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8.Even when nations have ………….. in international agreements, many of them have added ………………..to preserve their right to decline to be bound by particular parts of the agreement.

ADR methods in the USA

1. Provide a summary of the text

Alternative Dispute Resolution ("ADR") generally refers to any means of settling a dispute outside of a courtroom. Considerations when selecting an ADR method include the type of industry, transaction as well as the governing law set forth in the agreement which in turn may have a bearing preferred set of ADR rules and the enforceability of any settlement as the result of the ADR method utilized.

Generally, litigation is the least desirable method for settling a dispute since the process is adversarial and the outcome is perceived as "winner v. loser." Further, litigation does not support an efficient use of resources philosophy, since even suits considered minor in nature can tie up company resources in the production of documents, depositions of executives and senior management, in court testimony, etc., with the suit being unresolved for several months, if not years. Even when lawsuits are settled, settlement usually occurs only as the trial date approaches and after most of the costs have been incurred. Depending on the jurisdiction, rules of evidence and procedure, litigation can be a costly and complex process. Litigation between international trading partners can be even more complex as the parties argue over jurisdiction and venue issues.

According to a United States Justice Department study, approximately ninetyseven percent of all civil cases filed in state courts are settled or dismissed without a trial. (See http://bjs. ojp.usdoj.gov/ content/pub/pdf/cbjtsc05.pdf.) The foregoing figure indicates that the vast majority of civil disputes are settled via methods other than litigation. Further, the trend toward "non-litigation" dispute resolution reflects the need for companies to familiarize themselves with the ADR forums available and select the appropriate forum language in their business agreements which offer the greatest advantage to the company in the event the "disputes" clause is invoked.

At an early stage in the business relationship, the parties are in the best position to consider the types of disputes that may arise, and how and where those disputes should be resolved. Inclusion of a disputes clause with a mutually agreed to ADR provision in a contract greatly enhances the likelihood that the parties will be able to resolve the dispute through means other than litigation.

ADR methods and the corresponding disputes contract clauses typically include negotiation, mediation, arbitration, and conciliation. To alleviate the backlog

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of court cases, many states have initiated ADR programs requiring "settlement conferences." Some of these programs are voluntary, while others are mandatory via state law. The most common forms of ADR methods are negotiation and/or mediation and/or arbitration.

Negotiation

Negotiation alone is the preferred method of settling a business dispute. Since the negotiation process is managed by the parties, the process is usually conducted in a manner that is both expeditious and cost effective. Further, since a settlement of the dispute is predicated upon the parties ' reaching a mutual understanding, much of the goodwill that has been developed during the course of the business relationship can be retained. Under a "multi-step" method of dispute resolution, negotiation is usually required as a precursor to either mediation/ arbitration or litigation. A summary of the advantages/disadvantages follows:

1.Advantages

a.Maintenance of the business relationship

b.Privacy of proceedings (some exceptions)

c.Most cost effective

d.Mutuality of settlement - parties most likely to adhere to negotiated settlement which reflects their interests.

2.Disadvantages

a.Non-binding prior to executed settlement

b.Requires application to courts to enforce

c."Biased" interests in negotiation

d.Unequal bargaining strength

Mediation

Though more formal than negotiation, mediation is still an acceptable alternative to litigation. Mediation involves the interjection of an unbiased, knowledgeable third party (sometimes called a "neutral"), to assist the parties in reaching a settlement. Mediators are individuals trained in negotiations who bring the opposing parties together and attempts to work out a settlement or agreement that both parties accept or reject. It is important to note that mediation does not

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prohibit either party from pursuing additional legal recourse if the mediation process does not result in a settlement. However, statistics support that mediation efforts are more successful than not. The Los Angeles Superior court system reports that 63% of cases ordered into mediation are resolved. Nationwide, the mediation success rate ranges between 60%-90%. (See Final Report of Colorado Governor's Task Force on Civil Justice Reform, Exhibit 7 at: http://www.state.co.us/cjrtf/report/report.htm ). The main advantage of mediation is that it is a private process between the two parties and informal, while litigation is a formal process conducted in a public courtroom. The primary disadvantage of mediation is that it is non-binding and either party is free to pursue additional legal remedy, with the mediation becoming just another step to a lawsuit.

