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).