Alternative dispute resolution for businesses in developing countries

Question

Identify mechanisms (particularly innovative ones) for helping businesses to effectively resolve commercial disputes in developing countries.

Summary

Dispute resolution mechanisms can be arranged in a continuum. At one end are processes like which are formal, inflexible, and adversarial, and which depend on neutral third parties to decide the outcome of the process, such as litigation in court, where the outcome is decided by a judge. At the other end are increasingly informal, flexible, and consensual processes such as mediation and negotiation. In these processes, the parties involved in the dispute have greater control over the proceedings and the neutral party, if there is one, supports the process but does not decide the outcome. The most commonly used Alternative dispute resolution (ADR) processes are arbitration and mediation.

The following trends and innovations are apparent in the literature reviewed for the report:

  • increasing interest in ADR generally, with governments in high- and low-income countries strengthening and encouraging ADR;
  • increasing interest in mediation, compared with arbitration which appears to be becoming more formalised and may be losing some of the features that distinguished it from litigation;
  • global convergence on the Model Law developed by the United Nations Commission on International Trade Law (UNCITRAL) to provide the basis for harmonised national legal frameworks for ADR, with many countries either directly implementing the Model Law or drawing on it;
  • increased interest in ADR mechanisms located wholly within the private sector, rather than being linked to the justice system;
  • increased recognition in some jurisdictions of traditional dispute resolution mechanisms and in opening up a broader range of ADR mechanisms; and
  • online dispute resolution opening up as a new area of activity, which is still in its infancy but which is likely to grow with the continued growth of online commerce.