Alternative dispute resolution [ADR] is becoming more of a preferable method when it comes to resolving business disputes. John Lee, a solicitor of Simmons & Simmons, discussed the strengths and weaknesses of both ADR and arbitration at the Asia-Pacific IP Forum.

"ADR is increasingly becoming an appropriate dispute resolution method especially in terms of mediation," Lee said. To define ADR, Lee used a recognized definition by Brown & Marriott on ADR Practices: "[ADR] involves a range of procedures that serve us as alternative to arbitration for resolution of disputes."

Negotiation is the method that is applied in ADR, and it allows parties to reach an agreement on a dispute. Since it is based on consensus, the outcome of the dispute is usually positive. The strengths, Lee said, are that ADR is relatively more economical and quicker. It also preserves the relationship of the parties while enforcing communications. Flexibility is another advantage, too, allowing arrangements to be made on short notice.

"It is nonessential but it is desirable to have [an] ADR clause; parties are more likely to agree on ADR before disputes arise. It provides more certainty and allows you to design a process that fits your IP disputes," Lee said.

Parties can also select a third party to act as a mediator. The ultimate goal of ADR is to maintain both parties' relationship and to come up with a resolution. Nevertheless, ADR's weaknesses are that it is not as binding as a decision from a court, and that it has no guarantee of confidentiality. In contrast, arbitration, a dispute between two or more parties, is determined judicially. While ADR lacks confidentiality, arbitration can guarantee privacy. The downside for arbitration is that a judge does not draw parties together in an arbitration consensus whereas in ADR, parties are encouraged to work together, resolve the dispute, and maintain relationships; arbitration also takes up a lot of money and time from the client, not to mention straining the relationship between the parties.

Lee explained that differences between arbitration and ADR are such that a judge or arbitrator would look at the position of the parties, whereas a mediator in ADR would consider motivation, underlying interests and concerns of the parties.

"[The] mediator advances the expectation of the parties using professionally skills and reaches a solution that is applicable to both parties, so it is a win-win situation for both parties," Lee said.