Gini Nelson’s Engaging Conflicts

Today’s post introduces a series co-authored by myself and international business attorney Vonda K. Vandaveer.

For business leaders, alternative dispute resolution rather than litigation has no doubt become the preferred process for handling problems, thanks to its efficiency, cost-effectiveness, and flexibility. As businesses become more global, however, the traditional methods of face-to-face mediation, arbitration or other dispute resolution processes pose significant logistical barriers to parties separated by oceans or continents, calling into question traditional ADR’s value in these circumstances.

For example, a U.S. company with a prime contract to build a camp for the U.S. Army in Iraq may subcontract with a local vendor for day laborers. The contract drafted by the U.S. company inevitably will provide for some form of ADR, such as mediation, but equally inevitably the U.S. company will place venue in its home state, thousands of miles away from the other party.

Needless to say, such a provision presents a financial and logistical hardship to the foreign subcontractor. Not only does the party have to share the mediator’s expenses, its representatives would have to pay for air fare and lodging in the foreign venue.

In addition, this travel means valuable time away from their own business. As would be expected, this term in reality has a chilling effect on the distant party from engaging in ADR with the U.S. company. In fact, if the contract drafter is the more powerful of the parties, it may have included the clause with that very intent, knowing the smaller company has no leverage to argue for a more even-handed term.

If the parties are of equal power, at most they might negotiate venue in a neutral location, which means in case of a dispute both parties will have to pay for flights and lodging and take time away from their work. In addition, unless the parties find a mediator in the local jurisdiction, they would have to pay for the mediator’s expenses as well further augmenting expenses. As a consequence, with no incentive to engage in ADR, the parties will likely end up in court in one jurisdiction or another, the very result both parties were hoping to avoid.

These parties, though, have another solution to these logistical problems that should be included in the international ADR repertoire: online dispute resolution, also known as ODR.

With online dispute resolution, these logistical barriers pose no problem. Each party and the neutral all remain in their respective locations while engaging in the dispute resolution process, saving costs and time away from work. This article wiill address these questions:

1. How Does ODR Work?
2. What Disputes Work Well for ODR?
3. My Contract Does Not Address ODR, Can I Take Advantage Of It?
4. Are There Special Considerations In Selecting An ODR Leader For Business Disputes?

This series will continue next week.

I came across these International Dispute Negotiation podcasts recently on the International Institute for Conflict Prevention and Resolution’s (CPR) website. They address hot topics in cross-border commercial conflict resolution. New ones are added every Friday. Michael McIlwrath, Senior Counsel, Litigation for GE Infrastructure – Oil & Gas, is host. Michael is based at his company’s headquarters in Florence, Italy and represents his division in disputes world-wide, including work in negotiations, mediation, and arbitration.

Recent podcasts include:

• Offshore Litigation Work in India — This controversial method of reducing litigation costs in common law systems, like the US and UK, send legal work to India.
• How to Effectively Use Mediators with interview featuring Prof. Dwight Golann from Boston’s Suffolk University Law School.

Tomorrow’s podcast is “The Arbitration Tribunal of Barcelona”.

Click here for more information.