Alternative dispute resolution includes both mediation and arbitration.
Companies are increasingly turning to ADR as the means to resolve their disputes, as a faster and less costly alternative to going to court. The parties themselves design their method of dispute resolution and choose the ground rules.
Mediation is a process in which a neutral third party helps the parties to reach a resolution of their dispute, or to narrow the differences between them.
In arbitration, the parties agree to be bound by the decision of the arbitrator. In the case of future disputes arising under a contract, the parties insert an arbitration clause in the relevant contract. International awards are enforced by national courts under the 1958 New York Convention. More than 130 countries are party to this Convention.
For international commercial disputes, the advantages of arbitration over court litigation are even greater. With court litigation, there may be multiple proceedings under different laws, with a risk of conflicting results. There may also be an actual or perceived home court advantage for the party that litigates in its own country. With arbitration, parties can choose the nationality of an arbitrator that is neutral to the law, language and institutional culture of both parties.