The following contains a brief summary of the advantages and disadvantages of mediation.

1.Advantages

a.Maintenance of the business relationship

b.Privacy (some exceptions)

c.Cost

d.Use of Specialists/experts in the field as "neutrals"

e.Allows for more "objective" investigation of facts and interests

f.Empathy towards the disputants (recognition)

g.Objective persuasion to obtain concessions

h. Invention of solution only when necessarylet the parties do it (empowerment)

2.Disadvantages

a.Non-binding decisions

b. Mediation discussions are not admissible to show negligence, but are admissible for other purposes (control, bias, etc.)

c.Delay to final resolution - may be mere formality prior to initiating

litigation

d.Lack of enforcement of decision

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Arbitration

Arbitration is a simplified version of a trial involving little or no discovery and simplified rules of evidence. There are two different types of arbitration: binding and non-binding arbitration. Binding arbitration means that the arbitrator's decision is final and not subject to judicial review or appeal. An arbitrator, unlike a judge in a court of law, is not bound by the rules of law when arbitrating a dispute. Even when the arbitrator agrees to follow applicable state law, an erroneous award, unlike an award of a court, cannot be corrected by any judicial review. The arbitrator's award is final and binding on all parties, unless: the parties have agreed the arbitrator's award is subject to "judicial review;" or the arbitrator applied the wrong law and in so doing exceeded his powers which had been limited to applicable law by the arbitration provision. Non-binding arbitration, as the name implies, means that the parties are not bound to the arbitrator's decision and are free to seek remedy in court if they so choose. Although court-ordered arbitration is stipulated in many jurisdictions, including California, agreements to arbitrate are usually made via private contract (for more information on California court-sponsored ADR forums go to http:www.lasuperiorcourt .org).

The following contains a brief summary of the advantages and disadvantages of arbitration.

1.Advantages

a.Privacy (some exceptions)

b.Cost

c.Expertise of the decision-maker (choose an expert)

d.Finality of Decision (generally, court-enforceable upon application)

e.Procedural Informality (usually)

f.Low cost (no discovery or appeal)

g.Speed

h.Ability to limit certain damages by agreement

2.Disadvantages

a.Usually binding, but arbitrators have no enforcement power.

b.May need to apply to courts for enforcement.

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c.More costly than negotiation or mediation.

d.If unhappy with result, no opportunity for appeal. Conciliation

Conciliation is an ADR process whereby the parties to a dispute use a conciliator, similar to a neutral, who meets with the parties separately in an attempt to resolve their differences. They do this by lowering tensions, improving communications, interpreting issues, providing technical assistance, exploring potential solutions and bringing about a negotiated settlement.

A conciliator assists each of the parties to independently develop a list of all of their objectives (the outcomes which they desire to obtain from the conciliation). The conciliator then has each of the parties separately prioritize their own list from most to least important. The conciliator then goes back and forth between the parties and encourages them to "give" on the objectives one at a time, starting with the least important and working toward the most important for each party in turn. The parties rarely place the same priorities on all objectives, and usually have some objectives that are not listed by the other party. Thus the conciliator can quickly build a string of successes and help the parties create an atmosphere of trust which the conciliator can continue to develop.

Most successful conciliators are highly skilled negotiators. Some conciliators operate under the auspices of any one of several non-governmental entities, and for governmental agencies such as the Federal Mediation and Conciliation Service in the United States.

Conciliation differs from arbitration in that the conciliation process, in and of itself, has no legal standing, and the conciliator usually has no authority to seek evidence or call witnesses, usually writes no decision, and makes no award.

Conciliation differs from mediation in that the main goal is to conciliate, most of the time by seeking concessions from both sides. In mediation, the mediator tries to guide the discussion in a way that optimizes parties’ needs, takes feelings into account and reframes representations.

In conciliation the parties seldom, if ever, actually face each other across the table in the presence of the conciliator.

1.Advantages

a. Reduced tension by parties meeting separately

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b.Objective-based – isolates the true needs of each party

c.Encourages "give-and-take" by both parties to reach a compromise solution

d.If the parties are not satisfied with process, they are free to pursue other

remedies

2.Disadvantages

a. Lack of legal standing - no discovery, calling of witnesses, or supplying a law-based decision

b.Requires both parties to make concessions in order to reach a settlement

c.Possibility of litigation occurring if the conciliation fails

d.Time – may be little more than an extra step in the litigation process

2. Complete the sentences according to the text:

1)Alternative Dispute Resolution ("ADR") generally refers to ……..

