How Effective Is Alternative Dispute Resolution?

port efficient allocation of resources and growth in an economy. The ease with which contracts can be enforced varies dramatically across economies. According to data from the World Bank’s Doing Business project, the time required to enforce a contract (from the moment the plaintiff files the lawsuit until payment is made) ranges from about five months in Singapore and seven in New Zealand to more than four years in Guatemala, Afghanistan, and Suriname. The cost ranges from less than 10 percent of the contract value in Iceland, Luxembourg, and Norway to more than 100 percent in such countries as Cambodia, Indonesia, and Sierra Leone. Among the reasons that contract enforcement is so inefficient in many countries are lack of modern laws, deficient and underfunded court systems, and prevalent corruption. Alternative dispute resolution (ADR) has emerged as an alternative to court litigation that may offer a more efficient and less expensive avenue for resolving disputes. It provides confidentiality, choice of neutral parties, more flexibility of procedure, and other benefits. This Note summarizes the findings of the literature on the effectiveness of ADR mechanisms as an alternative to traditional litigation.