ALTERNATIVE DISPUTE RESOLUTION (ADR)

Definition

Alternative Dispute Resolution (ADR) is a term that is used to refer to a wide

spectrum of legal avenues that use means other than court trial to settle disputes.

It is a collective term for the ways that parties can settle disputes, with the help
of a third party. Most civil disputes, these days, are, therefore, resolved without
filing a lawsuit and without a trial.

In recent times, the legal needs of countries, companies, and ordinary people
have changed. When faced with a dispute, business people are learning that,
whenever possible, it is more advantageous to reach practical and private
agreements than to fight for years and spend huge amounts of money in
courtroom battles. Due to the vast amounts of time and money involved in the
court trial process, business communities have increasingly turned to legal
alternatives that are more prompt, private and economical than the courtroom.

As suggested by the name, the idea behind methods of ADR is to provide an

alternative to filing a lawsuit and going to court, which is the traditional method
for resolving legal disputes.

These days, even the courts, through the establishment of Multi-Door Courts,
encourage and mandate processes that help people resolve disputes without a
trial.

Good examples of this are the Lagos and Ogun States Multi-Door Courts.

REASON FOR ADR

1. Delay in litigation
- The process of litigation can generally be delayed and prolonged. This
can be very frustrating
- Delay caused by disagreement over jurisdiction of court and other trial
commencement technicaliies which sometimes may be ill-defined
- Negative practices engaged in by Legal Practitioners and the courts
2. Adversarial and acrimonious nature of court trial
3. High cost of court trial
4. Uncertainty in court trial
 5. Formalities of court system
6. Lack of expertise of judges assigned to adjudicate over a matter in a
specialised field or area which may require an expert from that field for
effective adjudication
7. Exposure by court system of private business to the public

TYPES OF ADR

Arbitration, Conciliation, Mediation, Settlement Conference and Neutral

Evaluation

1. ARBITRATION

Arbitration is a process in which a panel of arbitrators or just one arbitrator sit

to resolve a dispute between parties

Note

Federal arbitration law There is the Arbitration and Conciliation Act Cap
A18, Laws of the Federation of Nigeria 2004 which is the.

The Act mandatorily applies to all domestic arbitrations where parties have not
chosen another law to govern their proceedings.

The Act came into force on March 14 1988.

Some states have also enacted their own arbitration laws.

In Lagos, the Lagos State Arbitration Law 2009 applies to all arbitrations that
have not specified another law.

Arbitration must comply substantially with any Arbitration and Conciliation law
applicable as agreed to by the parties involved.

How Arbitration Works

Firstly, the parties to a dispute must AGREE to arbitrate. The desire of one of
the parties to a dispute to enter into arbitration does not take away another
party's right to go to court.

Arbitration only comes about when two parties agree to it, either before or after
a legal dispute comes up.
For this reason, agreements to arbitrate disputes are typically found somewhere
in a written contract agreed to by both parties

Arbitrations can take many forms:

- In almost any arbitration, however, the complaining party will send the
opposing party a notice of intent to arbitrate a dispute, outlining the basis
for the dispute.
- There is typically a period for response
- Selection of arbitrators comes after the period of response.
- This is followed by the hearing itself.
- Arbitrations are either presided over by a panel of arbitrators or just one
arbitrator.
- The selection process is typically outlined in the contract guiding the
relationship between parties, but typically some type of input from both
parties is requested.
- The rules of arbitration can vary widely. In many circumstances, a
contract will specify the rules and timelines that will be applied in a
dispute.
- In general, the arbitration process involves many of the same components
and characteristics of a courtroom trial.
- For example, evidence is presented, arguments are made, witnesses are
called and questioned by the parties, and so forth.
- However, many of these facets are simplified or limited so as to make the
process quicker than the typical courtroom trial.
- Following the required hearings, an arbitrator or a panel of arbitrators will
usually deliver a ruling to the parties within a specific period of time.
Depending on the type of arbitration, this ruling may be final, or there
may be options to appeal.

On what grounds can parties appeal an award?

