Alternative Dispute Resolution - Law - Notes, Study notes for Law. Bhupendra Narayan Mandal University
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Alternative Dispute Resolution - Law - Notes, Study notes for Law. Bhupendra Narayan Mandal University

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Alternative Dispute Resolution, Historical Development, Negotiation, Advantages of Negotiation, Disadvantages of Negotiations, Effects of Negotiation, Meaning of Mediation, Perceived Advantages, Perceived Disadvantages, ...
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Alternative Dispute Resolution

Alternative Dispute Resolution Teaching Material

Developed By:

1) Tefera Eshetu 2) Mulugeta Getu

Sponsored by the Justice and Legal System Research Institute

2009

i

Table of Contents

Course Introduction…………………………………………………………………………1

Chapter One: General Overview of ADR………………………………………………….3

1.1. Introduction ……………………………………………………………….................3

1.2. Definition; what is Alternative dispute resolution? …………………………………4

1.3. Historical Development of ADR …………………………………………………….6

1.4. Purposes of ADR ………………….………………………………………………..17

1.5. Demerits of (short comings) of Litigation ………………………………………….20

1.6. Demerits of ADR …………………………………………………………………...23

1.7. Summary …………………………………………………………………………….24

Chapter Two: Types of ADR and their proceeding …………………………………………26

2.1. Introduction …………………………………………………………………………26

2.2 Types of ADR ……………………………………………………………………….27

2.3 Negotiation ……………………………………………………………..…………...30

2.3.1 Primary consideration of negotiation ……………………………………..30

2.3.1.1 When is negotiation appropriate Dispute resolution? …………..31

2.3.1.2 Nature of bargaining power ……………………….……………31

2.3.1.2.1 Element affecting of bargaining power ……………………...32

2.3.2 Perceived advantages of negotiation …………………………………….36

2.3.3 Perceived disadvantages of negotiations...……………………………….36

2.3.4 Legal effects of negotiation agreement ………………………………….37

2.4 Mediation /Conciliation ……………………………………………………………38

2.4.1 Meaning of mediation /Conciliation …………………………………….38

2.4.2 Features of mediation /Conciliation ………………………..……………39

2.4.3 Perceived advantages of mediation ……………………………………..40

2.4.4 Perceived disadvantages of mediation ………………………………….40

ii

2.4.5 Mediation proceedings and the roles of mediator(s) …………………....40

2.4.6 The roles of lawyers in mediation …………………………………………..44

2.4.7 Legal effects of mediated agreement ……………………………………….45

2.5 Arbitration ………………………………………………………………………….....45

2.5.1 What is Arbitration? ………………………………………………..……….46

2.5.2 Early History of Arbitration ………………………………………………... 47

2.5.3 Preliminary Considerations of Arbitration ………………………….……… 50

2.5.3.1 Arbitrability……………………………………………………….....50

2.5.3.2 Arbitration agreement. …………………………………….……..…51

2.5.4 Varieties of Arbitrations………………………………………..……….…....55

2.5.5 Arbitration and litigation ……………………………………………………..56

2.5.6. Perceived Advantages ………………………………………..………….…..57

2.5.7 Perceived disadvantages …………………………………….……………….57

2.5.8 The Role of Arbitrator ……………………………………..………………...58

2.5.8.1 Impartiality of arbitrator …………………………………………….58

2.5.8.2 Independency of arbitrator ………………………………………….61

2.5.9 Arbitration Procedure ………………………………………………………..62

2.5.9.1 Formation of Arbitral Tribunals ……………………………………62

2.5.9.2 Arbitral Proceedings in general …………………………………… 65

2.5.10. Legal effects of Arbitration ……………………………………………….. 70

2.5.10.1 Arbitral award …………………………………………………… 71

2.6. Summary ………………………………………………………………………74

Chapter Three: ADR in Ethiopia ………………………………………………………….76

3.1. Introduction …………………………………………………………………………76

3.2. Historical Background ………………………………………………………………77

3.3. Constitutionality of ADR ……………………………………………………………80

3.4. Customary ways of Dispute Settlement ………….………………………………….83

3.4.1. Common characteristics of customary dispute settlement …………. ………...84

3.4.2. Customary dispute settlement of some specific ethnic groups ………………..89

3.5. Compromise in General ……………………………………………………..............97

iii

3.5.1. Definitions …………………………………………………………………..97

3.5.2. Nature and effect of Compromise …………………………….…………….98

3.5.3. Compromise before a Court of law …………………………..……………..99

3.6. Conciliation …………………………………………………………...…………..101

3.6.1. Preliminary Points ………………………………………………..…………101

3.6.2. Conciliators …………………………………………………….…………...102

3.6.3. Effects of Conciliation ……………………………………….…………….105

3.7. Arbitration ……………………………………………………………...…..……106

3.7.1. Introduction ………………………………………………….……………106

3.7.2. Sources of Arbitration and Arbitral Submission ………………....……….108

3.7.3. Arbitrators ………………………………………………………..……….123

3.7.4. Scope of Arbitration …………………………………………..………….156

3.7.5. Arbitration Proceedings ………………………………....…….………….174

3.7.6. Arbitral Award ……………………………………………….…………..174

3.7.7. Institutionalized Practice in Ethiopia …………………………….………177

3.7.7.1. Ethiopian Arbitration and Conciliation Centre (EACC) ……….178

3.7.7.2. Addis Ababa Chamber Commerce and Sectorial Association Arbitration

Centre ……………………………………………………….…192

3.8. ADR in other Laws ……………………………………………………….….…201

