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According to Gramberge
(2001:pp. 3-5), it is defined as structured informal negotiation processes with the aid of
an independent third party. Grace (2002) further defines it as all forms of conflict
resolution apart from litigation; dispute resolution processes that leave the form and
settlement. In simple terms as put across by Buchanan (2000: p. 16), it refers to other
mechanisms of solving conflicts outside the courts environment.
Litigation refers to filing a lawsuit which is a civil action brought to a court of law where
the plaintiff seeks equal remedy for actions committed by the defendant. Judgment may
be passed where the plaintiff proves beyond reasonable doubt that the defendant
committed the offence. As Krisberg (1999) reiterates, the court orders issued arising
from the judgment include; awarding damages, imposing n injunction to prevent or
compel an act, or enforce a right. Consequentially, judgment which is declaratory may
be issued to prevent future legal disputes. Where contractual dealings are involved,
litigation is initiated by a contracting party who alleges that the other party breached
the agreement.
Litigation despite providing justice where disputes are concerned still has its demerits
which include; it is an expensive undertaking. Before court proceedings take off, several
expenses have to be settled such as court fees as well as advocate or lawyer fees. In
addition, it is time consuming as dates on appearance have to be set, the defendant has
to be served by the plaintiff (Reichert, 2000). Procedural fairness is also lengthy.
Individuals involved in the commercial industry consider time a great asset and the loss
of it as a result of lengthy judicial proceedings my result in irreversible set backs further
influencing the profit margins of institutions and companies.
It is also prone to favoritism in cases where a local party is concerned. Judgment may
therefore be skewed. Furthermore, rudimentary procedural systems resulting from
incompetence may affect the result of a court case as they may not ensure just results
(Burton, 1999).
Privacy and confidentiality are aspects held in high esteem in commercial undertakings.
William (1996: 55) echoes that these aspects provide a remedy of conserving business
relationships as network marketing is a common practice in this industry. The effects of
publicity of court cases affect the market dynamics of business entities. Litigation to a
large extent forsakes the need for privacy and confidentiality which may affect the
continuity of certain businesses.
Litigation lacks flexibility in its approach. Flexibility of the time format for example, is less
considered. This may be affected by the nature of court working hours. Court
proceedings are set within this time frame which may be difficult for parties involved in
the cases subjected to the court. Parties have a more active role as they contribute to
the opinions of their cases freely where alternative dispute resolution is concerned as
opposed to litigation where litigants feel alienated in the participatory process (Bwanika,
2004).
Judges are experienced and skilled in various issues however they may lack decision
making expertise in particular subject matters of certain fields. Their decisions may
therefore fail to address core issues resulting in lack of satisfaction from the parties
involved.
It ensures that the due process is adhered to hence providing procedural safeguards
such as cross examination. This ensures a fair judgment as it protects individuals from
hearsay which may affect the results of the judgment.
Consistency in its application is ensured as decisions are based on principles of the law
that have been formerly validated. Precedence is one aspect of these norms and follows
consistency on similar cases. This also builds up on the authoritative nature of litigation.
Litigation provides for options ranging from restraining orders, injunction to retributive
justice. These options consider situations like patent rights as they protect individual
inventions. Such options are necessary and are not available in Alternative Dispute
Resolution mechanisms such as mediation (Krisberg, 1999).
As compared to negotiation, mediation is a mutual endeavor and brings out the picture
that the parties involved are ready to shift from their previously withheld positions
(Burton, 1999).
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In essence, both courts and Alternative Dispute Resolution mechanisms cannot exist
singly in their approaches for favorable solutions to be obtained. The demerits of one
are the strengths of the other. Governments have a duty to promote trade and
investment, to tackle setbacks – real or perceived – which limit businesses and citizen’s
opportunities. One of the main hindrances to trade and investment is lack of
mechanisms to deal promptly and affordably with commercial disputes. This is backed
up by William (1996). Disputes are intrinsic in trade and business dealings. Companies
will be reluctant to engage in commercial relations in a foreign nation if they are not
convinced that there is a suitable way of solving them.
Generally, ADR has three main advantages; they are speedy and less costly, they offer
creative solutions as are not entirely bound by judicial preferences and are less
confrontational thus build on long-term working solutions. Judicial proceedings on the
other hand provide binding solutions and institute the application of precedence, an
essential component in addressing similar disputes (Buchanan, 2000).
In order to merge the two, legal frameworks need to be developed for Alternative
Dispute Resolution mechanisms. The creation of soft law by the European Union and
United Nations Commission on International Trade Law is a stepping stone towards
achieving this goal. The Commission consulted largely on this issue before adopting a
proposal for a directive on certain aspects of mediation in civil and commercial related
matters (Gramberge, 2001). Following the consultation, it was resolved that legislation
should be restricted to ensuring a favorable relationship between mediation and judicial
proceedings. On the other hand, a self regulatory instrument, the European code for
mediators, was initiated as the best approach to set standards for the mediation process
and the appointment and accreditation of mediators.
Court -annexed arbitration seeks to provide solutions where parties fail to include an
arbitration clause in the contract resulting further in a civil action. This is seen as a
means of involving a judge in case management (Burton, 1999).
The utilization of both litigation and ADRs ensures the liberal use of rules of courts to
facilitate efficiency; exclusive jurisdiction in the enforcement of arbitral awards in
international matters, appointment of expert witnesses (Krisberg, 1999).
Recommendations
The commercial industry is one sector that is highly influenced by globalization mostly
information and communication technology. It is therefore better placed to provide
appropriate techniques in conflict resolution that embrace the use of technology to
fasten the process hence reduce on time spent. Bureaucracies involved in conflict
resolution can also be adequately tackled with the implementation of these techniques
(Grace, 2002).
Alternative Dispute Resolution mechanisms lack full autonomy and are partly influenced
by judicial proceedings where legally binding agreements are concerned. This autonomy
should be adequately addressed to promote their application as well as gain confidence
among those who choose to adapt it.
Most projects based on the use of both judicial and Alternative Dispute Resolution
mechanisms are of pilot nature. These should be encouraged in more countries and
integrated with customary judiciary systems in nations whose customary laws that
promote Alternative Dispute Resolutions are already inculcated in their judicial systems
(Folberg, 1997).
One major setback crippling the fundamental initialization of these mechanisms is lack
of competent personnel. Focus should therefore be equally placed on training personnel
to be well versed in these systems hence ease the workload and ensure adequate
service delivery.
Conclusion
In conclusion, Alternative Dispute Resolution and litigation are fundamental conflict
resolution mechanisms in commercial law. For best results to be achieved, they cannot
exist in isolation but require mutual dependence in vast scenarios from developing
business constitutions to international marketing. This paper has therefore shed a light
on the need to ensure the development of Alternative Dispute Resolution mechanisms
and their impact on the sustainability of business entities as well as variations to their
applications.