2)Generally, litigation is the least desirable method for settling a dispute since

….

3)Inclusion of a disputes clause with a mutually agreed to ADR provision in a contract greatly enhances the likelihood that ……

4)Since the negotiation process is managed by the parties, the process is usually conducted in a manner that is both expeditious and cost effective…….

5)Mediators are individuals trained in negotiations who….

6)Binding arbitration means that….

7)Non-binding arbitration, as the name implies, means that ….

8)Conciliation differs from mediation in that…..

Class Action

1. Provide a summary of the text.

Class action is a lawsuit that allows a large number of people with a common interest in a matter to sue or be sued as a group.

The class action suit began in the equity courts of seventeenth-century England as a bill of peace. English courts would allow a bill of peace to be heard if the number of

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litigants was so large that joining their claims in a lawsuit was not possible or practical; the members of the group possessed a joint interest in the question to be adjudicated; and the parties named in the suit could adequately represent the interests of persons who were absent from the action but whose rights would be affected by the outcome. If a court allowed a bill of peace to proceed, the judgment that resulted would bind all members of the group.

The bill of peace, and later the class action, provided a convenient and efficient vehicle for resolving legal disputes affecting a number of parties with similar claims. Common issues that could have similar outcomes did not have to be tried piecemeal in separate actions, thus saving the courts and the litigants time and money.

Initially, a class action could be brought only in equity cases, disputes in which the parties did not necessarily seek monetary damages but instead might desire some other type of relief. The adoption of Rule 23 of the Federal Rules of Civil Procedure in 1938 broadened the scope of the class action suit, providing that cases in law seeking money damages as well as cases in equity could be brought as class actions. In 1966, the scope of the class action was again clarified and expanded when Rule 23 was amended to provide that unnamed parties to a class action were bound by the final judgment in the action so long as their interests were adequately represented.

Rule 23 of the Federal Rules of Civil Procedure defines three kinds of class actions. The first type may be brought where separate lawsuits might adversely affect other members of the class or the defendant in either of two ways—if the piecemeal litigation resulting from separate suits might impose inconsistent standards of conduct on the defendant, or if multiple suits might "impair or impede" the class members from protecting their various interests. In the second type of class action, a class seeks an injunction or some type of relief compelling the defendant either to cease a certain activity or to perform some other type of action. In the third category of class action lawsuit, there are questions of law or fact common to the entire class that predominate over questions peculiar to each individual plaintiff, and a class action suit is a more efficient means to resolve the controversy. Under the third type of class action, individual members of the class may "opt out" of the litigation if they do not want to be bound by the results of the suit. Courts have held that due process requires that absent class members be given adequate notice, adequate representation, and adequate opportunity to opt out, before they can be bound by a final judgment in the suit.

Class action suits have led to social reform in the United States. They have helped to remedy discrimination based on race and gender; been used to address inequities in education, housing, and Voting Rights laws; and helped to ensure due process. For example, brown v. board of education, 347 U.S. 483, 74 S. Ct. 686, 98 L. Ed. 873 (1954), the Supreme Court decision striking down segregated schools, was

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brought as a class action lawsuit. The landmark decision Goldberg v. Kelly, 397 U.S. 254, 90 S. Ct. 1011, 25 L. Ed. 2d 287 (1970), in which the Supreme court of the United States held that recipients of public assistance must be given notice and the opportunity for a hearing prior to termination of benefits, was also litigated as a class action suit.

In addition, the class action suit has been used in several widely publicized mass tort cases. In these actions, many plaintiffs, often hundreds or even thousands, have alleged injuries suffered as the result of the actions of a single defendant, usually the manufacturer of some product believed to have caused damage. In the mid-1970s, thousands of women brought suit against the manufacturer of the Dalkon Shield, an intrauterine contraceptive device linked to numerous health problems, including sterility. A class action suit was also employed in lawsuits against the manufacturer of the herbicide Agent Orange, a highly toxic defoliant that was used during the Vietnam War and has been linked to cancer and birth defects in Vietnam era veterans and their families. In mid-1995, two major class action suits on behalf of millions of smokers were instituted against several tobacco companies. The plaintiffs hoped to prove that they had become addicted to nicotine and suffered illnesses as a result, and that the defendant tobacco companies concealed their knowledge of the addictive nature of nicotine and the harmful effects of smoking.

