For a consumer, ADR is generally preferable over ordinary litigation because the former costs less and can be resolved quicker. The expense of undertaking lengthy and laborious court proceedings will far exceed any possible favorable outcome since most consumer complaints involve relatively small values.

ADR is useful in those circumstances where: (i) most if not all of the evidence to be presented are documentary in nature; (ii) the facts are not disputed; or (iii) only questions of law or the interpretation of the agreement between the parties are involved. ADR can also be helpful in commercial disputes since the parties are normally sophisticated business entities which normally do not see dispute settlements as ends in themselves but as a natural consequence of doing business. In other words, the main goal of companies is to engage in business and not engage in non-profitable and distracting litigation. Thus, commercial entities would rather have the matter resolved quickly so that they can get on with businesses. Most multinational companies who are engaged in transnational or global transactions prefer to resolve conflicts between and among themselves through ADR since it makes more business sense to do so.

This post was originally written for a class in Information Technology Law when I was an LLM student at the University of Edinburgh.

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