arbitration has become a recognized field in itself, with professional standards and training for arbitrators. They typically have a legal background plus specialized training in arbitration. The American Arbitration Association is the largest professional body and their website provides a wealth of resources.

Plan Ahead

Still, you may wonder, no one knows when conflict will crop up. How can you plan ahead? A very standard business practice these days is to sign an Arbitration Agreement in advance. In most cases, conflict usually arises with 1) your business partner(s) and 2) the parties you do business with or get business from. With that in mind, you should plan accordingly.

Though there is typically an arbitration clause in most contracts these days, an Arbitration Agreement goes beyond simply agreeing to arbitration. It can designate that the dispute will be governed by certain arbitration rules (e.g., the Commercial Arbitration Rules of the American Arbitration Association), and specify which professional group of arbitrators will be used.

Both parties benefit from signing an Arbitration Agreement. By communicating clear expectations and boundaries in your business interactions, you can create harmonious working relationships from the beginning. If you want to avoid the cost, stress, and hassle of legal proceedings, use our Arbitration Agreement that you can customize for your personal situation. You can take advantage of this resource right now.

This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.


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