Alternative Dispute Resolution Chapter 3 I Negotiation and Mediation a Negotiation the parties attempt to settle their dispute informally with or without attorneys They try to reach a resolution without the involvement of a third party acting as mediator i Preparation for Negotiation ii Assisted Negotiation involves a third party who helps the disputing parties b Mediation the parties attempt to come to an agreement with the assistance of a neutral third party called a mediator The mediator does not decide the matter he or she merely facilitates a resolution The result may be binding i Advantages non adversarial ii Disadvantages fees and the absence of deadlines and sanctions II Arbitration a Arbitration a more formal method of ADR in which a neutral third party of a panel of experts hears a dispute and renders a decision which can be legally binding i Almost any commercial matter can be submitted to arbitration often an arbitration clause is included in a contract ii Federal and many state governments favor arbitration over litigation b The Federal Arbitration Act requires courts to defer to a voluntary arbitration agreement in a case governed by federal law FAA doesn t set out arbitration procedures but does provide for court orders to compel arbitration under an arbitration agreement and to conform an arbitration award c State Arbitration Statues virtually all states follow the federal approach d The Arbitration Process includes submission the hearing and an award i Submission identifies the parties the nature of the dispute the amount in controversy and the place for arbitration ii Hearing what power the arbitrator has at the hearing is dictated by the parties who decide the rules for the proceeding or agree to let the arbitrator set the rules generally the rules are less formal than judicial rules though the format may be similar to a trial iii Award usually an arbitrator must render an award within 30 days of the hearing an award must usually be in writing but no statement of conclusions or reasoning is required e Enforcement of Agreements to Submit to Arbitration as long as an agreement to submit to arbitration does not compel an illegal act or contravene public policy a court will enforce it i The Issue of Arbitrability at the request of a party to compel arbitration a court may decide whether an arbitration agreement covers a particular dispute ii Compulsory Arbitration Agreements generally mandatory arbitration clauses in employment contracts are enforceable arbitration clauses in consumer contracts will NOT be enforced if their enforcement would be manifestly unfair or oppressive f Setting Aside an Award losing party may appeal an arbitrator s award to a court or winning party may seek a court order compelling the other party to comply with the award i Fact Findings and Legal Conclusions the right to appeal an arbitrator s award is limited as an arbitrator s award is usually final A court will rarely review the merits of the arbitrated dispute but the arbitrator s decision may be set aside for misconduct fraud corruption or abuse of power ii Public Policy and Legality no award will be enforced if compliance would result in the commission of a crime or conflict with or undermine public policy iii Defects in the Arbitration Process FAA provides 4 grounds on which awards may be set aside 1 Award was the result of corruption fraud or other undue means 2 Arbitrator exhibited bias or corruption 3 Arbitrator refused to postpone the hearing despite sufficient cause refused to hear pertinent evidence or otherwise acted to substantially prejudice the rights of one of the parties 4 The arbitrator exceeded his or her powers or failed to use them to make a mutual final and definite award iv Waiver a party who fails to make a timely objection to an award forfeits the right to challenge it v Conflicts of Law where there is a conflict federal law prevails vi Choice of Law parties may choose the law of a specific state to govern their arbitration agreement g Disadvantages of Arbitration include i Unpredictability of results ii Lack of required written opinions iii Difficulty of appeal iv Possible unfairness of procedural rules v Expense III Integration of ADR and Formal Court Procedures a Court Mandated ADR courts are increasingly requiring that parties attempt to settle through ADR before going to trial b Court Annexed Arbitration i A Fundamental Difference Mandatory court annexed arbitration is usually not binding Due process requires that any party can reject an award and go to trial ii The Role of the Arbitrator essentially the same in both private and public arbitration iii Which Rules Apply most states impose the same rules of evidence as on a trial iv Waiver failure to appear or participate constitutes a waiver of the right to reject an award c Court Related Mediation judges often order mediation before a dispute may proceed to trial d Summary Jury Trials a mock trial that occurs in a courtroom before a judge and jury rendering an advisory verdict IV ADR Forums and Services a NonProfit Organizations the major source of private arbitration services is the American Arbitration Association b For Profit Organizations