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

Two companies in a supply dispute want a way to resolve it without going to court. Which of the following is a feature common to alternative dispute resolution (ADR) methods?

ADR methods are generally less formal than litigation and give the parties more control over procedure and outcome. They are not always binding, as mediation depends on agreement, and they do not require a court to have refused jurisdiction first.

  1. AThey are generally less formal and give the parties more control over the process than court litigationCorrect
  2. BThey always produce a decision that is binding on the parties whether or not they agree to it
  3. CThey can only be used after a court has refused to hear the case

Explanation

ADR methods such as negotiation, mediation and arbitration sit outside the court process. They are usually more flexible, private and party-driven. Option B is wrong because methods like mediation and negotiation are not binding unless the parties agree a settlement. Option C is wrong because ADR does not depend on a court refusal.

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