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Dispute resolution is the process of resolving a dispute or conflict between different parties. Crucially, dispute resolution can be a way of solving a conflict without having to go to court.

As a business owner, it's important to be familiar with dispute resolution methods to effectively handle any conflicts that may occur within your business or with external parties.

Dispute Resolution or alternative dispute resolution, appropriate dispute resolution or ADR refer to several processes used to resolve a dispute between parties. ADR is usually an alternative to litigation and can be used to resolve any type of dispute including family, neighborhood, employment, business, housing, personal injury, securities, consumer, and environmental dispute. Parties can on their own choose to resolve their dispute via ADR, or dispute resolution might be prescribed by the court in early stages of litigation to give parties a chance to resolve their dispute before going to trial.

There are many types of dispute resolution processes, but arbitration; mediation; and negotiation are the three most common types of alternative dispute resolution.

  • Negotiation is the least formal type of ADR. The goal of negotiation is to help parties to come to a consensus on their own, parties can involve a neutral third party into their negotiation to help facilitate an agreement. The outcome of the negotiation is usually not binding; however, parties can initiate litigation to resolve their dispute and get an enforceable judgment.
  • Mediation is the process where a neutral third party (usually a professional mediator) helps disputants to resolve their dispute. Mediation is usually more formal than negotiation but less formal than arbitration. The outcome of mediation is not binding, however, after the end of the mediation parties can still initiate litigation to resolve their dispute and get an enforceable judgment.
  • Arbitration is one of the most formal types of ADR, even though it is less formal than a traditional trial, arbitration is usually performed by professional arbitrators (one or a panel) acting as ‘judges’ and parties have to follow the rules predetermined in their arbitration agreement. The outcome of the arbitration is usually binding, unless the court finds violation of the arbitration agreement.

Dispute resolution has several advantages:

  • It is usually cheaper and faster than litigation;
  • ADR is less formal and has more flexible rules than litigation (ex. Rules of Evidence are more relaxed in ADR);
  • In certain cases, parties have greater participation in reaching a solution, as well as more control over the outcome of the dispute;
  • Some types of ADR (like mediation and negotiation) preserve an opportunity for the parties to proceed with litigation if they are not able to resolve their dispute via dispute resolution.


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