There are no grounds to appeal against an arbitral award under the Nigerian law.
However, a party to a domestic arbitration may apply to the high court to have
an award set aside on grounds that:

1. The arbitrator exceeded its jurisdiction;

2. The arbitrator was guilty of misconduct; or
3. The award was fraudulently procured.
 2. CONCILLIATION
- Conciliation is a voluntary, flexible, confidential, and interest based
process.
- The parties seek to reach an amicable dispute settlement with the
assistance of the conciliator, who acts as a neutral third party.
- The main difference between conciliation and mediation proceedings is
that, at some point during the conciliation, the conciliator will be asked
by the parties to provide them with a non-binding settlement proposal. A
mediator, by contrast, will, in most cases and as a matter of principle,
refrain from making such a proposal.
- Conciliation is a voluntary proceeding, where the parties involved are
free to agree and attempt to resolve their dispute by conciliation.
- The process of conciliation is flexible, allowing parties to define the time,
structure and content of the conciliation proceedings.
- The proceedings of conciliation are rarely public.

Conciliation is interest-based, as the conciliator will when proposing a

settlement, not only take into account the parties' legal positions, but also their
commercial, financial and / or personal interests.

Like in mediation proceedings, the ultimate decision to agree on the settlement

remains with the parties.

Main benefits

a. Conciliation ensures party autonomy.

The parties can choose the timing, language, place, structure and content
of the conciliation proceedings.
b. Conciliation ensures the expertise of the decision maker.
The parties are free to select their conciliator. A conciliator does not have
to have a specific professional background. The parties may base their
selection on criteria such as; experience, professional and / or personal
expertise, availability, language and cultural skills. A conciliator should
be impartial and independent.
c. Conciliation is time and cost efficient.
Due to the informal and flexible nature of conciliation proceedings, they
can be conducted in a time and cost-efficient manner.
 d. Conciliation ensures confidentiality.
The parties usually agree on confidentiality. Thus, disputes can be settled
discretely and business secrets will remain confidential.
3. MEDIATION

Mediation is an ADR method where a neutral and impartial third party, the
mediator, facilitates dialogue in a structured multi-stage process to help parties
reach a conclusive and mutually satisfactory agreement.

A mediator assists the parties in identifying and articulating their own interests,
priorities, needs and wishes to each other.

A mediator does not decide or judge, but instead becomes an active driver
during the negotiation between the parties.

A mediator uses specialized communication techniques and negotiation

techniques to assist the parties in reaching optimal solutions.

Advantages

a. Mediation is a peaceful dispute resolution tool that is complementary to

the existing court system and the practice of arbitration.
b. Mediation promotes the ideals, such as access to justice, a prompt
hearing, fair outcomes and reduce congestion in the courts.
c. Mediation is a voluntary and non-binding process - it is a creative
alternative to the court system.
d. Mediation often is successful because it offers parties the rare opportunity
to directly express their own interests and anxieties relevant to the
dispute.
e. Mediation provides parties with the opportunity to develop a mutually
satisfying outcome by creating solutions that are uniquely tailored to meet
the needs of the particular parties.
f. Parties are free to express their own interests and needs through an open
dialogue in a less adversarial setting than a courtroom.

The main aim of mediation is to assist people in dedicating more time and
attention to the creation of a voluntary, functional and durable agreement. The
parties themselves posses the power to control the process- they reserve the
right to determine the parameters of the agreement. In mediation, the parties
also reserve the right to stop anytime and refer a dispute to the court system or
perhaps arbitration.

In addition to economic and legal skills, mediators are professionals who

possess specialized technical training in the resolution of disputes. A mediator
plays a dual role during the mediation process- as a facilitator of the parties’
positive relationship, and as an evaluator adept at examining the different
aspects of the dispute.

After analyzing a dispute, a mediator can help parties to articulate a final

agreement and resolve their dispute. The agreement at the end of the mediation
process is product of the parties’ discussions and decisions.

The aim of mediation is to find a mutually satisfactory agreement that all parties
believe is beneficial. Their agreement serves as a landmark and reminds parties
of their historical, confrontational period, and ultimately helps them anticipate
the potential for future disputes.

Generally, an agreement reached through mediation specifies time, periods for

performance and is customarily specific, measurable, achievable, and realistic.
It is advisable for the parties to put their agreement in writing to create tangible
evidence that they accomplished something together. The written agreement
reminds the parties of their newly achieved common ground and helps to
prevent arguments and misunderstandings afterward. Most importantly, a
written agreement provides a clear ending point to the mediation process. The
agreement binds the parties contractually.

