Alternative Dispute Resolution (ADR)

The term "Alternative Dispute Resolution" (ADR) is normally used to describe a range of dispute resolution mechanisms such as arbitration, mediation and other less used methods that are alternative to litigation. The most two common forms of ADR are Mediation and Arbitration.

Mediation
Mediation is characterized by the use of a "neutral" third party, the mediator, either to mediate a specific dispute between two parties or to reconcile their relationship. The most important difference with arbitration is that in mediation, the mediator cannot impose a decision on the parties, and does not have the authority to rule on a settlement. Instead, the mediator offers a neutral view on the dispute to the two parties, and tries to facilitate both parties in finding an amicable solution.

Arbitration
Arbitration systems, contrary Mediation systems, authorize a third party, the arbitrator, to decide how a dispute should be resolved.

ADR systems offer disputants a chance to avoid the often long and expensive process of taking a case through the formal judicial system. Mediated solutions are generally faster, less expensive, and more likely to allow the parties to return to doing business with one another.ADR has long been an important part of dispute resolution in many developed counties and are becoming increasingly important in developing countries as these countries attempt to reform their judicial systems.

ADR systems offer some obvious benefits when properly introduced.

• Reduction of backlog from Courts
• Faster and less costly resolution of disputes
• Reduction of formality with easier and more accessible processes
• More efficient dispute resolution in highly-technical specialized areas

The IFC ADR product line offers assistance in the implementation of more efficient, less expensive conflict resolution mechanisms for businesses in emerging economies. To address the needs of the private sector in conflict resolution, IFC partners with the local government, justice ministries, lawyers' associations, business membership organizations, international mediation experts, and donors. A typical IFC ADR project focuses on establishing a supportive legal framework for ADR, building support within the judicial system, publicizing mediation within the broader business community, and creating financially sustainable pilot programs for mediators.

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