3.8.1. Arbitration in Family Law ………………………………………………..201

3.8.1.1. Introduction ………………………………………….………....201

3.8.1.2 Kinds of Family Disputes Governed By ADR ………..………..203

3.8.1.3. Appointments and Removal of Third Party .………….…….….205

3.8.1.4. Powers and Duties of Third Party …….…………………….….206

3.8.1.5. Procedure ……………………………………………………….207

3.8.1.6. Outcomes and enforcement of the proceeding ………...……….208

3.8.2. ADR in Labour Law …………………………………………..………….209

3.8.2.1. Introduction ………………………………………….…............209

3.8.2.2. Conciliation …………………………………….……...……….210

3.8.2.3. Arbitration …………………………………..………………….213

3.8.2.4. Labour Relation Board …………………………………………215

iv

3.8.3. Arbitration under Insurance Law ………………………………………..217

3.8.3.1. Introduction ……………………………………………………217

3.8.3.2. Kinds of ADR Recognized in Insurance ………………………217

3.8.3.3. Insurance Matters Which Could Be Taken to ADR. ………….219

3.8.3.4. Parties’ Rights to waive their Right to institute 1 st

Instance substantive litigation …………………………………223

3.9. Summary ………………………………………………………………………228

Chapter Four: ADR in International and RegionalLevel …………………………229

4.1. Introduction ……………………………………………………………….229

4.2. The need for ADR in International disputes ……………………….……..230

4.3. Scope and Parties to International ADR ………………………..………...236

4.4. International Documents and Organs Regulating ADR …….…………….240

4.4.1. New York Convention on the Recognition and Enforcement of

Foreign Arbitral Award, 1958 ………………………………….241

4.4.2. Convention for the Pacific Settlement of International Disputes

(1899 and 1907) and the Permanent Court of Arbitration (PCA) …245

4.4.3. UNCITRAL Documents ……………………………………….…. 256

4.4.4. International Chamber of Commerce (ICC) and the International

Court of Arbitration ……………………………………….……… 263

4.5. ADR in Regional Level ………………………………………….………….. 269

4.5.1. Europe ……………………………………………..……………… 269

4.5.2. America (NAFTA) ……………………………..…………………. 275

4.5.3. Africa ………………………………………..……………………. 281

4.6. Ethiopia’s Approach to International ADR ………………………………… 292

4.7. Summary ………………………………………………………………….… 296

References…………………………………………………………………………………298

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Course Introduction

Dispute is indispensable part of societal interaction since the inception of human

settlement. If it is not well taken and resolved early, dispute between two individuals will

grow up and become treat to national security, peace and stability, which are the basic

parameter to measure the development of a nation. With the objective of settling dispute

in a more justifiable manner, national governments and the constitutions of most nations

establish institutions; judiciary organs of the government. It is the natural mandate of

courts of law to entertain disputes. Other than judiciary arm of the government, the

necessity of establishing other tribunals with judicial power has been felt long ago. With

in the executive arm of the government, quasi judicial tribunals named otherwise as

administrative tribunals have been establish to settle disputes. Courts and administrative

tribunals are public institutions established to resolve disputes.

But before the establishment of courts and administrative tribunals, and even after their

establishment, there have been other private tribunals by which the society is trying to

settle disputes. These are called Alternative Dispute Resolution (ADR) mechanisms.

ADR doesn‘t refer a single kind of mechanism, but it is a generic name to refer dispute

settlement mechanisms other than court and administrative tribunals. Arbitration,

Conciliation, Mediation, Negotiation and Mini- Trial are some of them which are referred

as ADR.

This two credit hours course will try to bring in to your attention the issues surrounding

ADR. With a view of making a systematic study of the subject matter the material is

divided in to four chapters. The first chapter is devoted for a general understanding of the

subject ADR. In doing so, the meaning and the concept, historical developments,

advantage and disadvantage of ADR and similarly court litigation will be best assessed.

Though we call generally as ADR, it contains different kinds of dispute settlement

devises. The second chapter will look all the widely known ADRs. It starts by looking the

basic characteristics of these different kinds and a very close discussion will be made on

the three widely used ADR; Arbitration, Mediation/Conciliation and Negotiation.

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The third chapter is exclusively devoted for the experience of ADR under Ethiopian legal

regime. The historical background of ADR in Ethiopia and its constitutionality comes

first. Under the existing Ethiopian legislations, there are different provisions put through

out of its legislation regulating the matter. Compromise in general, conciliation and

arbitration in general and specifically under family, labour and insurance law will be

assessed. The practice of institutionalized ADR under the Ethiopian legal regime will be

seen in this chapter.

