Voluntary Alternative Dispute Resolution


Alternative dispute resolution refers to any means of settling disputes outside of the courtroom. Arbitration and mediation are the two primary forms of alternative dispute resolution. A business, along with a consumer or employee, can agree to use them after a dispute arises.

In mediation, an impartial mediator helps the parties try to reach a mutually acceptable resolution of the dispute. Mediation leaves control of the outcome with the parties. The mediator helps the parties communicate so they can try to settle the dispute themselves. In arbitration, an arbitrator hears arguments and evidence from each side and then decides the outcome of the dispute.

Arbitration is less formal than a trial, and the rules of evidence are often relaxed. Voluntary arbitration may be either binding or nonbinding. Binding voluntary arbitration means that the parties waive their right to a trial. They agree to accept the arbitrator's decision as final. Generally, binding arbitration gives no right to appeal an arbitrator's decision. Nonbinding voluntary arbitration means that the parties are free to request a trial if they do not accept the arbitrator's decision. When arbitration is required in a consumer contract, it is not voluntary (see also Pre-Dispute Mandatory Binding Arbitration).



Post-dispute arbitration and mediation

Options for alternative dispute resolution (ADR) should be available. These include mediation and arbitration. ADR should be voluntary and nonbinding.

Policymakers and the private sector should ensure the process is fair. This includes putting in place the following protections:

  • Parties must receive clear notice of the ADR process, an explanation of its rules and consequences, and an opportunity to decline to participate in any ADR processes.
  • Arbitrators and mediators must be qualified and independent.
  • Consumers and employees should only pay reasonable costs, and ADR access should not be denied based on ability to pay.
  • Parties must have the right to counsel.
  • Mediation procedures should ensure confidentiality for both parties.
  • Arbitration decisions should be in writing and subject to court review.
  • Proceedings should be held reasonably near the location of the consumer or employee.