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Chapter 05 - Alternative Dispute Resolution
5-10
decide the law and the facts of the case.
F. Voluntary/Contract-Based Arbitration
Emphasize:
That voluntary arbitration is providing more submissions than is mandatory arbitration.
That the arbitration process is less time consuming and less costly than litigation only if
the parties are limited in seeking judicial review of the arbitrators’ awards.
Additional Matters for Discussion:
The reasons for broader review in case of statutory mandatory arbitration.
Sidebar 5.11 on the standard of review of an arbitrator’s decision.
Discuss the Concept Summary contrasting the differences between Voluntary versus
Mandatory Arbitration.
Review of Voluntary/Contract-Based Arbitration Awards
Emphasize:
The reasons that judicial review is very limited.
That the arbitrator’s findings on questions of law and fact are conclusive.
That if the scope of an arbitration clause is debatable or reasonably in doubt, the
clause is construed in favor of arbitration.
An erroneous view of the law no matter how egregious is binding because the parties
have agreed to accept the arbitrator’s view of the law.
Review of Statutorily Mandated Arbitration
Emphasize:
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When a de novo judicial review can be sought.
Review under the Federal Arbitration Act
Emphasize:
The four grounds for setting aside an arbitrator’s award under Section 10.
IV. Mediation (LO 5-3, LO 5-4)
Emphasize:
That parties in a mediation are the decision makers; mediators provide a procedure of
facilitated negotiation; and the parties are responsible for finding a solution to the dispute.
That mediation often allows disputing parties to preserve or reestablish relationships.
The comment in the marginalia that mediation has become the primary ADR method in
federal courts.
B. Advantages/Disadvantages
Emphasize:
The benefit of parties controlling their dispute resolution system.
The need for disputing parties to agree on one person to mediate.
Additional Matters for Discussion:
C. Lack of Judicial Involvement (LO 5-5)
Emphasize:
The positive aspect of mediation in that there is no need for a court to review the
Chapter 05 - Alternative Dispute Resolution
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agreement or lack of agreement of the parties.
That mediations do not involve the legal issues found in the arbitration process.
D. Combination with ADR Systems (LO 5-4)
Emphasize:
How mediation is flexible enough to be used in a variety of circumstances.
That this flexibility allows mediation to be combined with arbitration to form various
ADR systems.
Additional Matters for Discussion:
That, at this time, there are no uniform training programs for mediators and how this
fact should make parties cautious in selecting a mediator.
That some laws encourage the parties to be creative in utilizing ADR systems.
Answers to Review Questions and Problems
Conflicts and Negotiation
1. Conflicts and Disputes
A conflict exists whenever there are two or more points of view. This definition allows one
2. Styles and Methods of Negotiation
3. Positional Negotiation
4. Principled Negotiation
a. The seven elements developed by the authors of Getting to Yes include—
Chapter 05 - Alternative Dispute Resolution
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communication, relationship, interests, options, legitimacy, alternatives, and
commitments.
b. Focusing on these elements typically will help disputing parties discover things they
have in common and expand the scope of potential solutions.
Alternative Dispute Resolution (ADR) Systems
5. Range of Options
Typically found on a spectrum of ADR systems are focus groups, arbitration, and mediation.
6. Settlements
7. Focus Groups
Parties and lawyers can discover the “jury’s” perceptions of the strengths and weaknesses of
the case.
Arbitration
8. Submissions
a. A submission is the process of the parties asking for their dispute to be arbitrated. It
9. Arbitrators
The arbitration agreement will provide the scope and authority which the arbitrator
10. Awards
5-14
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An award generally is valid if the arbitrator simply responds to the issues stated in the
submission. There is no required form of an award.
11. The Federal Arbitration Act
a. This dispute between the partners will be submitted to arbitration, and the lawsuit will
12. Statutorily Mandated Arbitration
a. Statutorily mandated arbitration refers to those matters that must be arbitrated rather
13. Voluntary/Contract-Based Arbitration
In Green Tree Financial Corp.-Ala. v. Randolph, 121 S. Ct. 513 (2000), the court found that
14. Judicial Review
a. Since in a voluntary arbitration the parties willingly forego use of the courts, they are
not entitled to a judicial review of the award. Statutory-mandated arbitration must be
reviewed by the courts upon the request of a party since the parties had no choice but
to submit their dispute to arbitration.
b. No. If the award is within the submission and contains the honest decision of the
arbitrators, after a full and fair hearing of the parties, a court will not set it aside for
error, either in law or fact. A contrary course would be a substitution of the judgment
of the court in place of the arbitrators chosen by the parties, and would make an award
during the commencement, not the end, of litigation. Taylor v. Fitz Coal Company,
Inc., 618 S.W.2d 432 (Ky. 1981).
Mediation
5-15
15. Procedures
The mediation normally begins with the mediator’s opening statement. Each party then tells
16. Advantages/Disadvantages
a. In a mediation, the parties maintain control over whether to settle or not.
b. Advantages of mediation include—that parties control the decision making, time and
17. Lack of Judicial Involvement
18. Combination of ADR Systems
Often times disputing parties may agree to mediate first and then arbitrate any disputes not
resolved in the mediation.
Business Discussion #1
1. What are possible alternative dispute resolution systems (ADRs)?
combinations of these ADRs, mock and minitrials, and negotiation.
2. Should employees be required to sign a contract that an ADR method will be used before
any lawsuit is filed against the organization?
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conflicts to litigation.
Business Discussion #2
1. What steps should you take to discover, in the most accurate and efficient manner, the
reasons customers are filing complaints?
2. What is the distinction between mediation and arbitration?
Mediation and arbitration are two commonly used ADRs. In a mediation, a third party
3. Should your company’s sales contracts include a clause that requires the parties to attempt
resolution of dispute by mediation? By arbitration? By some other mechanisms?
Sales contracts containing some form of ADR may help discourage litigation and encourage
4. If your company’s sales contracts did include a dispute resolution (other than litigation)
clause, when can the courts still be used?
Business Discussion #3
1. What is the difference between a conflict and a dispute?
There are many definitions of the words conflict and dispute. Some people even use these
Chapter 05 - Alternative Dispute Resolution
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resolution systems.
2. What steps should you take to discover, in an accurate and efficient manner, the reasons
conflicts and disputes exist?
There is no simplistic answer that results in the effective management of every conflict and
the efficient resolution of every dispute. Because people are at the heart of every conflict and
3. Should your consulting firm’s contracts with employees contain a dispute resolution clause?
What about the firm’s consulting agreement with clients? If so, what system of dispute
resolution should be included?