Lastly, the documents which deal with ADR and institutions practicing ADR in

international level will be seen. Through there are lots of such kinds of institutions and

documents, only few of them will be seen as an example, like International Chamber of

Commerce (ICC) and International Court of Arbitration (ICA), the 1948 New York

Convention, the 1899 and the 1907 Convention that have established Permanent Court of

Arbitration (PCA) and the documents under UNCITRAL will be explored. The place of

ADR under regional documents of Europe, North America and Africa, and the approach

taken by the Ethiopian legal system to these international and regional documents will be

discussed at last.

There will be questions which the students will be expected to answer for a better

understanding of the subject. We have tried to incorporate real and hypothetical cases to

support the discussions made there under. Provisions related to ADR from the

Constitution, Civil Code, Civil Procedure Code (Civ. Pr. C.), Family Code and Labour

Proclamation No 377/2003 have been thoroughly analyzed.

As long as the objectives set in each chapter is not defeated, the instructor of the course

can use any materials, cases and documents other than listed at the end of the material.

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Chapter One

General Overview of ADR

1.1. Introduction

The provision of effective dispute resolution is the core concern of domestic as well as

international legal system. The aim of devising mechanisms to afford effective dispute

resolution is to ensure that disputes are solved through effective and efficient means for

the benefits of the disputants and the society in general. So as to attain this core objective,

states and the international community have been searching various ways of resolving

dispute than insisting on the traditional way of resolving dispute through court litigation

which is mostly ineffective and inefficient.

Now days, therefore, Alternative Dispute resolution has got wide acceptance to resolve

dispute due to its perceived advantages. Needless to say, even court officials, who used to

consider ADR as taking of court power, recognized the need of ADR as a choice to settle

dispute. Pre-trial conference and compulsory (court ordered) arbitration might be an

indication for this.

Alternative Dispute Resolution is a generic term used to describe a range of procedures

designed to provide ways to resolving a dispute as an alternative to court procedures.

ADR had been used by human society since ancient times though it gets wide acceptance

and recognition in countries‘ laws recently. ADR methods, in comparison with court

litigation, have various advantages though it is not free from different short comings. In

this chapter issues in relation with the meaning of ADR, its historical development, its

comparative advantages and disadvantages will be dealt. The short comings of court

litigation also enumerated to show the rampant problems of litigation.

Chapter Objectives

At the end of this chapter students will be able to;

 Define what Alternative Dispute Resolution mean;

 Appreciate the difference between conflict and dispute;

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 Know historical development of ADR;

 Identify the advantages of ADR in comparison with formal litigation;

 Realize the demerits of ADR;

 Demarcate the scope of application of ADR in Dispute settlement mechanisms.

1.2. Definition; What is Alternative Dispute Resolution?

ADR is composed o f different words: Alternative, dispute and resolution. Thus to clearly

understand or define the phrase it is paramount important to understand each words

separately thereof. And then what ‗Alternative‘ connotes to you? What about dispute? Is

a dispute synonymous with conflict? What about resolution?

The word ‗Alternative ‗, as to the definition given in 6 th

edition of Oxford Advanced

Learners Dictionary, refers ―a thing that you can choose to or have out of two or more

possibilities.‖

Therefore the word in this context is used as an adjective and refers to all permitted

dispute resolution mechanisms other than litigation, be it in court or administrative

tribunal . Whereas, the phrase dispute resolution, in the absence of alternative as prefix, is

simply a collection of procedures intended to prevent, manage or resolve disputes and

refers procedures ranges from self-help in the form of negotiation through to state

sanctioned mechanisms called litigation. It is to mean that ‗Alternative‘ connotes the

existence of dispute settling mechanisms other than formal litigation. Though the word

‗Alternative‘ in ADR seems to connote the normal or standard nature of dispute

resolution by litigation and aberrant or deviant nature of other means of dispute

resolution mechanisms, it is not really the case. ADR is not an alternative to the court

system but only meant to supplement the same aiming on less lawyering.

Now days there are arguments that ADR does not include arbitration and the proponent

of this position say that alternative Dispute resolution encompasses various amicable

dispute resolutions other than Litigation in court and arbitration. Indeed ADR Rules of

The international Chamber of Commerce follows this approach. The preamble of the

same rule reads as:

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Amicable settlement is a desirable solution for business disputes and

differences. It can occur before or during the litigation or arbitration of a

dispute and can often be facilitated through the aid of third party (the

neutral) acting in accordance with these rules.

Needless to say most literatures and laws consider alternative dispute resolution as

methods of dispute resolution which accommodates all the traditional dispute settling

mechanisms other than court litigation. As arbitration shares many characteristics with

other dispute resolution mechanisms than court litigation ADR in this material connotes

all dispute resolutions out of litigation.

The other important word to define ADR is Dispute/ Conflict. There is debate about

whether a conflict and a dispute are synonymous. Apart this debate psychologist,

Lawyers, Diplomats, and Public Servants all deal in their work with conflict/ dispute.

Concerning the distinction between Conflict and Dispute, different people suggested the

difference in meaning between these words. Some people, for instance, define ‗Conflict‘

as a form of competitive behaviour, like competition for scarce resource. Some see it as

mere reflection of differences and an opportunity for personal growth. Still others only

recognize conflict as armed conflict or war.

