Chapter 3 alternative and online dispute resolution
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Chapter 3 Alternative and Online Dispute Resolution. §1: Search for Alternatives to Litigation. Trials are a means of dispute resolution that are very expensive and sometimes take many months to resolve.

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Chapter 3 alternative and online dispute resolution

Chapter 3Alternative and OnlineDispute Resolution

1 search for alternatives to litigation
§1: Search for Alternatives to Litigation

  • Trials are a means of dispute resolution that are very expensive and sometimes take many months to resolve.

  • There are “alternative dispute resolution” (ADR) methods to resolve disputes that are inexpensive, relatively quick and leave more control with the parties involved.


  • ADR describes any procedure or device for resolving disputes other than the traditional judicial process.

  • Unless court-ordered, there is no record which is an important factor in commercial litigation due to trade secrets.

  • Most common: negotiation, mediation, arbitration.

2 negotiation and mediation
§2: Negotiation and Mediation

  • Less than 10% of cases reach trial.

  • Negotiation is informal discussion of the parties, sometimes without attorneys, where differences are aired with the goal of coming to a “meeting of the minds” in resolving the case.

  • Successful negotiation involves thorough preparation, from a position of strength.

Assisted negotiation
Assisted Negotiation

  • Mini-Trial: Attorneys for each side informally present their case before a mutually agreed-upon neutral 3rd party (e.g., a retired judge) who renders a non-binding “verdict.” This facilitates further discussion and settlement.

  • Expert evaluations.

  • Conciliation: 3rd party assists in reconciling differences.


  • Involves a neutral 3rd party (mediator).

  • Mediator talks face-to-face with parties (who typically are in different adjoining rooms) to determine “common ground.”

    • Advantages: few rules, customize process, parties control results (win-win).

    • Disadvantages: mediator fees, no sanctions or deadlines.

3 arbitration
§ 3: Arbitration

  • Many labor contracts have binding arbitration clauses.

  • Settling of a dispute by a neutral 3rd party (arbitrator) who renders a legally-binding decision; usually an expert or well-respected government official.

Federal arbitration act
Federal Arbitration Act

  • Provides for means of enforcing the arbitration procedures established by the parties.

  • Section 4: federal court can enforce arbitration clause.

  • Section 9: arbitrator’s decision confirmed in federal court.

  • Case 3.1:Hooters of America, Inc. v. Phillips (1999).

Arbitration process
Arbitration Process

  • Case begins with a submission to an arbitrator. Next comes the hearing where parties present evidence and arguments. Finally, the arbitrator renders an award.

  • Courts are not involved in arbitration unless an arbitration clause in a contract needs enforcement.

Enforcement of agreements to submit to arbitration
Enforcement of Agreements to Submit to Arbitration

  • Arbitrability: whether the issue must be resolved with arbitration.

  • Mandatory arbitration in employment.

Setting aside an arbitration award
Setting Aside an Arbitration Award

  • Loosing party may appeal the decision to a court.

  • Winning party may ask a court to enforce the award.

  • Court’s role is limited to determining whether a valid award exists

  • Facts and legal conclusions are usually final.

  • Case 3.2:Orlando v. Interstate Container Corp. (1996).

Setting aside an award
Setting Aside an Award

  • 1. Award result of fraud or corruption.

  • 2. Arbitrator bias.

  • 3. Arbitrator abuse of discretion.

  • 4. Arbitrator exceeded powers.

  • Case 3.3:Major League Baseball Players Association v. Garvey (2001).

Arbitration disadvantages
Arbitration Disadvantages

  • Results may be unpredictable because arbitrators do not have to follow precedent or rules of procedure or evidence.

  • Arbitrators do not have to issue written opinions.

  • Generally, no discovery available.

4 integration of adr and formal court procedures
§ 4: Integration of ADR and Formal Court Procedures

  • Many states require some ADR before trial.

  • Court-annexed Arbitration.

    • Finality of awards.

    • Role of the Arbitrator.

    • Waiver and Choice of Rules.

  • Court-Related Mediation.

  • Summary Jury Trials.

  • Case 3.4:In re Atlantic Pipe Corp. (2002).

5 adr forums and services
§ 5: ADR Forums and Services

  • Non-profit organizations:

    • American Arbitration Association.

    • Better Business Bureau.

  • For Profit:

    • enabled).

6 online dispute resolution
§ 6: Online Dispute Resolution

  • Also called ODR.

  • Uses the Internet to resolve disputes.

  • Still in its infancy but is gaining momentum.

  • See, e.g., .

  • Arbitration Programs.

    • ICANN to resolved domain name disputes.

7 international dispute resolution
§ 7: International Dispute Resolution

  • Forum Selection and Choice-of-Law clauses in contracts govern the transaction.

  • Arbitration clauses are generally incorporated into international contracts.

Law on the web
Law on the Web

  • American Arbitration Association.

  • ODR:,,

  • Legal Research Exercises on the Web.