In this post I will be exploring, yet another interesting aspect of international commercial law; Alternative Dispute Resolution (ADR), the practice of dispute resolution using private mediation rather than a court of law.
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So what is ADR?
ADR, also called arbitration or mediation, is as the names suggest an alternative method of resolving disputes between parties without the use of judicial process (i.e. going to a court of law)1. ADR usually utilises an impartial person known as the mediator or arbitrator to render a decision on the dispute.
Types of ADR2
I. Negotiation, where parties interact with each other in order to resolve their dispute with the help of a mediator. In occasion the negotiation process is part of a larger ADR scheme; the first stage where the parties agree on various elements of the scheme as for example the participants and the subject of the dispute.
II. Mediation3, where a mediator (playing the part of an impartial negotiator) tries to achieve a resolution of the dispute in a private and flexible informal environment.
III. Expert determination, where a field expert (as the name suggests) is called to determine a dispute with technical issues. The outcome can be binding based on contract law or act as a formal recommendation.
IV. Arbitration, the most utilised and used form of commercial ADR where the parties voluntarily agree to submit their dispute to an arbitrator or several (called an arbitration tribunal), where a decision is binding and the parties are usually obliged to agree not to pursue the said dispute into a court of law.
The problematic environment of International private law
So why is ADR such a popular tool in settling international disputes, even if it is essentially outside the boundaries of the established judicial system (although it is noteworthy that, ADR employs contract law, as a way to bind the parties and enforce the decision).
The answer is found within the nature of international private law...or as its called by scholars and lawyers alike, 'laws of conflict'4. The name tells us a story it self; there is no international court for civil action, there are no treaties establishing a unified system of international private law, to judge and enforce decisions. Essentially international private law is nothing more than a mechanism of finding which jurisdiction has the right to judge a civil case. Also in cases of domestic courts decisions, examining the validity of judgements by other domestic legal systems.
It becomes obvious that ADR provides a better alternative in many cases of international commercial disputes, in comparison to established judicial systems. Even before the case an international private law case is judged, there is a need to establish which court is has the jurisdiction to precede over, sometimes with both systems claiming jurisdiction over the dispute. In the commercial world where money and time is of the essence, such procedures are simply anti-economical, usually causing damage to both parties involved in the dispute.
So there you have it; ADR is a flexible and economical alternative to the rigid and archaic legal systems, that are not fit to serve the needs of the modern international commercial market5. Also on a personal note, I cant help but notice the similarities between ADR and the medieval practices of Lex Mercatoria that covered in an older post.
ps. I know its a big post...
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| King Solomon, supposedly judged each case that was brought before him only by the merits and the facts of the case, employing many of the principles that modern arbitrators use. |
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Further reading
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