Alternative Dispute Resolution and International Trade


Alternative dispute resolution (ADR) is getting a great deal of attention as the modem way to resolve controversies out of court. Contrary to popular belief, however, ADR is not new; arbitration, conciliation, and mediation, three important ADR techniques, have been utilized for centuries to resolve a myriad of disputes. ADR mechanisms continue to serve as the fora of choice in many ethnic, cultural, and religious communities. Although litigation is the primary method of dispute resolution in most western legal systems, alternatives to litigation are being sought to meet the burgeoning complexity and volume of modern international trade. The existence and utilization of ADR to resolve international commercial disputes, in turn, hastens the growth of world trade. The importance of ADR to global commercial endeavors is evidenced by an international network of ADR support. This support is manifest through legislation on a state and multistate level, through institutional organizations, and through various chambers of commerce.

Why are alternatives to the courts so important to the resolution of inter-national trade disputes? Primarily because ADR provides a neutral ground for parties of mixed nationalities, with different ethnic and legal systems, to resolve their controversies without fear of subjectivity by the court system of the forum state. Many disputants also find important the privacy and confidentiality associated with most ADR mechanisms. ADR has the further advantage over litigation of resolving disputes with less damage to ongoing business relations.

Of the various ADR mechanisms available to disputants in international trade matters, arbitration is by far the most widely used. The reasons for the preference of arbitration are many. Arbitration is a forum based on party autonomy – the parties to an agreement to arbitrate mutually shape the process to their needs and practices. Arbitration is final – the parties agree to be bound by the result. Moreover, the adjudicators, or arbitrators, are experts in their fields and are chosen by the parties expressly for their expertise. With the full cooperation of the parties, arbitration is faster and less costly than litigation. Finally, it is supported and enforceable by laws, treaties, and conventions in many nations including the United States.

Arbitration is not the exclusive means of ADR utilized in international commercial controversies, however. Mediation enjoys renewed popularity asa forum for settlement with the aid of neutral third parties. Some of the newer mechanisms, such as the minitrial, are also being explored as tools for dispute resolution in such matters. The particular ADR mechanism notwithstanding, the relationship between global commerce and ADR is one of healthy synergy; innovation and accessibility of ADR processes become increasingly evident as international trade flourishes.

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