Ways to settle disputes other than through litigation have increasingly received attention. Federal and State agencies have implemented alternative dispute resolution programs.[i] States contracted with community dispute resolution centers in their counties to offer dispute resolution services to local communities.[ii] Both federal and state statutes governing alternative dispute resolution have been enacted.[iii] Universities have designed training programs in negotiation and conflict resolution.[iv] And professionals have joined federal and state associations dedicated to promoting the understanding and practice of dispute resolution.[v]
A conflict resolution community evolved; its principal aim: to extend the spectrum of mechanisms available for conflict resolution. Collectively, these techniques have been given the acronym ADR—standing for alternative dispute resolution. Terms, however, have not always been used in the same sense. Names of different techniques jointly considered ADR have been employed to refer to substantially different processes. This is particularly true for the term mediation. These terms represent strictly distinct techniques of conflict resolution.
The purpose of this article is to promote understanding the fundamentals of alternative dispute resolution. Yet more important, it draws distinctions and describes interrelations between ADR techniques. For understanding alternative dispute resolution requires knowing the correlation of the mechanisms embraced rather than merely their definition.
1 Alternative Dispute Resolution
Washington, D.C. mediator and arbitrator Linda R. Singer described ADR as ranging ”somewhere between the polar alternatives of doing nothing or of escalating conflict[, being] less formal and generally more private than ritualized court battles[, and] permit[ting the disputants] to have more active participation in and more control over the process of solving their own problems.”[vi] In short, ADR is characterized by flexibility, informality, and control by the parties to a dispute.
The degree to which these characteristics are present in the various ADR techniques depends in part on the influence the third party has on the process and outcome. But all the techniques share these goals: to allow voluntary participation by the disputants in a fair process; to support the crafting of a creative and mutually satisfactory resolution; to enhance the parties’ relationships; and to enable the parties to maintain their dignity i.e., to save face.
Alternative dispute resolution is distinguished from ”traditional”[vii] methods of dealing with conflicts i.e., court litigation or administrative adjudication. The latter processes do normally not involve shared decision-making. If at all, they only require solicitation and consideration of public input before decisions are made. However, the above mentioned objectives can in part also be achieved by joining ADR techniques with traditional procedures of problem-solving.[viii]
2 Distinctions and interrelations between ADR techniques
Dispute resolution techniques can be grouped along a spectrum with unassisted negotiation on one end and litigation at the other (see Figure 1). Alternative dispute resolution techniques are, pursuant to the Administrative Dispute Resolution Act (ADRA) of 1996, ”procedure[s…] used to resolve issues in controversy, including, but not limited to, conciliation, facilitation, mediation, fact-finding, minitrials, arbitration, and use of ombuds, or any combination thereof.”[ix] Further methods are early neutral evaluation, negotiated rulemaking, and various hybrid processes.
Early Neutral Evaluation
Summary Jury Trial
These mechanisms are all characterized by a third party assisting the disputants in resolving a dispute. They are either assisted negotiation or adjudication. In negotiation the third party may facilitate the process or advise a particular solution. In adjudication s/he imposes a solution.
The relative degree of power over the process and outcome between the parties and the outsider varies, shifting from unassisted negotiation to facilitative, advisory processes, or, at the other end, adjudication. Along this line, the parties increasingly surrender control to the mediator. Likewise, their strategy for dispute resolution differs. In facilitated negotiation the range of possible solutions is extended before agreement is sought. In adjudication and advisory negotiation the view is rather narrowed. The parties focus on beneficial case presentations, and the adjudicator on ”the one right” resolution. The process resembles litigation.
2.1 Assisted negotiation
M.I.T.-Harvard Public Disputes Program director Lawrence Susskind and Jeffrey Cruikshank recognize that ”in an ideal world […] disputes would be settled by the parties themselves.”[x] But few conflicts concern only a small number of issues and stakeholding parties. Furthermore, sufficient channels of communication between the parties are rare. Thus most disputes do not meet the preconditions for successful unassisted negotiation. This is especially true for public disputes, which are highly complex and where the affected groups are hard to identify and to represent.