The nouns ‗Conflict‘ and ‗Dispute‘ are used interchangeably all time and indeed, are

synonymous for each other in English Language, however. Still scholars, including

Chornenki, draw slight distinction among the two words. According to the named scholar

here, ‗Conflict‘ is the parent and disputes are the children and frequently, intervention is

more important at parental level. He further states that conflict is a phenomenon or

condition with three aspects. It manifests it self through attitudes, behaviour and

situations. This triangular image opens the prospect that conflict can be internal state of

mind, an external act or an environmental situation. By contrast, Dispute is an issue –

specific manifestation of conflict as to the same person. It usually has identifiable parties

and articulated or defined /delineated points of difference between those parties. A

dispute is the subset of conflict: conflict gives rise to and sustains dispute. This

distinction, as to the above proponent, is very important because if a dispute is addressed

in only superficial way without regard for the underlying conflict, it may recur or

replaced by other similar or related disputes.

Page | 6

Similarly, Folberg and Taylor also give the same definition for dispute as of Chornenki.

To them ‗a Dispute‘ is an interpersonal conflict that is communicated or manifested. A

conflict may not become a dispute if it is not communicated to someone in the form of

perceived incompatibility or contested claim as to them.

Abebe Semagne in his unpublished senior thesis also quoted the meaning of dispute as;

― a conflict or controversy; conflict of claims or right; an

assertion of right, claim or demand on one side met by the

contrary claims or allegations on the other; the subject of

litigation; the matter for which a suit is brought and which issue

in joined; and in relation to which jurors are called and witness

examined

Apart the above difference in meaning between two words the writers of this teaching

material use the two words interchangeably for convenience sake.

The other element of ADR is Resolution. The oxford Advanced Learner‘s Dictionary

defines ‗Resolution‘ as the act of resolving or settling a problem, dispute, etc.

Thus , even if the phrase ,i.e. ADR, defy precise definition ,as to the above illustrations

and different literatures, it is a generic term used to describe rang of procedure designed

to provide a way of resolving a dispute as an alternative to court or administrative

Tribunal procedure. For instance, Kerley , Hames and Sukys in their book entitled ‗Civil

Litigation ‗ shortly define the phrase as methods to resolve legal problems other than

court judgment.

ADR is sometimes referred as Appropriate Dispute resolution as the referred option

should be the process most appropriate to the case, the parties and the issue involved.

1.3. Historical Development of ADR

There is no clear information when exactly ADR had been used as means of dispute

resolution but it quite possible to conclude its dating back to the history of human

Page | 7

society since there were no courts to resolve differences during ancient time .Different

scholars have showed the long history of ADR methods in their work. Here under we

incorporated the full text of an article written by Lipner, entitled ‗Methods of Dispute

Resolution: TORAH TOTALMUD TO TODAY.‘ The article indicates the prevalence

of the idea of ADR before 2000 years ago by showing the kind of debate in Talmud.

The modern –day methods and the issues raised by the difference between litigation

and arbitration, have ancient roots. As this article demonstrates, the fundamental

philosophical questions we face every day in the dispute resolution field were also

faced by Rabbis and Hebrew sages nearly 2,000 years ago. The debates of these sages

and their opinions are reflected today in our attitudes and laws about dispute

resolution.

I. The TORAH

The Bible (at this time after referred to by its Hebrew name ―TORAH‖) contains one of

the earliest legal codes. Throughout much of the TORAH, laws are prescribed and

punishments are defined. Some of the laws prescribed are simple and …from today‘s

perspective...Self-evident (e.g. the Ten Commandments); others are more arcane and

obscure. The Torah contains laws that are both societal (what we think of as ―criminal ―

) and laws that are private (What we think of as ―tortuous‖ and, in some case

―commercial‖).

In the final book of the torah, Deuteronomy, mosses makes two long speeches to nation of

Israel . The people‘s travel through the wilderness are nearing an end, and the Israelites

are about to cross over the Promised Land. Moses‘ speeches in Deuteronomy are

basically recapitulation of the laws recited earlier in the torah combined there with

ominous injections that the laws must be strictly observed.

Not only does Moses recite the substantive laws themselves, he also speaks about the

nation of Israel about resolution of disputes. Speaking about creation of a leadership

structure of his people, Moses says:

I charged your magistrate at that time as follows,‖ Hear out your fellow

men, and decide justly between any man and fellow Israelite or a

strange. You shall not be partial in judgment: hear out low and high

Page | 8

like. Fear no man, for judgment is God‘s. And any mater that is too

difficult for you, you shall bring to me and I will hear it.

Moses‘ words seem basic laws were announced; judges were appointed. The judges‘

function was to decide dispute fairly through application of law. Complex cases can be

brought before Moses himself, who would sit as a sort of Supreme Court. Correctness of

the magistrates‘ rulings would be ensured through divine inspiration. Justice,

impartiality and access to court are offered as guiding precepts but no alternative of the

―Magistrates‖ is offered.

II. THE TALMUD

The Talmud (the word means ―learning‖) was compiled between 1,600 and 2,000 years

ago by rabbis in Jerusalem and Babylonia. Recorded over a period of four centuries, and

combined with later-written commentary, the Talmud consists, in large part, of the

studies and debates of Israel‘s leading scholars, predecessors of today‘s rabbis. The

Talmud explores in a variety of ways the meaning of the Torah‘s ancient laws. Yet the

Talmud was compiled many years after the Torah; the rabbis and the compilers of the

Talmud were recording further details about the meaning of the Torah‘s laws.