In case of disputes concerning compliance with the mediated agreement (e.g.,

whether a party carries out an agreement) or implementation of a mediated
agreement (e.g., disputes concerning the precise terms for carrying out an
agreement), the agreement is enforceable as a contract, as it would be in cases
of the non-fulfilment of any ordinary contractual provision.

Enforceability is necessary for mediation, as an ADR process, to possess any

legal strength or to impose any liability on the parties.

4. SETTLEMENT CONFERENCE
A settlement conference is an ADR in which a meeting is held by the parties
with the purpose of settling the issues prior to a trial. In some states, a
settlement conference is held by the trial judge and takes place in the judge's
chambers or in a conference room in the court premises. Only the parties, their
attorneys, and the judge attend.

In other states, the term settlement conference denotes any meeting between the
parties where the goal is to settle the dispute.

A settlement conference is a meeting between opposing sides of a lawsuit at

which the parties attempt to reach a mutually agreeable resolution of their
dispute without having to proceed to a trial. Such a conference may be initiated
through either party, usually by the conveyance of a settlement offer; or it may
be ordered by the court as a precedent (preliminary step) to holding a trial. Each
party, the plaintiff and the defendant, is usually represented at the settlement
conference by their own counsel or attorney. Conferences are frequently
conducted by a judge or other neutral party, in the form of a mediation.

In many courts in the common law system, a case conference may be used to
settle a case.

Note

In some courts, the rules require that before certain types of motions or petitions
will be heard by the judge, the lawyers must "meet and confer" to try to resolve
the matter.

5. NEUTRAL EVALUATION

Neutral Evaluation is a process in which the parties or their counsel present

their cases to a neutral third party (usually an experienced and respected lawyer
with expertise in the substantive area of the dispute) who renders a non-binding
reasoned evaluation on the merit of the case.

This process combines features of both a decision-making and a non-decision-

making process. During the process, the neutral may be invited to serve as
mediator or facilitator.

- Helps the parties identify the main issues in dispute

- Discusses the strengths and weaknesses of the parties' arguments
- Assesses the merits of the claims; and
 - Renders an opinion on the likely outcome of the case in court.

Whenever possible, the neutral evaluator helps the parties explore the
possibility of a mutually acceptable settlement

Purposes

1. To make litigation less expensive for parties.

By reducing pre-trial costs and enhancing pre-trial practice.

2. To avoid some of the pitfalls of litigation.

Such as the failure of lawyers and clients to assess their cases early, the
uncommunicative pleadings and unnecessary or unfocused discovery, which
lead to unnecessary costs and delays.

While Neutral Evaluation may include settlement discussions, its broader

purpose is to contribute to both the case development and the settlement
process.

Neutral Evaluation was originally conceived as a case management tool. It was

designed to provide the parties with an early, efficient and meaningful
opportunity to communicate about their dispute; to move them and counsel to
meet early to clarify issues and identify areas of agreement; and to assess
realistically the relative strengths and weaknesses of their positions, thus
encouraging, early settlements.

Neutral Evaluation may be court-connected or be undertaken in a private setting

through voluntary arrangements between the parties.

Neutral Evaluation may be initiated at any time in the life of the dispute
although an assessment of the case early in the process is often preferable. In
principle, when it is court-annexed, Neutral Evaluation does not begin until a
lawsuit is filed, while in a private context, it may be triggered as soon as a
deadlock arises in connection with the dispute. At that stage, if the applicable
agreement provides it, the parties may start the Neutral Evaluation process.
Even if Neutral Evaluation was not specifically provided for in an agreement,
the parties may still be able to agree to commence the process

CHARACTERISTICS OF A NEUTRAL EVALUATION

Neutral Evaluation is:

