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Alternative dispute resolution and its importance in everyday business relationships

17th of January

With the development of various types of cooperation, especially in connection with the conclusion of transactions both in the domestic market and with foreign partners, there is an increasing interest in quick and efficient dispute resolution. Dispute resolution in state courts has always remained a stable tool for dispute resolution, but given changing economic circumstances, parties to a transaction are increasingly looking for a quick and financially favorable solution, which can be achieved using alternative types of dispute resolution. Alternative dispute resolution refers to negotiations between the parties to a transaction aimed at achieving voluntary mutual agreement and settlement between the parties, avoiding the use of coercive means. Of course, each of the alternative types of dispute resolution provides for a different procedure and outcome, but the goal is the same for all of them - to achieve the best possible result. Alternative dispute resolution is a process in which the parties and a professional third party involved neutrally and objectively help the parties reach a resolution of their dispute using a variety of non-coercive dispute resolution methods. Alternative dispute resolution utilizes a variety of approaches to resolve conflicts and avoid litigation.

The main principles of alternative dispute resolution are:

Freedom of choice: parties to a transaction have the right to freely choose and reach a voluntary informed agreement on ways and processes to resolve existing or future disputes.

Neutrality and objectivity: providers of alternative dispute resolution services (mediators, negotiators, mediators, arbitrators) are legally disinterested and neutral persons who do not have and should not have any interest in the outcome of a dispute or the resolution of a particular dispute, or any bias towards the problem being resolved. The parties to the transaction must be informed of any circumstances that may affect the impartiality of the alternative dispute resolution provider. Alternative dispute resolution providers must follow established ethical guidelines and standards of behavior.

Confidentiality: Alternative dispute resolution providers shall not disclose information obtained during the process about the content of the dispute and all information related to the dispute.

Adversarial principle: the adversarial principle is manifested in the parties' exercise of their right to present evidence, to give explanations and, for example, to the mediator or the arbitral tribunal involved in the examination and evaluation of evidence, as well as other procedural actions.

Freedom to choose the procedure: the parties have the right to freely determine the procedure. Whether the dispute is resolved by negotiation, conciliation, mediation or arbitration, the process is carried out in accordance with the mutual agreement of the parties.

Alternative dispute resolution procedures include negotiation, conciliation, mediation and arbitration. These types differ in their procedure and possible outcome.

Negotiation. Negotiation is a process in which the parties to a dispute discuss possible solutions with each other without using other mediators - negotiators. Each side argues its point of view, and each side may be represented by an attorney or designee invited by it. The parties exchange proposals and demands. Mutual discussions take place until a solution is reached or, alternatively, an impasse is declared. If negotiations do not lead to a result acceptable to both parties, conciliation may be used, which differs from negotiations in that in addition to the parties involved in the dispute, a third neutral party, the conciliator, is involved and participates in the process.

Conciliation. Conciliation is a negotiation process involving the parties involved in the dispute and a third neutral person, the conciliator. The third person has no decision-making power. The third person is perceived as the conciliator because each party wants to convince the other party of the correctness of their position. The conciliator can influence the content of the negotiation, strengthen arguments, comfort and make suggestions. The goal of mutual negotiation is to be able to communicate one's point of view to the other party in a way that each party can understand and come to a mutual agreement to find a solution. A conciliator is a person who acts as a mediator, providing an opportunity for each party to objectively view and explain the other party's point of view. If the conciliation process is not successful, the parties may opt for the mediation process, which explores solutions and options in more detail to reach a mutually desired outcome.

Mediation. Mediation is a collaborative process in which negotiations take place in the presence of a neutral person, the mediator, whereby the parties involved in the conflict negotiate their own solutions to the dispute. The aim of mediation is to reduce emotional tension, resolve the conflict and reach a mutual agreement satisfactory to all parties involved. Mediation is a voluntary process in which the conflicting parties, with the help of a neutral third party, try to find a constructive solution to the conflict themselves. Mediation is a conflict resolution process, which is a complement and at the same time an alternative to litigation and plays an increasingly important role in cases of various types of disagreements. Through mediation, a conflict can be resolved in a shorter period of time. If negotiations between the parties in the above processes are not successful, there is the possibility to use dispute resolution in arbitration.

Court of Arbitration. The Court of Arbitration is a private dispute resolution institution that provides a process for resolving disputes. The parties to a transaction agree to abide by the decision of a neutral, third party (the arbitrator), which is binding on the parties and equally enforceable as a court decision. In the arbitration process, the third party (the arbitrator) has decision-making powers that differ from the state court process, but structurally the communication with the parties and the dispute resolution process are comparable to the court procedures in the state court. To resolve a dispute in arbitration, the parties must agree in writing in advance, either before or at the time the dispute arises, that any dispute, controversy or claim arising out of this agreement, the transactions affecting it or its breach, termination or invalidity will be resolved in a specific arbitration tribunal. If no such written agreement has been executed, the parties will not be able to proceed to arbitration. The parties have equal procedural rights in the arbitral tribunal process. The composition of the arbitral tribunal shall ensure equal opportunities for the parties to use the rights granted to them to protect their interests. In the process of the arbitration court the parties may agree, but if it fails, the arbitrator shall decide the dispute on the basis of evidence and arguments, determining which party is entitled to what, stating it in the decision. The decision of the arbitral tribunal is final and cannot be challenged. The arbitration process is predictable because the parties to the dispute can agree on the conduct of the process. Dispute timelines are relatively quick, usually both domestic and international disputes are resolved within 2 months.

Through alternative dispute resolution, any disagreements and disputes that can be resolved outside of a state court can be addressed using various processes developed in practice as well as regulated in regulations. Alternative dispute resolution offers processes suitable for resolving disputes and disagreements between parties in a manner most acceptable to legal entities and individuals, while maintaining good mutual business relations. Alternative dispute resolution is based on recommended processes and tools by which the parties involved in a dispute can reach a mutually acceptable settlement as quickly as possible. Of fundamental importance is the will of the parties to resolve the dispute quickly and without enforcement, by mutually agreeing on possible compromises.