Question

First in time rule for charges does not resolve the dispute that may arise. What are your views? Give reference to case laws.

Answer 1

Back in the 1980s, experts and executives alike heralded alternative dispute resolution (ADR) as a sensible, cost-effective way to keep corporations out of court and away from the kind of litigation that devastates winners almost as much as losers. Over the next few years, more than 600 large corporations adopted the ADR policy statement suggested by the Center for Public Resources, and many of these companies reported considerable savings in time and money.

But the great hopes for ADR faded quickly. Damage awards, legal billings, and the number of lawsuits in the United States continued to rise—even for many of the companies that had embraced ADR. In fact, one study found that rather than reducing costs and delays, at least one form of ADR—court-annexed arbitration—had actually increased them.

What had gone wrong? Was ADR really just an empty promise? We believed it was not, but lack of success with ADR at so many companies prompted us to take a closer look at how managers were implementing the ADR process.

We found bad news and good. The bad news is that ADR as currently practiced too often mutates into a private judicial system that looks and costs like the litigation it’s supposed to prevent. At many companies, ADR procedures now typically include a lot of excess baggage in the form of motions, briefs, discovery, depositions, judges, lawyers, court reporters, expert witnesses, publicity, and damage awards beyond reason (and beyond contractual limits).

The good news is that a number of companies have learned to use ADR effectively, and those companies are in fact reaping ADR’s predicted benefits: lower costs, quicker dispute resolutions, and outcomes that preserve and sometimes even improve relationships.

At Chevron, for instance, ADR-based mediation of one dispute cost $25,000, whereas mediation through outside counsel would have cost an estimated $700,000 and going to court as much as $2.5 million over a period of three to five years. At Toyota’s U.S. subsidiary, a Reversal Arbitration Board, set up to ease contention between the company and its dealers concerning allocation of cars and sales credits, has brought about a steady decline in the number of these cases, from 178 cases in 1985 to 3 in 1992.

What are Chevron and Toyota doing that other companies are not? The difference between success and failure lies chiefly in the level of commitment. Companies that give ADR top priority—even in cases where they’re sure they’re right—are realizing immense savings of time, money, and relationships. In contrast, companies that let old litigious habits worm their way into the process might as well go back to court.

Cases on Arbitration

• AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (via Westlaw)

  Also Available on Lexis Advance

• Marmet Health Care Center v. Brown, 565 U.S.530 (2012)

• Rachal v. Reitz, 56 Tex. Sup. J. 530, 403 S.W.3d 840 (Tex. 2013)

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• Eagle v. Fred Martin Motor Co., 157 Ohio App. 3d 150, 809 N.E.2d 1161, 2004-Ohio-829 (9th Dist.)

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• Loyer v Signature Healthcare of Galion, 66 N.E.3d 779, 2016-Ohio-7736 (3rd Dist.)

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• Kindred Nursing Centers L.P. v. Clark, 137 S.Ct. 1421 (2017).

Cases on Mediation and Negotiation

• Virginian R. Co. v. System Federation, 300 U.S. 515 (1937)

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• Switchmen's Union of N. Am. v. Nat'l Mediation Bd., 320 U.S. 297 (1943)

  Also Available on Lexis Advance