Alternative Dispute Resolution
By Mervyn Malamed
Written by Mervyn Malamed | PUBLISHED IN “THE JEWELLERY NEWS”
Diamond Dealers Club members have been bound to settle disputes within the privacy of the Club through arbitration for a very long time,
This, however, is not so in the finished jewellery sector. Contracts usually do not state what happens in the event of a dispute. That means that it automatically goes to the lawyers on a journey to nowhere, or gets written off.
Best practice is an Alternative Dispute Resolution (ADR) clause. In short, it is an agreement to not sue each other but to rather collaborate in a three-step process. The progression goes from only you and your counterparts deciding what the outcome should be, to arbitration, which leaves the results in the hands of a third party, acting according to a set of rules. Creative, acceptable, and practical ideas are no longer of any consequence.
The first step calls for good faith negotiation. Should that fail, assisted negotiation (also referred to as mediation) is required. Mediation has a success rate of approximately 80% and is, therefore, an appealing step before arbitration.
Negotiations, and specifically mediation are non-binding, and agreements may or may not be decided by only the parties. The mediator doesn’t impose anything, explains Malamed. However, if there is an agreement, it can be suitably recorded and become an order of the court. That is undoubtedly first prize with bad publicity and rumour mongering generally avoided and relationships that tend to endure.
Arbitration, the third step, is final and binding. It is a private trial with the ‘judge’ (arbitrator/s) selected by the parties – conducted without all of the shenanigans, pleadings, responses and delays of a court trial.
“I believe it is you and your business partner, customer or supplier – not your attorneys – that should dictate settlement procedures,” says Malamed. “In this judicial environment, access to justice is so often out of reach. It’s smart business to stop disputes from escalating to senseless levels.”