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Alternative dispute resolution (ADR) and arbitration are non-litigation solutions for civil disputes. ADR is a broad field of options, while arbitration is a specific type of ADR resulting in a binding legal agreement. ADR methods include negotiation and mediation, while arbitration involves a neutral third party or panel of legal professionals making a final decision. ADR is often advised before resorting to a court case, and some contracts include an agreement to resolve legal issues through ADR.
Alternative dispute resolution and arbitration are often related terms, if not always well defined. Both try to find solutions to legal issues without resorting to traditional litigation. Alternative dispute resolution, also known as ADR, is a term used to describe a broad field of options for non-litigation solutions, while arbitration is a specific type of ADR.
Both forms of dispute resolution tend to focus on legal issues related to civil disputes, as most criminal cases are necessarily heard in court. Civil law cases are costly in a variety of ways, including financial, emotional, and time-consuming. In many cases, attorneys and legal experts advise clients in nearly all areas of law to seek ADR before resorting to a court case. In some cases, especially in contract law matters, the agreement to resolve any legal issues through alternative dispute resolution is often built right into the initial contract.
The field of ADR encompasses several methods for processing legal differences. Some, like negotiation or mediation, are not legally binding agreements. While using these methods can sometimes help lead to a peaceful resolution, it can also result in a decision to move to a formal court resolution. This is an area where the more general field and arbitration diverge; arbitration results in a binding legal agreement that is usually not subject to appeal.
Like most forms of ADR, arbitration relies on the primary parties involved to conduct themselves reasonably and resolve issues with some assistance. The parties to the arbitration may use attorneys, but often choose to simply handle the matter themselves. The decision in an arbitration is made by a neutral third party or panel of three, all legal professionals. In the arbitration panel, each party chooses one arbitrator, while the third is either a joint decision of both parties or is chosen by the two selected arbitrators.
Another important distinction between alternative dispute resolution and arbitration is the scope of responsibility attributed to arbitrators. In other forms of ADR, such as mediation, a neutral third party representative may be used to finalize the details of a legal settlement, but does not necessarily have the power to make final, binding decisions about a case. Other forms of ADR do not require a named third party at all, instead relying on the principal parties or their attorneys to reach a fair settlement.
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