Mos 2275 Chapter 4 Notes.docx

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Western University
Management and Organizational Studies
Management and Organizational Studies 2275A/B
Desmond Mc Keon

Chapter 4: Dispute Resolution Introduction  Business organizations require a risk management plan to minimize the potentially adverse impact of the legal environment through prevention and a planned reaction to adverse events when they arise.  However, legal problems cannot always be avoided, and it is not in the best interest of the business to avoid all legal conflicts at all costs. (Extended example page 71 – 74) Alternative Dispute Resolution  Alternative dispute resolution (ADR): A range of options for resolving disputes as an alternative to litigation  Negotiation: A process of deliberation and discussion intended to reach a mutually acceptable resolution to a dispute o Most common, due to:  Cost effectiveness  Usually quick  Allows parties to craft a solution that is suitable for their particular situation  Helps to preserve relationship between the parties o When to negotiate:  Virtually any type of dispute, at any stage of it  Parties may agree to negotiate, or a contract may require the parties to attempt to negotiate. o How to negotiate:  Carried out by parties to the dispute, but may be preferable to hire a lawyer, advocate, or counsellor who has the expertise to help in the negotiations or can negotiate on behalf of the parties  First, investigate the situation to determine the nature and extent of the dispute.  Then, contact the individuals involved both sides of the dispute to clarify the situation.  Whether negotiations will succeed will depend on:  The willingness of the parties to compromise and negotiate in good faith  The nature and significance of the dispute  The priority the parties give to its resolution  The effectiveness of those involved in the negotiations  If negotiations are successful, they enter a settlement agreement so that:  The dispute cannot be resurrected or litigated in the future  The terms of the settlement are not revealed (if confidentiality clause) o When negotiations fail:  Concede and cut losses  Risk the expenditure of more time and money through litigation  Ask the following questions:  What further steps are available and how long will they take?  Can the business devote the resources necessary to proceed with the dispute in terms of both the commitment and the time of the business personnel?  Will a lengthy dispute affect the public profile and reputation of the business?  Is the relationship with the other side valuable?  What is the likely cost in terms of legal fees and company time?  Are there worthwhile principles at stake that go beyond the particular dispute?  If the dispute goes to court, what are the chances of winning?  If the court decides in favour of the business, does the other have the assets to pay the claim?  Mediation: An ADR process whereby a mediator (a person who helps the parties resolve their dispute) assists the parties in reaching a settlement of their dispute. o Popular method of resolving disputes because it:  Is less expansive and quicker than more formal dispute resolution methods  Is private and confidential if the parties choose  Helps to preserve the relationship between the parties  Can result in a resolution tailored to the needs of the parties o When mediation is used:  Used to resolve business conflicts involving: contract matter, personal injuries, employment matters, environmental protection, etc.  More successful when the parties are interested in considering each other’s positions  Parties may be required to mediate due to the contract or legislation. o How mediation works:  The parties choose a neutral third party to act as a mediator who are often lawyers or retired judges (or if the parties cannot be agreed, is assigned from a roster of mediators)  Usually occurs with the parties face-to-face, but may also be conducted through videoconferencing  The mediator manages the process, organizes the discussion, clears up misunderstanding, and helps reduce tension between the parties  The mediator does not impose a solution on the parties o When mediation ends:  When successful, parties enter a settlement agreement setting out the terms, which will help prevent future litigation concerning the same matter  Mediation is however, not uniformly successful.  Arbitration: Method of resolving for a dispute whereby an arbitrator (a person who listens to the parties to a dispute and make a ruling that is usually binding on the parties) appointed by the parties make a decision. o Similar to litigation in that it involves a hearing in which the parties or their representatives make submissions and the resolution is outside the control of the parties o Has advantage in that:  The parties can choose the arbitrator before decision making power  Usually cheaper and faster and can lead to an overall sense of satisfaction  Can have the same degree of formality as a litigation if the parties choose o When arbitration is used:  Works particularly well for most commercial and business disputes because the parties can select an arbiter with relevant experience and keep commercially sensitive information private  Arbitrator is usually chosen by the parties before a dispute arises through a term in a contract providing that disagreements arising from the contracts are to proceed to arbitration  In the absence of an arbitration clause, arbitration can be adopted at any point in a dispute o How arbitration works:  The parties may agree on an arbitrator or have a third party choose o
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