 a. Voluntary: It is non-binding on the parties: they are free to accept or
reject the outcome of the Neutral Evaluation. They must expressly agree
to attempt settlement through the Neutral Evaluation process and may
withdraw from the process at any given time.
b. Informal: There are no fixed evidentiary or procedural rules governing
the process. Rather, the parties decide on the governing rules that may be
set out in writing in the Neutral Evaluation agreement. This is a flexible
process as its scope can be shaped by the neutral evaluator and/or the
parties according, for example, to the type of dispute, complexity of the
case and number of parties involved.
c. Confidential: Neutral Evaluation is generally a confidential process,
unless the parties agree otherwise. The parties should jointly establish the
extent of confidentiality in a confidentiality agreement or via a clause in
the Neutral Evaluation agreement. Notwithstanding a confidentiality
clause or agreement, when the federal government is a party, the Access
to Information Act and Privacy Act must be examined to determine the
extent to which they restrict disclosure and withholding of information.
For further information about the application of these Acts, please refer to
the document entitled “Confidentiality: Access to Information Act and
Privacy Act” contained in this Reference Guide.
d. Assisted: The neutral evaluator's role is that of an impartial third party
who helps the parties identify the main issues in dispute, discusses the
strengths and weaknesses of the parties' arguments, assesses the merits of
the claims and renders an opinion on the likely outcome of the case in
court. Whenever possible, the neutral evaluator helps the parties explore
the possibility of a mutually acceptable settlement and may be invited to
serve as mediator or facilitator.

Advantages of the Neutral Evaluation

1. Neutral Evaluation provides an opportunity for early, open and direct

communication, enabling parties to focus on the core issues in dispute.
The process motivates counsel and parties to concentrate on the case
earlier than usual and enables them to increase their understanding of the
issues while learning what their opponent's case really is all about.
2. It helps parties to maintain their on-going relationship.
3. Neutral Evaluation is especially useful when the parties need or desire to
maintain an ongoing relationship: it allows the parties to avoid the
 adversarial elements of litigation which often make it difficult to continue
a productive relationship.
4. Not governed by strict rules.Neutral Evaluation is an informal, flexible
and creative tool of dispute resolution which is not governed by strict
rules of procedure and evidence. This allows the parties to design a
process which can be moulded to suit their needs and encourages a
consensual rather than an adversarial approach.
5. Confidentiality. Neutral Evaluation is confidential (unless agreed
otherwise by the parties), subject to the application of the Access to
Information Act and of the Privacy Act when the federal government is a
party. The process is appropriate when confidentiality is considered
important or necessary to the parties, which is often the case: parties
utilizing DR processes usually do so on the basis that they can discuss
matters freely in the expectation that they will be disclosed, neither
publicly, nor to a court.
6. It saves cost. Neutral Evaluation may generally reduce litigation costs :
this is of importance both to corporate parties who wish to keep costs
down and to parties who otherwise might not be able to afford the cost of
litigation. The costs of the process or compensation given to the neutral
evaluator are generally borne equally by all parties, providing all parties
with an equal stake in the outcome and an equal sense of ownership.
7. Impartiality. The presence of a third-party neutral allows for a controlled
and impartial process which may help the parties recognize the
limitations of their cases and favors a prompt, early settlement. The
presence of the neutral evaluator can even introduce a fresh and creative
perspective to the litigation, helping the parties to search for alternative
solutions.
8. Neutral Evaluation may assist in de-personalizing an issue by giving
clients an opportunity for catharsis, thus removing a sometime major
obstacle to productive settlement discussions.
9. It can also assist in tempering unrealistic expectations of the outcome.
The neutral evaluator's objective and impartial assessment serves as a
“reality check” for the parties and their lawyers, bringing frivolous
matters to an end or fundamentally altering their expectations. It brings to
the negotiation table serious and realistic offers (or dismissal of claims)
that may eventually result in an early settlement.
 10.Used as a gatekeeper for other dispute resolution processes, Neutral
Evaluation can diminish the risk of not choosing the DR process that is
best suited for a particular dispute. Neutral Evaluation provides the
parties with the possibility of exploring all the appropriate DR options
after the dispute has arisen without restricting any party in advance to any
inappropriate option. It is a safe harbor within which parties who might
not otherwise be amenable to DR can ponder the possibilities

Disadvantages of the Neutral Evaluation

1. Adding an additional step or layer before getting to court and thus

postponing the eventual trial.
2. There is concern about possible duplication between Neutral Evaluation
and other case management or DR processes.
3. Possible overall added costs to litigation if the process does not produce
settlement or if the process is pursued in bad faith.
4. Vulnerable to manipulation as it may be used to preview a counterpart's
case; or else, if pursued in bad faith (when a defendant agrees to the
process, but does not frankly cooperate), it may also be used as a dilatory
tactic.