Key Terms
Alternative Dispute Resolution (ADR)
All methods of resolving disputes outside the judicial/court process.
ADR Continuum (least formal to most formal)
Negotiation --> Mediation --> Arbitration --> Litigation
FAA
Federal statute requiring parties to participate in arbitration when they have agreed by contract to do so — even in sta
Negotiation
ADR method in which the parties retain all decision-making power. No outside party is involved.
Unequal bargaining power
When one party has significantly more leverage in a negotiation than the other.
Example
A small buyer who depends entirely on one supplier vs. a large supplier who barely notices that buyer's business.
Mediation
ADR method in which parties work toward a mutually acceptable agreement with the help of a neutral third party (the medi
Mediator
Neutral third party who facilitates the agreement. Acts as a go-between for the parties.
Arbitration
ADR method in which parties vest authority in a neutral third-party decision maker (the arbitrator) to hear the case and
Arbitrator
Neutral decision maker; often an expert in law and the subject matter at issue.
Mandatory arbitration
Required when (1) parties signed a contract with a mandatory arbitration clause, or (2) state law requires it.
Voluntary arbitration
Parties choose arbitration because they believe it is preferable to litigation.
Binding arbitration
The arbitration award is final. The merits of the award cannot be appealed to court.
Confirmation
The process by which an arbitration award is converted into a court judgment, creating the legal mechanism to collect on
Courts review whether
1. The award covered matters beyond what was submitted 2.