In studying and expounding on the Torah and its laws, the rabbis in the Talmud also

debated methods of dispute resolution. Just like courts and arbitrators today the rabbis of

the Talmud were faced with the question whether the ―laws‖ were to be applied strictly

or whether a broader sense of ―Justice‖ and ―equity‖ should prevail.

Their answer is strikingly similar to our own modern attitudes about adjudication and

arbitration.

[*317] In the Tractate of the Talmud called ―Sanhedrin,‖ the rabbis discuss

different approaches to dispute resolution. Which is more appropriate, they ask--

―Judgment‖ based on the strict law, or the ―arbitration‖ of a ―compromise‖. It was

taught….‖ once a case has been brought to court, it is forbidden to arbitrate a

compromise. Not only is compromise forbidden, but whoever arbitrates a compromise is

regarded as a sinner, for compromise necessarily involves a deviation from Torah law to

Page | 9

the disadvantage of one of the litigants. And whoever praises one who arbitrates a

compromise blasphemes God‖.

Rabbi Eliezer… explains: Rather than compromise, ―let the law cut through the

mountain. Let even the most difficult case be decided according to the strict letter of the

law, as it is said in Deuteronomy 1:17:Do not be afraid of any man, for the judgment is

God‘s . And similarly Moses, who was the first to judge Israel according to the Torahlaw,

would Say: ―let the law cut through the mountain‖.

But his brother Aaron, who was not a judge, loved peace and caused peace to reign

between a man and his fellow man…

Woven into this Talmudic discussion is a fundamental premise that remains with us

today-- that arbitration involves the surrender of rights; it thus must be the product of

consent.

Inherent in the ―surrender‖ premise is that there is a difference between the strict

application of law in the courts and the less-strict approach used in arbitration. Put

differently, ―rights‖ are at issue because of the substantive differences between the two

approaches-differences that can act to the detriment of one of the parties.

[*318] The wisdom of applying the letter of the law-and the divine interlocution that is

assured in the Bible—is then cast into doubt by the reference to the contradictory

philosophy of Moses‘ brother, Aaron. Aaron ,the Talmud tells us , had a different attitude

toward the resolution of disputes.

While the details of Aaron‘s approach are not revealed in Torah or Talmud, the

reference to Aaron appears to signal biblical legitimacy for an alternative approach to

the resolution of disputes outside of the judicial system. As the High priest of Israel,

Aaron knew the laws well, and he could have applied them as did Moses, but we are told

that he chose not to do so.

It will not go un-noticed to those experienced in arbitration that Moses‘ brother Aaron

is specifically identified as not being a judge. More important, however, is the fact that

Page | 10

this Talmudic passage ends with the incursion of a new but logical goal for dispute

resolution-the promotion of ―peace‖

Leaving for another day the question whether arbitration is in fact more likely (than is

litigation) to promote peace, it must still be observed that the colloquy leaves the ultimate

question unanswered—which approach is superior, that of Moses or that Aaron?

The Talmud next records a ruling on the desirability of an arbitrated compromise versus

a litigated judgment, and ends with a not-unusual conundrum meant to inspire further

thought: Rav said: the law is in accordance with the view of Rabbi Yehoshua ben korhah,

that it is a mitzvah [a meritorious deed] for a court to impose a compromise….

[ But] is it really so that Rav rules that a compromise is a mitzvah? Surely Rav Huna,

who was a disciple of Rav, accepted his master‘s rulings, and whenever two people came

before Rav Huna to have him adjudicate a dispute, he would ask them: ― Do you want me

to adjudicate the case and tender a judgment or do you want me to arbitrate a

compromise?‖ Now if Rav ruled that a compromise is a mitzvah, why did his pupil Rav

Huna offer the litigants a choice between judgment and compromise?

The question the Talmud asks here lies at the heart of the debate over the benefits and

drawbacks of alternative dispute resolution (―ADR‖)- which method is preferable? The

Talmud‘s answer is that ―choice‖ is to be promoted, but that neither arbitration nor

letter-of –the law judgment is so superior as to be preferred to the exclusion of the other.

[*319] The next question might be: but why should the law promote a choice between a

divinely-directed system and one that may act contrary to God‘s law? ADR ―believers‖

may be content to rest their case with the citation to Aaron, though they are sure to add

certain disbelief about the divine inspiration of judges.

A principal goal of dispute resolution, the Talmud explains, is creating peace (―shalom‖)

between the disputants:

… surely where there is judgment and adherence to the law, there

is no peace between the two litigants. And where the litigation ends with

Page | 11

peace reigning between the two parties, there is no true judgment for to

arrive at absolute justice, we must strictly follow the letter of the law,

which is usually only in one party‘s favor. How then can there be a

judgment which attains peace? You must say that this verse refers to

compromise. And similarly, regarding King David, the verse states: ―And

David executed judgment and charity to all his people.‖ But surely where

there is judgment and strict adherence to the law, parties, there is charity,

or consideration given to the financial circumstances the two parties. And

where there is charity , there is no judgment, for the law is one and the

same for rich and poor. How then can there be a judgment which involves

charity? You must say that this verse refers to compromise.

