Alternate Dispute Resolution in the corporate sector of Sri Lanka

The discussion will be focused on how Alternate Dispute Resolution (ADR) is used in the business environment and the use of ADR in the cooperate sector of Sri Lanka.

ADR is the collective name given to several methods of dealing with disputers without litigation or going to court. In the United Kingdom the introduction of Lord Woolf’s reform in 1996 encouraged organizations to use methods of ADR to solve civil procedures problems. There are several mechanisms of ADR. Briefly, ADR is an alternative to going to court (Senft and Savage, 2014). Arbitration is a legal binding on both sides, usually by a lawyer or an expert in that field. In mediation, a mediator helps parties with a dispute to try and reach an agreement. Conciliation is similar to mediation but it is possible for the third party to suggest possible solutions to negotiate a settlement. Negotiation is when you negotiate directly with someone you are in dispute with, or an advisor or solicitor to negotiate for you.

In Sri Lanka, mediation and conciliation programs are usually funded by the government and aid agencies. It was initiated in 1990 to reduce court backlog and increase access to justice for the less fortunate. It comprises 218 mediation boards which mediate between 250,000-300,000 cases a year (WorldBank, 2011). However the use of ADR rather than going to courts can be controversial. If we take one of the popular avenues of ADR, Mediation for example is a lot cheaper than going to court. Being a developing nation, several organizations in Sri Lanka have started to adapt methods of ADR, it allows parties to facilitate and come to a mutual agreement.

If you’re involved in a small claim in court, ADR could be a faster procedure. Yet, in some cases ADR could take a longer time than usual. . A fine example of this would be ‘Gam Sabawa’ which has been a common form of mediation in rural areas since the earlier days which is still being used as an alternative to going to court.

Privacy and protecting the confidentiality of an Organization has been one of the main advantages of using ADR. Any leading organization wouldn’t want their name to be tarnished. Going through tribunal would result in loss of customer loyalty. For instance, a consumer would prefer going to court to get an injunction to stop a business from putting his life at risk. For instance, the ‘Golden Key Credit Cooperation’ in Sri Lanka became one of the biggest scams in Sri Lanka and it lead to a financial misappropriation case. Their reputation was tarnished since confidentiality of the hearing was lost.

ADR procedures are usually flexible. Mediators will usually bring both the parties for a face-to-face discussion.  Through interaction it can produce a solution which satisfies both sides. For instance, unfair dismissal is usually seen in labour intensive organizations regardless of how developed the company is. However, a court case between a consumer and a large organisation such as a local authority or a company, where the size and resources of an organization could put the consumer at a disadvantage. With ADR for example, a responsive solution to the problem could be offered. But in some cases, if it didn’t end in a settlement, it would be just added time and cost to the process.

From the knowledge gained from interviewing Mr. Faisz Musthapha, One of the main drawbacks seen is the lack of public awareness regarding ADR in Sri Lanka. Not everyone knows the other avenues of solving a dispute without going to courts (ADR, 2014). The role of the court is to resolve disputes and interpret the law. The legal system relies on reason not emotion. Thus, the values of the legal system are quite diverse from the values of any other alternative. Although the cost of other alternatives is less expensive in the UK, In Sri Lanka it is comparatively costly. Awareness by government agencies is crucial. This could be done by distributing pamphlets and brochures, and creating websites to inform the public about ADR. Training with regard to ADR should be included in institutions and companies as well. In Sri Lanka, a common problem in judiciary is the slow and ineffectiveness. With the growing use of ADR procedures in Sri Lanka, it will work as an alternative to court system and it will improve the efficiency. Many litigants are not aware of the range of options they got.

In conclusion the evidence on the cost and time savings of ADR procedures for parties in a dispute is growing. Especially procedures like binding arbitration which usually offers a final solution. However, the cost and time saving of using ADR might be just the tip of the iceberg. The indirect impacts, such as improvement in court effectiveness, the business environment and trust in the legal system could be quite important in the overall contribution of ADR to economic developments. Nevertheless, ADR should not be a prescription for reducing the prominence of well-functioning courts, which is the mainstay of the justice system. The lack of clarity about what these processes are could lead to serious ethical considerations for mediators, attorneys and courts. This could provide an opportunity for change.

References

Marketing Donut, (2014). Alternative dispute resolution FAQs. [online] Available at: http://www.lawdonut.co.uk/law/commercial-disputes/dispute-resolution/alternative-dispute-resolution-faqs [Accessed 27 Jul. 2014].

Findlaw, (2014). Dispute Resolution. [online] Available at: http://www.findlaw.co.uk/law/dispute_resolution/alternative_dispute_resolution/500304.html [Accessed 28 Jul. 2014].

Senft, L. and Savage, C. (2014). Penn State Law Review. Pennsylvania: The Dickinson School of Law, pp.327-260.

ASAUK, (2014). Why use ADR?. [online] Available at: http://asauk.org.uk/wp-content/uploads/2013/08/Why-use-ADR.pdf [Accessed 26 Jul. 2014].

WorldBank, (2011). Settling Out of Court. Washington DC: World Bank Group, p.4.