In assisted negotiation an outsider to a dispute brings the parties together and, to varying degrees, helps them to resolve their disagreements. The decisions, however, remain in the hands of the parties themselves. The outsider only assists the parties in negotiating an agreement. At the very most s/he may recommend a particular settlement.
Assisted negotiation can be grouped into facilitative and advisory processes. The former are characterized by the parties’ effort to create solutions by themselves, whereas through, the latter the disputants seek advice from outside.
2.1.1 Negotiation—Beyond bargaining over positions
Whether assisted or unassisted, people negotiate in very different ways. A long-established approach to negotiation considers it a ”zero-sum”[xi] game, assuming that one party’s gain is the other party’s loss. Harvard Law School professors Fisher and Ury developed another method that they call ”principled negotiation.”[xii] It is based on the premise that it is possible to meet one’s own needs and those of others, and that conflict provides such opportunities. Principled negotiation is characterized by the parties effort to resolve a dispute by cooperating rather than by competing. Four principles define the method:
Separate ”people problems” from substantial issues. Every comment contains, whether intended or not, factual and emotional statements.[xiii] Emotions become entangled with the objective issues of the conflict. This may create prejudice and misunderstandings that permanently encumber the problem-solving; hence the first principle: ”separate the people from the problem.”[xiv] ”People problems”[xv]—feelings of frustration and anger, differences in perceptions, and difficulties in communication—must be addressed, but separately from the substantive issues. The parties do not have to like each other in order to settle substantial issues. Nor does the fact that they have different objectives require that they dislike each other. If the goal is to settle a dispute and to enhance the relationship, the means to get there is to ”be hard on the problem and soft on the people.”[xvi]
Transform positions into the underlying interests. The basis of disputes are conflicting interests, not positions. Interests underlie the parties’ positions, often latently and unconsciously. They are the parties’ tangible needs, desires, concerns, and fears. The object of a negotiation is to satisfy the parties’ interests. The satisfaction of interests can usually be accomplished by anyone of several positions (or solutions). Because positional bargaining often leads to an impasse when the positions are incompatible, the second and fundamental principle is to ”focus on interests, not positions.”[xvii] By uncovering the motivating interests behind opposed positions, the parties can often find an alternative position which satisfies the interests of not just one but all parties. In addition, the parties may find that not all of the uncovered interests will be in conflict. Some interests may be shared while others may be different but complementary. Both of them can serve as the basis for an agreement. The parties’ interests have to become the subject of negotiation. This is the key to mutual gains.
Generate multiple options for mutual gain before deciding. The parties often assume that settling a dispute is an ”either/or,” a winning or losing choice. They usually believe that they already know the right answer. Their view is narrowed and creative thinking inhibited by: premature judgement and criticism; rash closing of the exploration of options, searching for the one right solution; assuming that one side can only be satisfied at the expense of the other. Problem-solving lies in ”thinking outside the box”, in developing creative ideas.[xviii] Thus, the above mentioned constraints must be excluded from the creative process of brainstorming options. In short: ”invent options for mutual gain”[xix] before seeking to reach an agreement. It is all about expanding the pie before dividing it. Though this may not always be possible, it can be done in a surprisingly large proportion of disputes.[xx]
Use mutually agreed objective criteria. Negotiation aims at reaching a fair and durable agreement, one that meets the legitimate interests of each side to the greatest extent possible, and, at the same time takes community interests into account. Hence the fourth principle: ”insist on using objective criteria”[xxi] as the basis of agreements. Objective criteria facilitate the negotiation because they prevent the matter from becoming a contest of will. Also, either party can defer to a fair solution. Objective criteria make the agreement more likely to endure, decrease its vulnerability to attack and decrease the risk that the agreement will be repudiated later by either party. Finally, objective criteria provide the parties with standards that can be used later for assuring the implementation of the agreement. Objective criteria can be based on, for example, standards of fairness, efficiency, or scientific merit, precedent practice or past experience. Objective criteria must be legitimate, practical, reciprocally applicable, and independent of each side’s will.