King David is venerated in Jewish lore as being unerring; the reference to verse from

David, with its linkage of ―judgment‖ and ―charity,‘ provides the biblical (albeit post-

mosaic) basis for promoting an arbitrated rather than strict legal resolution of disputes.

Those seeking rabbinic authority for a preference for arbitration can, however turn to

another scholarly and authoritative work about the meaning of the Torah and Talmud.

The ―Shulchan Oruch‖ (literally the ―prepared table‖) is a more-straightforward

recapitulation of the Talmud. By the time of Shulchan Oruch (early 16 th

Century), the

Talmudi ―laws‖ and debates had become so complex that people Yearned for a simpler

version to which they could turn for answers. The Shulchan Oruch thus tries to answer,

in four well-organized volumes, the questions the Talmud asks.

The Shulchan Oruch, written by Rabbi Joseph caro, settles the judgment/ arbitration

issue as follows: It is a meritorious deed to compromise. ―It is a mitzvah for the

judge to ask the parties at the outset whether they want their dispute resolved according

to the law or by the means of a compromise …‖

[*320] There can be no doubt that , again, the main emphasis is on honoring choice. But

now, the thrust is not simply about honoring the parties‘ choice—arbitration and

compromise have not just been elevated to equal status with a court‘s strict judgment,

arbitration is in a sense preferred. The judge must offer the parties a choice.

Page | 12

The statement that the judge himself does a meritorious act by offering arbitration at the

outset 12

is intended as a clear expression to the parties that the use of the arbitration

alternative is sanctioned/encouraged. This passage from the Shulchan Oruch displays a

certain judicial reluctance on the part of rabbis to apply the strict law.

Other rabbinic interpretations support the concept of preferring arbitration. For

example, an older piece of writhing from the 12<th> century—that of Rabbi Moses ben

Maimon (Maimonides or RAMBAM) interprets the Talmud as favoring arbitration. The

promotion of ― peace‖ is the principal rationale offered. Like Rabbi Caro and the

Shulchan Oruch, Maimonides preferred arbitration to letter-of the-law litigation.

But it can also be observed that the Mosaci preference for judgment according to the

strict letter of law was derived from a sense that both the law and the decision-maker are

divinely directed. But a corollary of that ―faith‖ is that unlike God (and perhaps Moses),

humans are fallible, and that God does not necessarily intervene to assure the

correctness of every judicial act.

The rabbis thus favor arbitration/compromise because it reduces the potential for

grievous error. Put differently, a middle-ground solution reduces the adverse

consequences of the judge being totally wrong; the potential for injustice is there by

reduced-and justice is the first and foremost goal.

These biblical and rabbinic texts throughout stress the theme that all dispute resolution

systems be fair and impartial, and driven by the need to do ―justice.‖ Whether in

litigation or arbitration, the decision-maker must do ―justice.‖

But the Talmud teaches that there is no presumption that strict application of law is

necessarily more ―just‖ than an arbitrated, less-legal solution. Indeed, in the later

[*321] writings, there is, surprisingly, a preference for the looser approach

characterized by what we think of today as ADR.

Next we will see how that preference continues, in remarkably similar form, in our

(secular) law today. But before doing so, it important to note that the Talmud cautions

that‖ the power of compromise is greater than the power of judgment, perhaps intended

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as a warning to arbitrators that they must always act with utmost discretion and

thoughtfulness, rather than cavalierly or capriciously.

III. TODAY

Arbitration law today very much reflects the Rabbinic and Talmudic views on dispute

resolution. Any individual who is aggrieved has ready access to the courts, and a right to

strict application of the law—including resort in complex cases to appellate authority.

The courts, we know, will not modify or ignore legal rues in the name of compromise or

peace, letting the proverbial chips fall where they may.

But our law also recognizes that if an agreement to arbitrate exists, the right to go to court

and insist on strict application is surrendered. The Federal Arbitration Act (―FAA‖)

Section 2, provides:

Validity, Irrevocability, and Enforcement of Agreements to Arbitrate: A

written provision in any… contract… to settle by arbitration a controversy

thereafter arising out of such contract… shall be valid, irrevocable, and

enforceable, save upon such grounds as exists at law or in equity for the

revocation of any contract.

Every state has a similar, if not identical, statute. There are, as well international treaties

to the same effect.

And as was the case with the Talmud, once in arbitration, the parties have no right to

insist on strict application of law.

Absent provision in the arbitration clause itself, and arbitrator is not bound by principles

of substantive law or by rules of evidence. He may do justice as the sees it, applying his

own sense of law and equity to the facts as the finds them to be and making an award

reflecting the spirit rather than the latter of the agreement, even though the award exceeds

the remedy requested by the parties. His award will not be vacated even though the court

concludes that is interpretation of the agreement misconstrues or disregards its plain

meaning or misapplies substantive rules of law, unless it is violative of a strong public

policy or is totally irrational, or exceed a specific enumerated limitation on his power. 17

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[*322] comparing the FAA and the Sliverman case with the Rabbinic discussion, one

sees a modern judicial attitude identical to that of the Talmud. The agreement, i.e. ―

choice,‖ is the main element. 18 once the choice is made to arbitrate, the parties enter

into a different system and there is no turning back.

