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Federal Energy Regulatory Commission

Legal Resources Alternative Dispute Resolution Is ADR Appropriate for My Dispute?

Is ADR Appropriate for My Dispute?
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There are several considerations in determining whether or not a dispute may be appropriate for ADR.

  • Can this matter be addressed by negotiating a resolution directly with the other parties involved (i.e., without the assistance of a third-party neutral)?

    Parties to a disagreement should always try to resolve the differences between/among themselves whenever possible. This not only saves time and money; it usually results in a faster, cheaper and better resolution for the parties than any other decision-making method.

  • If the parties are unable to resolve the dispute themselves, the next alternative is to use a third-party neutral to help the parties work toward a result that is preferably tailored to their interests.

    As with unassisted negotiation, use of a third-party neutral is usually faster and cheaper than traditional processes such as litigation or an administrative hearing in which a disinterested third party decides the matter.

There are certain factors that make some cases better candidates for ADR than others. The following guides identify these factors:

Factors Favoring ADR Use | Factors Weighing Against ADR Use

Factors Favoring ADR Use

  • Ongoing Relationship/Business Interests
    • The parties either have an ongoing business relationship or are beginning a relationship that will be ongoing. An ADR process helps parties to communicate more effectively, often resulting in better business relationships and fewer disputes among the parties in the future.

  • Case Characteristics (Pre- or Post-Filing)
    • There is low trust among the parties.

    • Parties were unable to negotiate and achieve resolution on their own.

    • Cases that are complex, lengthy, costly, and resource-intensive may benefit from the assistance of a third party. Even if the case needs to be set for hearing, addressed by the Commission or appealed in the courts, an initial ADR process could help narrow the issues or streamline discovery.

    • On the other hand, matters that seem too small for a Commission decision or trial may benefit from an immediate and quick third-party intervention.

    • A third-party neutral may be able to help clarify issues, interests, and impacts in cases where issues or parties from other cases are involved.

  • Need for a New Perspective
    • For parties who have negotiated without success, or have reached a stalemate, the assistance of a third-party neutral may help them to clarify issues and make progress toward settlement.

    • If there are several parties, the third-party neutral can help them identify and prioritize their issues and interests and assist them in choosing an appropriate ADR process.

    • A third-party neutral could arrange for a:
      • Reality check. For example, one or more parties may have unrealistic expectations of the potential outcome of a Commission decision or trial and could benefit from hearing an assessment from someone other than their own lawyer(s) and consultant(s) - e.g., an early neutral evaluator who could be a FERC judge or staff person or an appropriate outside resource; or

      • Subject matter expert to advise the parties on technical or legal aspects of the case or issues in dispute.

  • Other Factors
    • Either party needs a swift resolution. ADR processes are generally much faster than a hearing or other Commission process.
    • The parties need to keep information confidential. In general, the third-party neutral must keep ADR deliberations confidential. Parties to a dispute resolution process may also agree to keep their own negotiations confidential, which allows all sides in a dispute to speak more openly, share more information, and explore ideas and options in order to come to a resolution. The Commission's regulations on confidentiality adopt most of the same guidelines as Section 574 of the Administrative Dispute Resolution Act. They are provided on the Code of Federal Regulations website at 18 C.F.R. 385.606.

Factors Weighing Against ADR Use

  • Overriding Commission Concerns
    • The disputed issues would require the Commission to establish a precedent or define broad Commission policy.

    • The Commission needs to apply uniform treatment that cannot be achieved through using ADR.

    • Party/Commission strongly needs to maintain status quo.

    • It is important that there be a full record of the proceeding.

  • Outcome Would Affect Non-Participants

  • One or More Parties are Not Committed to Process