Alternative Dispute Resolution has several definitions. According to Gramberge (2001:pp. 3-5), it is defined as structured informal negotiation processes with the aid of an independent third party. Grace (2002) further defines it as all forms of conflict resolution apart from litigation; dispute resolution processes that leave the form and settlement. In simple terms as put across by Buchanan (2000: p. 16), it refers to other mechanisms of solving conflicts outside the courts environment.
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Ireland’s Alternative Dispute Resolution approaches have grown immensely over the years. This is partly attributed to the nature of conflicts and conflict resolution mechanisms in that country impacted by political and military dynamics. The 1954 Act stemmed from the 1950 English Arbitration Act. It stipulated that where one of the parties requested the arbitrator to state a case to the high court related to a point of law, the arbitrator would be obliged to do so .In this Act, an arbitrator is not required to give a reasoned award neither is he required to give reasons unless he is required by the parties to do so. The difference between the Irish 1954 Act and that of England occurs in the decision making component of arbitrators whose decisions are not challenged in the Irish courts as contracting parties chose to go for arbitration on the first place.
The 1980 Act ‘s provisions are that; court proceedings are mandatory where an arbitration agreement is in force hence amending the 1954 Act which left it to the discretion of courts, it legalizes the provisions of the 1958 New York Convention and the 1965 Washington Convention.
The 1998 Act adopts the UNCITRAL Model Law which focuses on international commercial arbitration. This Act adopts the entire Model law with minor identifiable amendments clearly stipulated. The principal amendments are on the arbitral tribunal powers which are extended to award interests on sums before and after the date of award and, the immunity of an arbitrator from liability in discharging his function. Ireland despite being new to international arbitration, it is strategically placed geographically and economically as well as legally in attracting international arbitration dealings. This is backed by the recently established International Arbitration Centre in Dublin.
As a country, Ireland took a significant step in May 1998 to attract international commercial arbitration with the enforcement of the Arbitration International Act of 1998.Prior to the inception of the International arbitration Act, Ireland’s arbitration system was governed by the 1954- 1980 Arbitration Acts which were similar to the English Legislation before the 1996 Arbitration Act in its jurisdiction (Bloomfield, 1998: pp.79-85).
Despite these Acts serving adequately domestic arbitration, they were largely inappropriate for international commercial arbitration as they did not take into account the vastly growing vibrant economy of Ireland especially in financial services as well as computers. Ireland is also located in Europe and is well known for international neutrality thus not affected by the stigma of colonial powers. With these, coupled with a favorable judicial system, a superior network of contemporary arbitration laws and conventions, and a strong presence of major arbitration institutions, Ireland is destined to become a unique venue for international arbitration (Bloomfield, 1998: p.82).
The advantages and disadvantages of Litigation in Resolving Commercial Disputes
Litigation refers to filing a lawsuit which is a civil action brought to a court of law where the plaintiff seeks equal remedy for actions committed by the defendant. Judgment may be passed where the plaintiff proves beyond reasonable doubt that the defendant committed the offence. As Krisberg (1999) reiterates, the court orders issued arising from the judgment include; awarding damages, imposing an injunction to prevent or compel an act, or enforce a right. Consequentially, judgment which is declaratory may be issued to prevent future legal disputes. Where contractual dealings are involved, litigation is initiated by a contracting party who alleges that the other party breached the agreement.
Litigation despite providing justice where disputes are concerned still has its demerits which include; it is an expensive undertaking. Before court proceedings take off, several expenses have to be settled such as court fees as well as advocate or lawyer fees. In addition, it is time consuming as dates on appearance have to be set, the defendant has to be served by the plaintiff (Reichert, 2000). Procedural fairness is also lengthy. Individuals involved in the commercial industry consider time a great asset and the loss of it as a result of lengthy judicial proceedings may result in irreversible set backs further influencing the profit margins of institutions and companies.
It is also prone to favoritism in cases where a local party is concerned. Judgment may therefore be skewed. Furthermore, rudimentary procedural systems resulting from incompetence may affect the result of a court case as they may not ensure just results (Burton, 1999).
