Comparative Efficiency of Alternative Dispute Resolution in Common and Civil Law Countries

Abstract

Economic analysis of legal conflicts studies the way in which litigation is solved when parties have choice between settling their differences out of court or going before a judge. Most of studies focuses attention to the choice between judgment and free negotiation. A wide range of out-of-court solutions is open to litigants via Alternative Dispute Resolution. Few economists have taken an interest in the particular nature of these types of dispute settlement. Shavell [1995] has offered an analysis of the motives making individuals resort to ADR in an attempt to justify them both from a social and private point of view. He studies mediation and arbitration in the USA, basing his work on the idea that these two types of settlement have the common feature of using a third party (arbiter or mediator) whose role is to communicate information to the parties. By doing this, there is no attention to the particular nature of the arbiter and the mediator, preferring to insist upon what they have in common (this failure to differentiate may be justified in the USA to the extent that the parties always choose their arbiter and sometimes their mediator). To the contrary, we propose to insist on the differences between these two ADR.Particularly :- Arbitration is a jurisdictional settlement to the extent that the arbiter's decision is imposed on both parties. Mediation is a non jurisdictional form of settlement. The role of the mediator is limited to suggest a solution.- Arbitration is a form of private justice performed by third parties who have been chosen for their specific skills. It is quite the opposite for mediation which comes within the realm of public justice with a judge.- Arbitration is a costly means of settlement. The cost of a procedure is the price to be paid to keep the dispute secret and to have the benefit of particular skills. Quite the opposite is true of mediation, which remains an inexpensive procedure despite the parties having to pay the mediator. In France the parties can receive legal aid.- Finally (especially in France), the arbiter is chosen by the parties whereas the mediator is always designated by the judge. The aim of this paper is to show that the behavior of the litigants is quite different under the two systems.