The system described by the New York court of Appeals in silverman is just like the one

the rabbis described in the Talud. The arbitrator has discretion to fashion a solution that

the strict law might not support. The comparison of the cases and the centuries- old

discussion by the sages reveals that the commonly-recited benefits of arbitration-an

emphasis on equity over law, greater flexibility, virtual finality and, yes, the promotion

of‖ peace,‘ go back a long, long way.

The silverman case‘s famous dicta, however, stands in contrast of sorts to the dicta of the

United States Supreme Court in Mitsubish! Motors Corp. V Soler Chrysler Plymouth,

Inc. In that case (involving international arbitration of issues arising under U.S. antitrust

law) the court stated that by agreeing to arbitrate a… claim, a party does not forego the

substantive rights afforded by [law]; it only submits to their resolution in an arbitral

rather than a judicial, forum .― In a sense the Court is reminding arbitrators what the

Talmud warned two millennia ago-that the ―power of compromise is greater than the

power of law‖ that power must be exercised with the same degree of justice as is

mandated by the law itself.

The author summarized his conclusion as follows;

These passages, now and old offer ―Sages‘‖ advice for the arbitration community today

1. Arbitrators are not judges, and arbitration is not meant to be a court of law;

2. Arbitrators should not apply the law in the same strict way that a judge does that

goes for procedures and the rules of evidence as well; and

3. Arbitrators must never lose sight of the principle that their overriding obligation

is to provide access to all who are aggrieved, to act impartially, and most of all-to

do justice.

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According to Reddy, also, informal dispute resolution has long tradition in many of the

World societies dating back to the 12 th century in China, England and America.

However, 1970s law reform movement in USA had played a great role for the further

development of the same. In USA in the middle of the 20 th century, legal and academic

communities began to have serious concerns about the pitfalls of increased litigations

because, even though legislations of the time granted a broad range of rights and

individual protection, the search for redress of those rights while they are infringed

through legal system was becoming a complex exercise. Adjudication of disputes was

characterized by the court congestion, high legal cost and waiting for long hours in

courts.The emphasis of the court and other traditional forum was pronouncing rights and

wrong. And naming winner and loser destroy almost any pre-existing relationships

between the people involved.

The cost, the stresses and inaccessibility of ways to resolve conflict other than through

the popular alternative of fight and flight caused people to drop out or to seek extreme

techniques to make their points. There for against back drop of formal litigation, new

methods of settling disputes had been emerging both in and out of the court.

The Roscoe Pound Conference in Saint Raul, Minnesota, (1976) is well known

phenomenon in the history of growth of alternative dispute settlement mechanisms. The

conference was summoned by a person named Warren Burger, a former Chief Justice of

USA. It was a conference to discuss the causes of popular dissatisfaction with the

administration of Justice at the time and to find new and better ways of dealing with

disputes. In this conference academics, members of the judiciary and lawyers

participated.

The Pound Conference served to spark the interest of legal establishment in alternative

ways of dispute settlement. And a lot of changes had taken place on aftermath of the

Pound Conference: rapid growth of techniques of settling disputes and emergency of new

institution and professionals to use them.

After the Pound conference, the American Bar Association established a special

committee on minor dispute, which has now become the special committee on dispute

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resolution. Law schools and schools of business offered some alternative dispute

resolution courses as part of their curriculum. Insurance companies used ADR to handle

claims with the growing demands of clients to resolve disputes though ADR mechanisms,

law firms appointed ADR coordinators as a response. Troubled families who used to go

to the court began to mediation. And following this trend a number of jurisdictions

required divorcing couples to try mediation before the courts would resolve their dispute

for them.

States become to treat ADR in their law .The American Congress in the late 1990 passed

the Administrative Dispute Resolution Act, which requires the Federal Agencies to

develop policies on the use of ADR, appoint ADR specialists and provide appropriate

employees with training in ADR. In USA, the Civil Justice Reform Act was passed in

1990. It required all Federal district Court to create advisory Committees to consider

ways of reducing the cost and delay of civil litigation, and directed these committees to

consider the use of ADR to reduce cost and delay.

As ADR mechanisms are disseminated in many countries; countries developed

innovative conflict management programs specific to their own cultures.

Apart domestic effort by each states to use ADR, the International Community also

resolved to use ADR on the same fashion. The international community, for example,

use Arbitration clauses in International Trade contracts so as to reduce the back drop of

litigation in court. International Arbitrations may be either ad hock, specified by parties

in their contracts and administered and conducted in a manner defined by them or

institutional incorporating rules, procedures and administration of Arbitration Institutions.

Such Arbitration Institutions include the International Chamber of Commerce (ICC),

head quarter in Paris, London Court International Arbitration (LCIA), The American

Arbitration (A.A.A) and the International Center for Settlement of Dispute (ICSID),

established by the World Bank in Washington, D.C. The other Arbitration centres have

been developed by the United Nations Commission on International Trade laws

(UNCITRAL) of uniform set of culturally neutral Arbitral Rules for use of on world

basis. The UNCITRAL rules have achieved wide acceptance for private as well as quasi-

public International Disputes. In chapter three and four you will see the historical

development of ADR in Ethiopia and in the international sphere in detail.

