By. Y. UMUHUZA MUGISHA, JadeTimes News
Transaction as Method of ADR
Transaction, in Alternative Dispute Resolution, describes the process through which parties agree upon and settle a dispute out of the formalities of the law. It is basically a process of the settlement of disputes through direct negotiation and mutual agreement, absent the adjudicative or arbitral process. In most cases, it is an informal and flexible approach, making it very effective and amicable in the settlement of disputes.
1. Definition and Process
The transaction in ADR involves direct discussions between parties with the aim of achieving a mutually acceptable settlement. Unlike mediation, the process for the transaction does not require a third-party mediator to facilitate the process, as it takes place directly between the parties concerned. The process typically starts with the identification of the basic issues and interests for each party. This is then followed by negotiation through the proposal of solutions by the parties towards an agreed compromise. The agreement between parties is then reduced to writing with a settlement or transaction agreement, which establishes the terms and conditions agreed to by the parties.
2. Advantages of Transactional ADR
Flexibility and Control: Perhaps the most important advantage of transactional ADR lies in its flexibility. Parties have substantial control over the process of negotiation and the terms of settlement. Such control would enable parties to tailor solutions to their needs and preferences, which may not be possible within the more formal setting of ADR methods such as arbitration or litigation.
Cost-Effectiveness: Overall, transactional ADR is less costly than litigation or arbitration. Since it is not a legal process, parties can avoid the legal costs and other allied expenses. The limited time frame for solutions also saves costs.
Speed of Resolution: This method may take much less time than formal dispute resolution procedures. The convenience of the parties and negotiations are made where both parties feel most comfortable reaching agreements, and they can be resolved quite quickly in terms of settlements without the delays that could result in court or arbitration processes.
Confidentiality: Unlike proceedings in open court, most transactions are in private, and the information about the dispute and the terms on settlement are kept confidential. This can be an extremely useful advantage if the parties wish to avoid public scrutiny or protect business reputations.
Preservation of Relationships: Because transactional ADR deals with negotiation and compromise, it often preserves professional or personal relationships between the parties. In business matters, for instance, maintaining a positive relationship is important for future interactions.
3. Issues and Factors to Consider
Imbalances in Power: The issue of power imbalance is one of the most complex matters related to transactional ADR. When one of the parties takes a significantly large share of power or resources, it affects the aspect of fairness in the process of negotiating. To this regard, the parties may also find the presence of a neutral advisor or mediator to ensure the fairness of the negotiation proceedings.
Lack of Formality: An informal nature of transactional ADR can further lead to questions of enforceability upon an agreement. There would be no formal processes or checks that can assist the parties in making sure that the terms of settlement are complied with. To mitigate this, a full-blown settlement agreement should be drafted in detailed form.
Negotiation Skills: Any transactional ADR substantially depends on the negotiation skills of the parties. For effective negotiation, what is needed is the willingness to compromise and articulate communication and problem-solving ability. If the parties are not skilled negotiators, it is then quite difficult to arrive at a satisfying settlement.
4. Applications and Use Cases
In general, transactional ADR is used in business disputes, family disputes, and consumer conflicts. In the business sector, this process is efficient for solving contract-related, partnership, and client-related problems. In family issues, it might be used in cases of divorce, child custody, and other inheritance matters. This process is helpful also in all the consumer disputes because much of the direct negotiation brings a resolution with satisfaction without having to use the process of law.
In essence, transaction as an ADR practice is a flexible, cost-effective, and efficient way of resolving disputes. Since it centers on negotiation and mutual agreement, parties can achieve resolutions that would suit them and save their interrelations. This approach has its challenges, but with proper management and clear agreements, it can be surmounted. As such, transactional ADR is an enormously helpful tool in very many diverse situations for dispute resolution, availing an alternative that proves less formal and adversary as opposed to the other processes.
