Chapter 4 Alternative Dispute Resolution · LO 4-1 Compare the primary forms of alternative dispute resolution o Negotiation- (1) A bargaining process in which disputing parties interact informally to attempt to resolve their dispute. (2) The transfer of the rights to a negotiable instrument from one party to another o A party can enter negotiations with one of two approaches: Adversarial or problem solving o Adversarial negotiations- Negotiation in which each party seeks to maximize its own gain o Problem solving negotiations- Negotiation in which the parties seek to achieve joint gain o Mediation- A type of intensive negotiation in which disputing parties select a neutral party to help facilitate communication and suggest ways for the parties to solve their dispute o A dispute typically arises after various problematic incidents; mediation permits the parties to address the various incidents, as well as the underlying circumstances leading to those incidents. After concerns have been highlighted, the mediator emphasizes areas of agreement and reframes the disputed points o When selecting a mediator, parties should be aware that mediators come from a variety of backgrounds; experts in the area of the dispute, lawyers, judges, psychologists and sociologists o Arbitration- A type of alternative dispute resolution wherein disputes are submitted for resolution to private nonofficial persons selected in a manner provided by law or the agreement of the parties. o When a party contacts one of the agencies, the party receives a list of potential arbitrators. This list includes biographical information about the potential arbitrators, and both parties examine the list and agree on an arbitrator. o The general qualifications for being an arbitrator are honesty, impartiality, and subject-matter competence. o The Federal Arbitration Act (FAA) the federal law enacted to encourage the use of arbitration, explicitly 4 grounds on which an arbitrator's award may be set aside: The award was the result of corruption, fraud, or other undue means · The arbitrator displayed bias or corruption " The arbitrator refused to postpone the hearing despite sufficient cause; refused to hear relevant evidence, or otherwise misbehaved to prejudice the rights of one of the parties " The arbitrator's reward exceeded the authority of the arbitrator authority or failed to use that authority to make a mutual, final, and definite award o Advantages · Arbitration is more efficient and less expensive than litigation
· Parties have more control over the process of dispute resolution through arbitration · The parties can choose someone to serve as the arbitrator who has expertise in the specific subject matter · The arbitrator has greater flexibility in decision making than a judge has. Unlike judges, arbitrators generally don't have to offer reasons for their decision o Disadvantages " Arbitration panels are being used more frequently, resulting in a loss of some of the prior advantages or arbitration " Because appealing an arbitration award is so difficult, some scholars argue that injustice is more likely to occur. · Some individuals are concerned that by agreeing to give up one's right to