Another drawback of litigation can be obtained from the nature of jurisdiction of a particular court. If a court lacks jurisdiction over one of the parties, its judgment may be worthless. This may occur in situations where one of the individuals is immune such as diplomatic individuals or the court’s geographic boundary is limited thus a party located in or flees to another country may affect the worthiness of a judgment (Buchanan, 2000).
Privacy and confidentiality are aspects held in high esteem in commercial undertakings. William (1996:p.55) echoes that these aspects provide a remedy of conserving business relationships as network marketing is a common practice in this industry. The effects of publicity of court cases affect the market dynamics of business entities. Litigation to a large extent forsakes the need for privacy and confidentiality which may affect the continuity of certain businesses.
Litigation lacks flexibility in its approach. Flexibility of the time format for example, is less considered. This may be affected by the nature of court working hours. Court proceedings are set within this time frame which may be difficult for parties involved in the cases subjected to the court. Parties have a more active role as they contribute to the opinions of their cases freely where alternative dispute resolution is concerned as opposed to litigation where litigants feel alienated in the participatory process (Bwanika, 2004).
Judges are experienced and skilled in various issues however they may lack decision making expertise in particular subject matters of certain fields. Their decisions may therefore fail to address core issues resulting in lack of satisfaction from the parties involved.
In spite of the above limitations litigation is advantageous in solving commercial disputes, its merits include;
It may provide legal precedence where none existed (Folberg, 1997). Legal precedence helps to ease the workload of future court cases and therefore cuts down on overall expenses involved. It may also yield a more predictable outcome as compared to Alternative Dispute Resolution. Furthermore, it allows for appeal where one is not satisfied with the judgment passed.
Enforceability of the judgment is one attribute of litigation. It provides an opportunity for one to redeem their previous status and therefore faces out unfairness in the sense that one does not continue to gain inappropriately over others. The implementation of the final judgment is taken seriously (Folberg, 1997: p. 28).
It ensures that the due process is adhered to hence providing procedural safeguards such as cross examination. This ensures a fair judgment as it protects individuals from hearsay which may affect the results of the judgment.
Consistency in its application is ensured as decisions are based on principles of the law that have been formerly validated. Precedence is one aspect of these norms and follows consistency on similar cases. This also builds up on the authoritative nature of litigation.
In order to ensure competence which is essential in building the confidence of clients, litigation provides structured public procedures for judges and other court staff to ensure that they are qualified in their relevant fields. This is because they affect the ultimate decisions made (Grace, 2002).
Litigation provides for options ranging from restraining orders, injunction to retributive justice. These options consider situations like patent rights as they protect individual inventions. Such options are necessary and are not available in Alternative Dispute Resolution mechanisms such as mediation (Krisberg, 1999).
Types of Alternative Dispute Resolution mechanisms which may be used by corporations to avoid litigation
Litigation is an option by institutions to address certain conflicts related to corporations. It is however not the only option available for application. Several other mechanisms exist that can be used as alternatives to litigation by corporations.
The first of these to be discussed is mediation. Mediation is a form of Alternative Dispute Resolution that has been in existence for a while (Folberg, 1997: p.50). It is used by one or more than one party to reach an agreement. The parties have an opportunity to determine conditions of settlements reached. Mediation takes into consideration multiparty involvement in order to arrive at concrete solutions to their disputes. A mediator chosen by both parties utilizes appropriate skills to initiate dialogue between and among disputants. He or she is considered neutral. A third party is included to help settle a contract or agreement. It is a less costly and less expensive undertaking as compared to litigation. It ensures confidentiality as it is private while litigation is mostly public. It therefore preserves ongoing relationships. It is also more flexible in participation and the resolution made is satisfactory to both parties.
As compared to negotiation, mediation is a mutual endeavor and brings out the picture that the parties involved are ready to shift from their previously withheld positions (Burton, 1999).
Arbitration is another alternative in resolving disputes out of court. In this settlement, an arbitrator or arbitral tribunal reviews the case at hand and makes decisions which are bound by the parties involved (Grace, 2002). It is similar to litigation where the decision is made by a third party. Arbitration may be legally binding or non-binding. In non binding, the scenario is similar to mediation. However, the arbitrator’s function is to only make a decision and does not take part in helping parties find a common ground. It takes into consideration the importance of expertise and therefore competent personnel are put on board to make a final decision. Just like mediation, it is faster, cheaper, confidential and less costly. They are also flexible thus easier to enforce in other countries as their jurisdiction is less limited. It also provides room for binding decisions hence relinquishes the need to access courts.