A strategy related to the method of principled negotiation is clarifying the parties’ ”BATNA—best alternative to a negotiated agreement.”[xxii] Parties evaluating possible settlements should neither compare them to their best nor their worst acceptable outcome, their bottom line. Instead, propositions should be measured against the parties’ assessment of their opportunities and risks in tracks alternative to negotiation. Unlike bottom lines, estimating what the parties are likely to get through conventional channels leaves them enough flexibility to explore imaginative solutions. It also ensures that they have a realistic understanding of the conflict—with respect to both agreements they should refuse, but also propositions it would be in their interest to accept.
Parties in facilitative processes can assign different degrees of procedural and substantial responsibility to a helper. The third party’s procedural assistance is always directive, but her/his role can vary from a rather passive to a rather active form.
The principal mechanisms of facilitative negotiation are conciliation, facilitation, and mediation. Ombuds service and negotiated rulemaking are special forms of mediation. The outsider’s focus in conciliation and facilitation is on the procedure, whereas a mediator’s intervention goes beyond procedural issues. The parties working towards an agreement receive substantial assistance designed to break impasses. However, a mediator who predicts how a decisionmaker would settle the dispute ”ventures at some point into a territory beyond mediation,”[xxiii] and closer to advisory processes.
Conciliation aims at establishing communication between the parties to a dispute. The conciliator need not necessarily be impartial. S/he assists the parties in clarifying misperceptions and handling strong emotions. The goal is to promote openness between the parties in terms of taking the risk to begin a dialogue. Unlike facilitation and mediation, conciliation usually connotes only preliminary involvement by a third party. However, its goal is the same as with other ADR techniques and it is therefore often used in conjunction with other mechanisms as an initial convening stage.
Facilitation is a negotiation process between the parties to a dispute in which the meetings are assisted by a facilitator. Facilitators act as ”moderators in large meetings.”[xxiv] Their aim is to improve the flow of information and enhance mutual understanding. The emphasis of the facilitator is on communication; s/he remains impartial about the substantive issues under discussion. Facilitators are not expected to volunteer their own ideas or to participate actively in finding a solution. Their function is to lead the parties through the process of negotiation by providing procedural directions. Unlike other ADR techniques facilitation does usually not involve caucuses between the parties and the intermediary, except for initial meetings to launch the proceeding.
Mediation provides the parties in negotiation with both procedural and—though limited—substantive assistance from a mediator. S/he primarily helps the disputants to establish and maintain communication. Having no decision-making authority, the mediator’s occasional substantive assistance is designed to break impasses. Rather than advising the parties of a solution, mediators encourage them to expand the range of available options for settlement. Therefore a mediator may find it useful to preliminarily sustain the tension of cognitive dissonance, and to refrain from heading for a premature harmony. S/he seeks to help the parties understand each other’s inconsistent perceptions without aiming at a ”cognitive Esperanto.”[xxv]
Unlike facilitation, mediation may employ caucuses between the parties and the intermediary. One reason to caucus may be to counter the ”reactive devaluation”[xxvi] phenomenon, which sometimes arises as a barrier in negotiation. Reactive devaluation is the depreciation of one party’s proposition by another party simply because it originated with a perceived opponent. This reaction may be avoided if the mediator raises the proposition through a caucus with each party. If made by an impartial, the proposition may be rated less negatively. However, some mediators prefer not to caucus because ”shuttle diplomacy” puts more power in the hands of the mediator than they would like. Without caucuses mediation is more party-driven, and the parties may develop a better sense of the issues, each sides’ interests, and the process. Agreements as well as relationships may be more likely to endure.
