The last three installments of PARCEL Counsel explored various aspects of a lawsuit: the terminology that lawyers use; the procedures that a litigant will experience in court; and how to effectively utilize a lawyer. In this issue of PARCEL, we will look at Alternative Dispute Resolution methods, abbreviated as ADR.
There are several kinds of ADR. However, the most common ones are mediation and arbitration. Each is a structured method of privately resolving a dispute by using neutral third parties without going to court.
Mediation is a process where the mediator listens to both sides of the dispute and works with the parties to agree to a voluntary settlement. If the parties do not reach a settlement their dispute will have to go to court or to arbitration for a final resolution.
Contracts may require mediation before a party commences litigation. Many courts will also require a mediation session to see if a lawsuit can be settled before going to trial.
When effective, mediation can be the best method of ADR as it can often result in an earlier resolution of a dispute at a lower cost. In some instances, mediation may repair the relationship as well as resolve the dispute.
Arbitration is a contract-based non-judicial adjudication by a neutral third party that results in a binding decision regarding the merits of the dispute.
While an agreement to mediate or arbitrate a dispute may be entered into after the dispute has arisen, parties frequently agree to use ADR to resolve future disputes at the time of the transaction or initial contract. With a few exceptions, including one for employment agreements with transportation workers, the United States Supreme Court has repeatedly held that under the Federal Arbitration Act courts must enforce properly structured arbitration agreements, even if they are set forth in standardized form contracts or a transportation provider’s terms and conditions.
What are the pros and cons of arbitration? On the plus side, it can often be a faster, less expensive and more efficient resolution of disputes. The parties can specify the rules and even the number of arbitrators to resolve their dispute, including selecting arbitrators with a specialized knowledge of their industry. For example, in transportation and logistics matters the Transportation Arbitration Board (TAB) uses transportation professionals as arbitrators. (https://tlcouncil.org/transportation-arbitration-board-inc/). Some corporations may also favor arbitration because the Supreme Court has ruled that contractual clauses that mandate arbitration can waive class action arbitration of certain claims.
Critics of arbitration say that it can frequently be as expensive as litigating a case in court, that streamlined arbitration procedures may not afford either evidentiary discovery or the procedural safeguards available in a court proceeding, and that an arbitration decision may not contain a reasoned explanation explaining the decision of the arbitrator. Further, an arbitration decision is usually subject to very limited judicial review in the absence of misconduct on the part of the arbitrator.
To conclude, if one is involved in a business dispute, ADR should be given serious consideration before proceeding with litigation. However, many breach of contract lawsuits can quickly evolve into lawsuits over whether the parties agreed to arbitrate their dispute. Any party entering into a commercial relationship should thus carefully review the language of any ADR clauses in their contracts as well as in any document that may be incorporated by reference such as a transportation provider’s terms and conditions.
All for now!
Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A., the Senior Editor of transportlawtexts, inc., and Director of Virtual Education for the Transportation and Logistics Council, Inc.
Andrew M. Danas is Partner, Grove, Jaskiewicz and Cobert, LLP. For more information, visit www.gjcobert.com or email adanas@danaslaw.com. The information contained in this article is intended to be general background information. It does not constitute and should not be relied upon as legal advice. Readers should contact a qualified attorney should they have a specific legal question.
Previous columns, including those of William J. Augello, may be found in the “Content Library” on PARCELindustry.com. Your questions are welcome at brent@primuslawoffice.com.
This article originally appeared in the March/April, 2024 issue of PARCEL.