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Its demerits are that there is no right of appeal thus erroneous decisions cannot be easily overturned. The awards of arbitration are not directly enforceable hence the need to seek judicial remedies for enforcement to take place which is known as an ‘action to confirm an award’ that leads to extra expenses hence negating the perceived notion that arbitration is less costly
From Bloomfield’s (1998) perspective, another mechanism employed is negotiation which mainly concentrates on the application of dialogue to resolve disputes. Professional negotiators are involved in the negotiating process. Trained negotiators utilize a variety of tactics to argue out their case. This can be compared with the advocate’s role in a court of law.
Expert Determination is also a form of Alternative Dispute Resolution. It differs from arbitration in the sense that statutory frameworks governing Expert Determination are not available. The parties concur with, or the contract may provide for, the appointment of an independent expert to give a verdict within a finite period of time on the issues in dispute. The expert’s decision is final as there are limited grounds for appeal in a judicial court. Therefore, once parties opt for Expert Determination as an option to resolve disputes, they have to be satisfied with the expert’s decision (Gelinas, 2000).
In this case of Health Service Executive -v- Eamon Keogh trading as Keogh Software, two interlocutory applications were brought before the court, one by the Plaintiff and the other by the Defendant. The Defendant had a contract with the Plaintiff to maintain software and systems supplied by the Defendant to the Plaintiff, which were in use in about 180 sites within the country for radiology, environment health, accident and emergency, hospital billing parliamentary affairs.
An expert determination clause existed in the contract between the Plaintiff and the Defendant which provided that an Independent Expert’s decision would be ultimate and binding on the parties to the agreement and would not be subjected to appeal in a court except where error is manifested. Both parties were to mutually agree to appoint an expert or where this failed to take place, the president of the Law Society would step in to carry out an appointment. The court utilized judicial precedence principle from a previous similar case of re Via Networks (Ireland) Limited  21/R/47 where the court held that once parties opt for an arbitration agreement, the right to seek further resolution from a court other than an arbitral tribunal is waived. The presence of an expert determination clause also nullifies the involvement of judicial courts.
The role of commercial courts as well as their promotion of the use of Alternative Dispute Resolution Mechanisms.
In essence, both courts and Alternative Dispute Resolution mechanisms cannot exist singly in their approaches for favorable solutions to be obtained. The demerits of one are the strengths of the other. Governments have a duty to promote trade and investment, to tackle setbacks – real or perceived – which limit businesses and citizen’s opportunities. One of the main hindrances to trade and investment is lack of mechanisms to deal promptly and affordably with commercial disputes. This is backed up by William (1996). Disputes are common in trade and business dealings. Companies will be reluctant to engage in commercial relations in a foreign nation if they are not convinced that there is a suitable way of solving disputes.
Generally, Alternative Dispute Resolution mechanisms have three main advantages; they are speedy and less costly, they offer creative solutions as are not entirely bound by judicial preferences and are less confrontational thus build on long-term working solutions. Judicial proceedings on the other hand provide binding solutions and institute the application of precedence, an essential component in addressing similar disputes (Buchanan, 2000).
In order to merge the two, legal frameworks need to be developed for Alternative Dispute Resolution mechanisms. The creation of soft law by the European Union and United Nations Commission on International Trade Law is a stepping stone towards achieving this goal. The Commission consulted largely on this issue before adopting a proposal for a directive on certain aspects of mediation in civil and commercial related matters (Gramberge, 2001). Following the consultation, it was resolved that legislation should be restricted to ensuring a favorable relationship between mediation and judicial proceedings. On the other hand, a self regulatory instrument, the European code for mediators, was initiated as the best approach to set standards for the mediation process and the appointment and accreditation of mediators.
In Thailand, conciliation (mediation) is practiced by courts of justice successfully. This departs the country from its traditional passive role of a judge in an adversary system to that of a more active judge in the inquisitorial system. The end result of both litigation and ADRs is to ensure an effective enforcement of the judgment or ward.
