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What is alternative dispute resolution?

On Behalf of | Feb 9, 2022 | Business Litigation |

Business contracts are important for most companies. While they’re usually followed without any issues, there are times when one party doesn’t uphold their end of the deal. This can lead to legal proceedings. 

Some contracts have a clause that requires them to be resolved through alternative dispute resolution instead of traditional litigation in the court system. Using alternative dispute resolution is usually faster and less expensive than taking a case to court. 

2 types of alternative dispute resolution

There are two main types of alternative dispute resolution: Mediation and arbitration. While these can both resolve disputes, they’re different processes. A contract may stipulate that one of these is preferred over the other, so it’s best to review the contract to find out about this. 

In mediation, both parties try to come to a mutually agreeable resolution to the matter. They have the help of an impartial third-party mediator who helps to keep the negotiations on track and can act as a go-between if the parties can’t get along. 

In arbitration, an arbitrator or board of arbitrators hears both sides of the matter and comes to a resolution for the matter. If the arbitration is binding, both parties must abide by the decision. If it’s non-binding, the decision is a suggestion that must be accepted by both parties before it’s considered the final resolution. 

Any business owner who’s facing legal issues may benefit from alternative dispute resolution. Working with a team that’s familiar with these procedures is beneficial since they can help you to prepare your side of the matter. This can free up your time so you can focus on running your company while they handle the legal side of things.