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ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms

Gamma Co's managing director says the company should choose ADR over litigation mainly because the dispute concerns commercially sensitive information and the company wants to preserve its relationship with the supplier. Which advantage of ADR is being relied on?

The advantage relied on is that ADR is generally private and less adversarial than court proceedings. Confidentiality protects sensitive commercial information, and the collaborative approach helps preserve the business relationship. ADR does not guarantee lower damages, and court judgments are not generally unenforceable abroad.

  1. ACourt judgments are always unenforceable abroad
  2. BProceedings are generally private and less adversarial than court proceedingsCorrect
  3. CADR guarantees a lower award of damages

Explanation

ADR is usually conducted in private, so sensitive information is not made public, and its collaborative nature is less damaging to business relationships. Option A is overstated and not a general rule. Option C is wrong because ADR gives no guarantee about the amount recovered.

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