Court -annexed arbitration seeks to provide solutions where parties fail to include an arbitration clause in the contract resulting further in a civil action. This is seen as a means of involving a judge in case management (Burton, 1999).
The utilization of both litigation and Alternative Dispute Resolution approaches ensures the liberal use of rules of courts to facilitate efficiency; exclusive jurisdiction in the enforcement of arbitral awards in international matters and appointment of expert witnesses (Krisberg, 1999).
The implementation of integrated systems of ADRs and judicial proceedings should be geared towards supplementing rather than supplanting. This involves mainstreaming both institutions and organizations to foresee adequate provision of services (Reichert, 2000).
Alternative Dispute Resolution mechanisms should be institutionalized in constitutions and laws of countries for easy enforcement. This ensures that proper machineries are put in place for the application of these mechanisms.
The commercial industry is one sector that is highly influenced by globalization mostly information and communication technology. It is therefore better placed to provide appropriate techniques in conflict resolution that embrace the use of technology to fasten the process hence reduce on time spent. Bureaucracies involved in conflict resolution can also be adequately tackled with the implementation of these techniques (Grace, 2002).
On-line settlement applies modern technologies to the habitual form of arbitration, which requires both parties concerned and the mediator to be in attendance at the same time. Where parties concerned are all present, on-line arbitration may be referred to as synchronized and asynchronous with the absence of one or more parties. In synchronized, the parties and the arbitrator must be connected at the same time through h a video-conference link, while asynchronous utilizes panel discussions and electronic mail as options for communication. The advantages of on-line arbitration are that it is not mandatory for all parties to be present at the same time, hence saving time and travel costs; messages in asynchronous arbitration can be read or sent as soon as possible.
Alternative Dispute Resolution mechanisms lack full autonomy and are partly influenced by judicial proceedings where legally binding agreements are concerned. This autonomy should be adequately addressed to promote their application as well as gain confidence among those who choose to adapt it.
Most projects based on the use of both judicial and Alternative Dispute Resolution mechanisms are currently of pilot nature. These should be encouraged in more countries and integrated with customary judiciary systems in nations whose customary laws that promote Alternative Dispute Resolutions are already inculcated in their judicial systems (Folberg, 1997).
One major setback crippling the fundamental initialization of these mechanisms is lack of competent personnel. Focus should therefore be equally placed on training personnel to be well versed in these systems hence ease the workload and ensure adequate service delivery.
In conclusion, Alternative Dispute Resolution and litigation are fundamental conflict resolution mechanisms in commercial law. For best results to be achieved, they cannot exist in isolation but require mutual interdependence in vast scenarios from developing business constitutions to international marketing. This paper has therefore shed a light on the need to ensure the development of Alternative Dispute Resolution mechanisms and their impact on the sustainability of business entities as well as variations to their applications.
- Bloomfield, D. 1998. Towards Complementarity’s in Conflict Management: resolution and settlement in Northern Ireland.UK.Sage.
- Buchanan, J.2000. Judicial Reforms of the Americas. Canada. FOCAL.
- Burton, S. 1999. Combining Mediation with Arbitration of Global Commercial Disputes. Iowa. University of Iowa.
- Bwanika, C. 2004. The Implementation of Contracts. Uganda Law Reform Commission Conference, Dec 2004.
- Folberg, J.1997. An Intensive Guide to Resolving Disputes without Litigation. Jossey Bass.San-Francisco.
- Gelinas, F. 2000. New Europe in the Global Economy. Journal of International Arbitration.17:28-32.
- Grace, T. 2002. Conflict Resolution in the Promotion of Economic Development, Journal of Peace Research,322:151-164.
- Gramberge, B. 2001. Exploring avenues for the Expansion of Alternative Dispute Resolution. Melbourne. Harcourt Brace.
- Krisberg, L. 1999. The Growth of the Conflict Resolution Field. Beverly Hills.Sage.
- Reichert, K. 2000.Ireland’s New International Commercial Arbitration Law, American Review of International Arbitration, 379.
- William, F. 1996. Dispute Resolution Mechanisms in International Contracts: the Sale of Goods. Washington DC. Catholic University of America.
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