Whether the benefits of caucuses outweigh their disadvantages must be evaluated in a given dispute. In any case, there are other tools which keep all the parties at the table. Because they enhance understanding and uncover destructive behavior, ”active listening”[xxvii] and paraphrasing could be effectively applied to oppose reactive devaluation.
Ombuds service uses individuals, ombudspersons (or ombudsmen), to handle complaints and disputes through mediation. If settlement efforts fail the ombudsperson attempts to recommend an appropriate resolution. Negotiated rulemaking, or regulatory negotiation (reg-neg), uses techniques of multiparty mediation to deal with large disputes over public policy. Representatives of stakeholder groups from industry, consumer and environmental organizations, and government agencies involved work with a mediator to negotiate government regulations. If they reach consensus, the agency can use the outcome as basis for a proposed rule. The latter will still be subject to public review and all other steps in the formal rulemaking proceeding.
Parties in a negotiation that want to assign higher substantive responsibility to a third party can engage in advisory dispute resolution processes. They can adopt this path if they feel more comfortable with proceedings that still allow them to work together at a table but are less party-driven. Or they can come to such processes if they have reached an impasse in facilitated negotiation but, due to their estimation of their BATNAs (see above), doubt that they could do better away from the table. They are in effect choosing an alternative to going to court where the case is likely to be resolved on a ”winner-takes-all basis”[xxviii] and each party risks losing everything.
The third party in an advisory process must have greater substantive expertise and bears more responsibility for devising possible solutions. Because of the nonbinding character of the recommendations, the parties may reenter negotiations, agree to adopt the recommended solution, or go to court. The advisory process is considered a form of assisted negotiation—even though it more closely resembles rather litigation.
Advisory processes range within a continuum. The process can promote initial clarification or assessment of some factual or legal issues. Alternatively, it can address the entire dispute and focus on an immediate settlement. In the former case, the parties consult impartial experts. In the latter case, where a settlement recommendation is requested, the process may involve principles, a jury, or an arbitrator. The different processes can be applied subsequently in the order given below, depending on the needs of the parties and the stage of the dispute resolution.
18.104.22.168 Initial Assessments
Fact-finding allows parties or decision-makers entering into a dispute resolution process to obtain neutral findings of fact. A fact-finder, an impartial expert, usually only investigates the matter presented and subsequently files a report which establishes the facts in the matter. If requested by parties or decision-maker, fact-finding can also result in a situation assessment or even a nonbinding recommendation by the third party as to how to resolve the dispute.[xxix]
Neutral evaluation, or early neutral evaluation since it typically takes place early in the process of conflict resolution, is designed to provide the parties with a neutral interpretation of facts. It is preceded by the fact-finding. Neutral evaluation involves the disputants’ brief presentation of evidence and arguments to a neutral, who is often a lawyer knowledgeable in the substantive area. The latter to predicts the probable range of outcomes, issuing a nonbinding assessment. This provides the parties with an objective view of their respective positions, i.e., the real strengths and weaknesses of their case, and on how a court might decide the dispute.[xxx]
22.214.171.124 Settlement recommendations
Minitrial is a settlement process in which the parties to a dispute present informal summaries of their view of critical issues to top management representatives of each side. Being authorized to settle, the latter subsequently attempt to negotiate a settlement face-to-face. This stage is chaired by an impartial advisor, who—comparable to a facilitator—is responsible for explaining and maintaining an orderly process of case presentation. In addition, s/he provides a range of settlement possibilities in order to help the parties to focus on realistic outcomes without the filter of their lawyers’ opposed assessment. If the parties fail to reach an agreement the advisor may intervene more substantially, e.g. by mediating further negotiations. More often, however, s/he will recommend a particular settlement, based upon an analysis of the strengths and weaknesses of each party’s position and predicting the outcome of possible litigation.[xxxi]
Summary jury trial intends to predict the verdict of a trial in a process which, unlike minitrial, resembles a civil trial. It includes abbreviated hearings before a summary jury that consists of jurors from the regular jury pool. The jury subsequently renders an advisory, nonbinding verdict and frequently explains the verdict to the disputants and responds to their questions.[xxxii] Designed to discourage protracted trials, a summary jury trial might provide enough indication of a realistic outcome to encourage a settlement.[xxxiii]
Nonbinding arbitration is characterized by the disputants presenting their respective arguments to an arbitrator, who subsequently issues a nonbinding decision. Alternatively, the parties might ask for an advisory majority ruling from an arbitration panel. Arbitrators must be impartial, objective, and fair. In addition, they have to be knowledgeable i.e., able to understand not only the substantive issues but also the legal issues and processes encompassing the dispute.[xxxiv]
Unlike these forms of assisted negotiation, adjudication is a determinative process. A solution is no longer advised but imposed on the disputants by an outsider. Adjudication can be performed by an agency, a court in formal litigation, or an arbitrator.