Some large companies, anticipating liability for potentially huge damages as a result of class action suits, file for bankruptcy in order to protect their assets. The pharmaceutical company A. H. Robins, the manufacturer of the Dalkon Shield, filed for bankruptcy in 1985 when it was faced with the prospect of paying millions of dollars as a result of class action suits filed against it. In 1995, Dow Corning Corporation, the subject of hundreds of claims resulting from allegedly defective silicone gel breast implants, filed for Chapter 11 bankruptcy protection. Other companies, fearing the financial consequences of possible class action suits arising from certain types of products, have ceased research and development in certain areas altogether. The Upjohn Company, for instance, ceased contraceptive research in 1986.

The Supreme Court addressed concerns about the use of Rule 23 in mass tort actions in Amchem Products, Inc. v. Windsor, 521 U.S. 591, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997). This case involved persons who had been exposed to asbestos and who either had diseases attributed to this exposure or who had the potential of developing these diseases. The federal courts became worried that they would be inundated by thousands of individual cases. Therefore, in 1991 all asbestos cases that had been filed but not tried were consolidated and transferred to a single judge in Pennsylvania.

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During settlement discussions the defendants refused to negotiate unless the final agreement bound victims who would file claims in the future. The plaintiffs eventually agreed and the parties came to a settlement. They then went into court and obtained a certification of class action. However, objections were raised by many class members and the Supreme Court was required to make a final determination.

The Supreme Court ruled the class action was improper. The Court was troubled by attorneys of current victims, who stood to receive payment from the defendants, binding future victims to a settlement that greatly restricted their ability to receive compensation. Rule 23 requires class representatives to protect the interests of all class members, yet it seemed unlikely that future victims were fully protected. Another concern was that the proposed class did not have sufficient unity so that the future claimants could "fairly be bound by class representatives' decisions. "The current plaintiffs, who had asbestos injuries and wanted immediate compensation, had agreed to terms that future claimants might find unacceptable. These included the lack of inflation adjustment, the limitation on the number of payable claims each year, and the prohibitions against asking for damages based on emotional distress and loss of consortium.

The Court found that the proposed class was not "sufficiently cohesive." Although all members of the class shared experience of asbestos exposure, this did not meet the predominance requirement under Rule 23 (b)(3). In fact, there were many individual issues and many categories of persons who were exposed and injured or exposed but not yet injured. The supposed class was too "sprawling" to meet the Rule 23 requirement.

In 2002, the Supreme Court reviewed the rights of persons who seek to intervene in a class action settlement for the purpose of objecting to the settlement. In Devlin v. Scardelletti, 536 U.S. 1, 122 S.Ct. 2005, 153 L.Ed.2d 27 (2002), the Court held that persons affected by a settlement may appeal even if they are not a class representative or a court-approved intervener. The decision is likely to increase such appeals.

2.Decide if the statements are true or false:

1)Class action is a lawsuit that allows a large number of people with a common interest in a matter to sue or be sued as a group.

2)The class action suit began in the equity courts of nineteenth-century England.

3)The bill of peace, and later the class action, provided a convenient and efficient vehicle for resolving legal disputes affecting a number of parties with similar claims.

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4)Rule 23 of the Federal Rules of Civil Procedure defines three kinds of class actions.

5)Under the third type of class action, individual members of the class may "opt out" of the litigation if they do not want to be bound by the results of the suit.

6)Class action suits haven’t led to social reform in the United States.

7)In 1991 all asbestos cases that had been filed but not tried were referred to the Supreme Court.

8)Rule 23 requires class representatives to protect the interests of certain class members.

9)In Devlin v. Scardelletti, 536 U.S. 1, 122 S.Ct. 2005, 153 L.Ed.2d 27 (2002), the Court held that persons affected by a settlement may appeal even if they are not a class representative or a court-approved intervener.