The Cornell University Law School Legal Information Institute defines “Alternative Dispute Resolution” (ADR) as “any method of resolving disputes other than by litigation”. Arbitration and mediation are the two main forms of ADR, although there are others available (e.g. negotiation, early neutral evaluation and conciliation).
ADR methods have been used to solve disputes since ancient times in different societies around the world. In “A History of Alternative Dispute Resolution”, authors Jerome T. Barrett and Joseph P. Barrett propose a timeline starting in 1,800 B.C., when the Mari Kingdom (modern Syria) used mediation and arbitration to resolve disputes with other kingdoms.
However, Professor Michael Moffitt determined ADR’s “Big Bang Moment” to have occurred in 1976, when Harvard Law School Professor Frank Sander delivered his speech at the Pound Conference on “The Causes of Popular Dissatisfaction with the Administration of Justice” in Minneapolis, Minnesota. Prof. Sander’s address, titled “Varieties of Dispute Processing”, suggested that while litigation could be effective in some cases, other types of disputes would be better resolved by different means. He proposed a future scenario where courts could screen complaints to assign the most appropriate form of resolution to each. This was the birth of the “multi-door courthouse” concept.
Several years later this ADR Big Bang reached Latin America, with initial legislative reforms incorporating ADR mechanisms -principally mediation- in Colombia (1991), Argentina (1995), Peru (1997), Ecuador, Bolivia, Costa Rica and Honduras (2001), and El Salvador and Paraguay (2002).
Some countries, such as Ecuador or Venezuela, even incorporated references to ADR in their Constitutions. Article 258 of the Venezuelan Constitution provides that “[…] The law shall encourage arbitration, conciliation, mediation and any other alternative means of resolving conflicts”.
In 1999, the Organization of American States (OAS) created CEJA (or “JSCA”, “Justice Studies Center of the Americas”) to “facilitate and promote the process of reform and modernization of the justice systems of the Americas”, which encompasses the topic of ADR. In April 2014, CEJA issued a report titled “Alternative Mechanisms to Judicial Procedures to Facilitate Access to Justice in Latin America” containing a study of 207 ADR initiatives identified in 19 Latin American countries including Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Dominican Republic, Uruguay and Venezuela. The report states that most ADR initiatives in the subject countries (145 out of 207) worked as part of the judicial system, and only a small minority (21) excluded access to judicial review.
The CEJA report concluded that mediation and conciliation are the two ADR methods most commonly implemented throughout Latin America. While a mediator seeks to assist the parties in communicating and evaluating positions with the objective of having the participants create their own solution to the conflict, a conciliator will go a step further and make tangible agreement proposals for the parties to consider (other countries do not recognize this distinction – in the United States, for example, mediators frequently make proposals to resolve the dispute).
These two ADR methods challenge the notion that the only way to resolve a conflict is by embarking on an adversarial approach, through adjudication. Instead of having one person win and the other lose, mediation and conciliation allow for the interests of both parties to be addressed, opening the possibility of “win-win” solutions.
For insurers and reinsurers in Latin America, the region’s ADR Big Bang has provided additional tools to close files on better terms and for much less cost. Those who wholeheartedly embrace this opportunity may be in the path of reaping tangible benefits by giving preference to these alternatives, assigning the necessary resources to obtain results and being creative.
Published by Daniel Baron*
*Not licensed to practice law in Florida