Chapter Four: Dispute Resolution
Mediator
A person who helps the parties resolve their dispute.
Arbitrator
A person who listens to the parties to a dispute and makes a ruling that is usually binding on the parties.
Negotiation
A process of deliberation and discussion intended to reach a mutually acceptable resolution to a dispute.
Alternative dispute resolution (ADR)
A range of options for resolving disputes as an alternative to litigation
Dispute Resolution
A risk management plan that is well developed and carefully implemented can minimize disputes that arise and provide guidance. Legal disputes should be approached with a view to achieving an acceptable resolution, rather than winning at all costs. There are a variety of techniques for resolving disputes that avoid litigation altogether or minimize damage to the businesses and commercial relationships. If the parties resort to litigation, they are involving themselves in a lengthy, costly, public, and risky process with strict procedural rules. Litigation has four stages: pleadings, discovery, trial, and decision. The winner must collect the amount awarded by the court. The judgment usually does not include full recovery of the legal expenses incurred to win the lawsuit.
What are the advantages and disadvantages of ADR?
Advantages of ADR • The parties control the process, the timing, and the selection of the arbitrator. • Rules are not as formal as in litigation. • The process is usually faster and cheaper than litigation. • The process and the outcome are confidential. • The parties can use expert assistance. Disadvantages of ADR • Sometimes there is no resolution to the dispute and the parties will have wasted time and money on arbitration and still need to litigate. • Since the outcome of ADR is private, the results are not available to the business community as guidance on how future issues will be resolved. The process is not as open or accountable as litigation.
Explain the concept of binding arbitration.
Arbitrators make definite rulings after considering the submissions from both parties. The ruling is in the form of a decision, which is usually final, or binding, for the parties involved in the dispute. Binding means the decision is enforceable in the courts. The parties decide beforehand whether or not the arbitration decision will be binding or whether it can be appealed.
The Litigation Process
Arises when one party brings a legal action against another Should be a last resort when other methods have failed PLAINTIFF - The party that initiates a lawsuit against another party DEFENDANT - The party being sued
Binding
Final and enforceable in the courts.
Stages of a Lawsuit
Four stages in most lawsuits: Pleadings - Each side files formal documents setting out their claims and defences. Discovery - Each side shares its evidence and cross-examines the other to gather evidence. Trial and decision - "Costs" will normally be paid for by the loser. Enforcement - Winner can collect judgment by using seizure and garnishment procedures.
Are There Any Situations When Negotiation Is Not Advisable?
If the loss is one for which there is insurance, the insurer should carry out the negotiations or insurance coverage can be jeopardized.
Private (Civil) Litigation
Must be brought by the person claiming the loss at their own cost Each province has its own rules for civil litigation Some provinces have "small claims courts" that hear lawsuits involving smaller claims. Usually a lawyer is not required and the process is quicker and less expensive.
How does each dispute resolution process end?
Negotiation ends when the parties reach a mutually satisfactory agreement, they agree to pursue another dispute resolution mechanism to resolve the disagreement, or one party opts for litigation. Mediation ends either with a negotiated settlement (with the help of the mediator) or a failure to agree, at which point parties can pursue other dispute resolution options or try another mediation session. Arbitration typically ends with a binding decision, unless the parties previously agreed to allow an appeal of the decision. Litigation ends with a trial decision, subject to the right to appeal any error in the law applied to the decision, or it can end because the parties voluntarily negotiate an settlement agreement (either on their own or with the help of a mediator) before the litigation is concluded.
Should a business avoid legal conflict at all costs?
No, a business should not avoid legal conflict at all costs, but it should try to manage conflicts with the goals of (a) avoiding time-consuming and expensive litigation and (b) preserving desirable long-term commercial relationships.
Legal Costs
Normally the court will order the loser to pay the winner's costs. Costs do no refer to actual costs and are usually based on a schedule and do not cover all the actual costs CONTINGENCY FEE - A fee based on a percentage of the judgment awarded and paid by the client to the lawyer only if the action is successful.
Court Terms
Plaintiff—page 82 The party that initiates a lawsuit against another party. Defendant—page 82 The party being sued. Class action—page 83 A lawsuit launched by one person who represents a class of persons having similar claims against the same defendant. Pleadings—page 85 The formal documents concerning the basis for a lawsuit. Claim—page 85 The formal document that initiates litigation by setting out the plaintiff's allegations against the defendant. Defence—page 85 The defendant's formal response to the plaintiff's allegations. Counterclaim—page 85 A claim by the defendant against the plaintiff. Discovery—page 85 The process of disclosing evidence to support the claims in a lawsuit. Trial—page 86 A formal hearing before a judge that results in a binding decision. Burden of proof—page 86 The obligation of the plaintiff to prove its case. Evidence—page 86 Proof presented in court to support a claim. Decision—page 87 The judgment of the court that specifies which party is successful and why. Costs—page 87 Legal expenses that a judge orders the loser to pay the winner. Judgment debtor—page 89 The party ordered by the court to pay a specified amount to the winner of a lawsuit. Appeal—page 89 The process of arguing to a higher court that a court decision is wrong. Appellant—page 89 The party who begins or files an appeal. Respondent—page 89 The party against whom an appeal is filed. Contingency fee—page 90 A fee based on a percentage of the judgment awarded and paid by the client to the lawyer only if the action is successful.
Compare and contrast mediation and arbitration.
The most common forms of ADR are mediation and arbitration. Both use a person who is independent of the parties and who has expertise in resolving disputes. A mediator helps the parties reach their own compromise by bringing the parties together to clarify the issues and assisting them in understanding the other party's position. A mediator does not judge the parties or decide the outcome. An arbitrator hears from both parties and makes a decision that is usually binding on them, which means that the decision is final and enforceable in the courts. Unless it has been agreed to before the arbitration, the decision generally cannot be appealed.
Limitation Periods
The time period specified by legislation for commencing legal action Vary widely, depending on the nature of the lawsuit and the province The right to sue is lost after the applicable period of time ends.
Limitation period
The time period specified by legislation for commencing legal action.
Who can act as an ADR practitioner?
There are no mandatory qualifications for ADR practitioners, and many training programs are available. Mediators and arbitrators are often lawyers or retired judges, but anyone is eligible to become a practitioner. Success depends on referrals from satisfied clients and a reputation for achieving results.
Considerations Before You Sue
What further steps are available, and how long will they take? Can the business devote the resources necessary to proceed with the dispute, in terms of both the commitment and the time of business personnel? Will a lengthy dispute affect the public profile and reputation of the business? Is the relationship with the other side valuable? Will that relationship be harmed, whatever the outcome? What is the likely cost in terms of legal fees and company time? Are there worthwhile principles at stake that go beyond the particular dispute? If the dispute goes to court, what are the chances of winning? If the court decides in favour of the business, does the other side have the assets to pay the claim?