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Instead of taking their conflicts to trial, more planners and hoteliers are finding compromise solutions through arbitration and mediation, out-of-court processes collectively referred to as alternative dispute resolution. As more planners become aware of alternative dispute resolution, more call for it in contracts where it doesn't already exist.

Copyright VNU eMedia, Inc. Mar 2005

Instead of taking their conflicts to trial, more planners and hoteliers are finding compromise solutions through arbitration and mediation, out-of-court processes collectively referred to as alternative dispute resolution.

In November 2004, for instance, the industry's biggest SARS-related lawsuit was settled out of court after both parties agreed to enlist the service of a mediator. Nineteen hotels initially sought C$6 million in damages from the Philadelphia-based American Academy for Cancer Research after it canceled its 2003 annual meeting in Toronto, Canada, because event leadership felt the SARS risk in the then-affected city was too high.

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Atlanta-based attorney John Foster, who represented the association, said that without alternative dispute resolution, the case could have easily ended up in court, which would have taken longer and been more costly.

In the mediation process, usually a retired or off-duty judge acts as a mediator for the two parties, facilitating communication and making suggestions until a mutually acceptable solution is created. In the case of arbitration, a variation of a mini-trial is held, again with a retired or off-duty judge serving as arbiter. Each side makes its case before the arbiter, who then hands down a decision to which the disputing parties must comply.

Avoiding court is one thing that planners and hoteliers can agree on, explains Phoenix-based hotel industry attorney Lisa Sommer Devlin.

The vast majority of disputes between planners and hoteliers are resolved by the parties themselves, she says. But if there is a more serious conflict, hotels often prefer arbitration and mediation over going to trial, because "it's generally cheaper than going through a full-blown court case." Once parties agree to arbitration or mediation, it's rare for them to end up in court. "They only go to court when the party who owes money refuses to pay. Then it goes to a judge to enforce the ruling."

As more planners become aware of alternative dispute resolution, more call for it in contracts where it doesn't already exist. "Typically, in our contracts we include a clause that calls for arbitration before we'll actually go to court," says Harvey Tiras, executive vice president of Houston, TX-based International Meeting Managers.

Tiras says he also tries to include a clause in his contracts to guarantee that any litigation would take place in his home county in Texas. "That's because I'm familiar with the Texas laws, and also because it's easier to work with local attorneys," he explains. "Sometimes suppliers agree to it. If not, we use the clause as a strategic negotiating point." -Ben Chapman