Business Law Discussion no – 6

As a result, arbitration is more expensive than it should be, and critics claim, with some justification, that ADR’s cost-cutting ability is exaggerated. NCR has set up guidelines to deal with this problem. It has been found that arbitration looks like, feels like, and works like arbitration when the parties are prepared to pursue the following goals.
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. 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).
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 the 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. 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.
At NCR and many other companies we know of, including AT