Alternative dispute resolution refers to any means of resolving disputes out of court. It typically includes arbitration, mediation, early neutral evaluation and conciliation. As courts crowd with cases and litigation costs rise, more states have begun experimenting with alternative dispute resolution.
The two most common forms of alternative dispute resolution are arbitration and mediation. Arbitration is a version of a trial involving no discovery and simplified rules of evidence. Either both sides agree on an arbitrator or each side selects an arbitrator and the two arbitrators elect the third to comprise a panel. Arbitration hearings usually last only a few hours, and the opinions are not public record. Arbitration has long been used in labor, construction and securities regulation but is now gaining popularity in other business disputes.
Title 9 of the U.S. Code establishes federal law supporting arbitration. There are, however, numerous state laws on alternative dispute resolution. Forty-nine states have adopted the 1956 version of the Uniform Arbitration Act as state law. The act was revised in 2000 and subsequently adopted by 12 states. Thus, the arbitration agreement and decision of the arbiter may be enforceable under state and federal law.
Mediation is an even less formal alternative to litigation. Mediators are trained in negotiations and bring opposing parties together to attempt to work out an agreement. Mediation is used for cases as diverse as juvenile felonies and federal government negotiations with Native American tribes. Mediation also has become a method for resolving disputes between investors and stock brokers.
Last Update: Oct. 3, 2008