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1.4. Purpose of ADR

What are the advantages of ADR?

The age-old complaints lodged against lawyers and the legal process has gained an

amplified resonance in the cotemporary world community. The common conception is

that judges and lawyers, the procedural rigor of justice and substantive incantation of

legality, lay Jury and technical experts hurt more than they help. The recourse to legal

actors and proceedings is cost , emotionally debilitating, and potentially

counterproductive .It is to meant that now it is a common knowledge that existing justice

system is not able to cope up with the ever increasing burden of civil and criminal

litigation . The problem is not of a load alone. The deficiency lies in the adversarial

nature of judicial process which is time consuming and more often procedure oriented.

There is growing awareness that in the bulk of cases court action is not appropriate

recourse for seeking justice.

Judicial process is set in motion by the action of an aggrieved party. Each party‘s case is

presented before the judge by the advocators, who are expert in court craft, in straight

jacket of rules of procedure and substantive law. The Judge perceived the dispute (or the

issue involved ) in the backdrop of known legal concepts , sifts evidence to arrive at the

truth, hears arguments to determine as to how logically the parties stand in terms of

applicable legal concepts and pronounce his verdict accordingly. The parties are bound

by the verdict, at the peril of legal sanctions, if disobeyed. Represented by lawyers

(especially in developed countries) the parties are kept at a distance not only from the

judge but also) from each other. The end result is a win–lose litigation .Thus, the dispute

is liquidated and justice done or that is what is professed. But the difference between the

parties continue to subsist, the competing interest of the parties remain unsolved, inter-

personal relationship of the parties becomes more hardened. The adversarial court does

not aim at resolution of competing claims of member of the society. It aims at upholding

the one and rejecting the other , leaving the conflict between the parties un solved .Thus,

apart from the fact that recourse to justice through the court system is time consuming

and inaccessible due to mounting arrears, the judicial process itself is not oriented for the

adjudicating upon rights –liability relationships created under legal regimes pertaining to

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modern science and high technology because the subjective matter of the disputes arising

from such relationship can be better understood in terms of scientific and technological

concepts though disputes are stated in terms of usual legal concepts.

In its philosophical perception, ADR process is considered to be model in which the

dispute resolution process is qualitatively distinct from judicial process. It is a process

where disputes are settled with the assistance of a neutral third party generally of parties

own choice: where the neutral is generally familiar with the nature of the dispute and the

context in which such a dispute normally arise; where the proceeding are informal,

devoid of procedural technicalities and are conducted, by and large, in the manner agreed

by the parties; where the dispute is resolved expeditiously and with less expenses: where

a decision making process aims at substantial justice, keeping in view the interests

involved and the contextual realities. In substance the ADR process aims at rendering

justice in the form and content which not only resolves the dispute but tends to resolve

the conflict in relationship of the parties which has given rise to that dispute.

Having stating the above general description about the purposes of ADR in general, here

under are specific purposes of ADR with their justifications.

A. Reduction of Cost and Time

One of motivations for ADR system is to reduce the cost and time involved in solving

disputes. If a new dispute resolution system can reduce costs and achieve out comes that

are just as good as those under previous system, it make the new system desirable. Law

suits are expensive, some times the cost goes even the extent of making the victory of a

party insignificant or exceeding of the amount of judgment .There are court fees, filling

fees, lawyers‘ fees, and other costs. There would also be loses to be incurred by both

litigants because of spending longer time in litigation that may not be covered by the

courts awards. On the other hand, an ADR system can make it possible to use process

that cost small fraction of the litigation, and yet produce as good or even better results.

Mediation is usually designed to start and finish in one day. The disputants usually share

the cost of the mediator. In this circumstance, therefore, the total cost of mediation is

minimal as compared to the cost of litigation.

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B. Improve or Maintain the Relationship

Insituations where the disputants have an ongoing relation , ADR system allows them to

work through their difficulties in a productive way that does not destroy their

relationship. After acrimonious litigation, disputants rarely want to put the past behind

them and work cooperatively. The dispute resolution system may provide process that

will not leave people to work together angry and frustrated with either the result or the

process itself. In the ADR process the disputants could rather learn information that will

allow them to work more effectively in the future.

C. Satisfactory Outcome

Regardless of the process used, the solution must solve the problem that exists. ADR

procedures tend involve the parties with the view to achieving settlement. ADR

procedures create a formal setting to bring parties together for serious attempt at

resolving a problem .A dispute resolution process must move parties towards workable,

durable and easily implement able out come. ADR procedures help to afford chance that

the parties can make real progress on the case and that the parties can communicate more

fully and frankly through a third party.

D. Deal with Emotion

The ADR process will give disputants an out let to discuss their frustrations. They will

get the chance of venting emotions in non-threatening environment. This will help the

disputants be satisfied with the outcome. ADR provides for effective and neutral methods

or factors for achieving maximum impact on the process, strategy, and tactics to words

resolution. A disputant will be ready to deal with the issues when he or she is satisfied

that other person has listened to his or her point of view.

E. Avoid Future Disputes

AnADR system can yield us techniques that can resolve disputes effectively and wit out

damaging relationships. The process used for a dispute at hand can provide a frame work

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