While agency or court adjudication are traditional ways of settling disputes, arbitration is considered an alternative dispute resolution technique. In fact, it is probably the ADR mechanism to be governed in the greatest details by law. State and federal statutes provide basic templates for arbitration as well as for the procedure that gives an arbitrator’s award the force and effect of a judgement after a trial in a court.[xxxv]
Binding arbitration is a process in which an impartial third party makes a judicially, binding determination of a dispute pursuant to the parties’ presentation of their cases. The individual arbitrator or the tribunal (arbitration panel) is appointed either directly by the disputing parties, or by existing arbitration panel members, or by an external party e.g., the court.
The proceeding typically includes an initiation stage; the appointment of an arbitrator; a discussion of appropriate process and timetable; one party’s statement of claim and the other’s response; a listing by each party of relevant documents in their control (discovery), and their inspection; a handing over of an agreed upon selection of documents to the arbitrator; a hearing including oral statements, questioning of witnesses and clarification of issues; submissions by each party of their evidence and applicable laws to the arbitrator; and finally the arbitrator’s award rendering the decision, reasons for it, and a summary of the proceeding.[xxxvi]
Arbitration may be mandatory or voluntary. In the former case, a dispute is submitted to arbitration by applicable court rules, or the terms of rules to which the parties have agreed in advance of any dispute. For example, members of the National Association of Securities Dealers are bound by its rules to arbitrate any dispute. In other cases, the parties may have voluntarily agreed to arbitrate a dispute at a time before final judgement in court. Alternatively, a submission agreement may be included in a dispute resolution clause of a contract which the parties negotiated in advance of any dispute.
2.3 Hybrid processes
A given conflict may require a hybrid process which combines several variants of alternative dispute resolution techniques. In fact, ADR techniques—though distinguishable—are not mutually exclusive. Different mechanisms might prove useful at different stages in conflict resolution. And outsider or parties might find it advantageous to move back and forth among them as problem-solving progresses.
”Mediation/arbitration (med/arb)”[xxxvii] is probably the most popular hybrid process. As opposed to straight arbitration it is used by disputants who want a binding decision in case they cannot reach an agreement. The parties agree from the start that if mediation fails to settle a dispute the mediator or a different impartial outsider will act as arbitrator i.e., be empowered to issue a binding decision on the remaining issue(s) in dispute. The advantage of med/arb is that it helps the parties to narrow issues rather quickly, and focus on those truly in dispute.
Whether the mediator is suitable to become the arbitrator is controversial. Using the same person to mediate and arbitrate has the advantage that the parties do not have to start over if they fail to resolve their dispute in mediation. However, there are reasons for utilizing two different persons. One is the concern that otherwise the process mixes and confuses procedural assistance with binding decision-making. Another is that the parties might hold back confidential information because they are not reassured that it will be excluded from the arbitrator’s mind. In addition, the parties might present extreme arguments during the mediation phase knowing that the same person will eventually make a decision as an arbitrator.