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President Clinton has signed into law HR Bill 3528 which requires all federal district courts to authorize and promote the use of alternative dispute resolution. The Act, known as the Alternative Dispute Resolution Act of 1998, governs all civil actions pending in United States District Courts, including adversary proceedings in bankruptcy.

The Act directs each United States District Court to authorize by local rule the use of an alternative dispute resolution process such as early neutral evaluation, mediation, minitrial and arbitration. Each court is to devise and implement its own program; and those courts having programs in place are directed to re-examine the effectiveness of their program and "adopt such improvements as are consistent with the provisions and purposes of the Act."

Each district court must provide litigants with at least one ADR process and require litigants in all civil cases to consider the use of an ADR process "at an appropriate stage in the litigation." Courts may require that the parties use a non-binding process such as early neutral evaluation or mediation.

The Act permits each district court to exempt specific cases or categories in which ADR would not be appropriate. Each court must also adopt appropriate processes for the selection of neutrals and for making neutrals available to the parties.

Section 6 of the Act governs referral to arbitration, which limits arbitration to cases in which the relief sought is less than $150,000.00 and provides for entry of judgment on the arbitration award unless a party requests a trial de novo within thirty days.

The Act also authorizes the Federal Judicial Center and the Administrative Office of United States Courts to assist the district courts in the establishment and improvement of ADR programs.

In Michigan, the Western District has a comprehensive alternative dispute resolution program which has been in place for several years. More extensive changes may come in the Eastern District as a result of the Act, although the Act permits individual courts wide discretion in establishing their programs so that it is not clear whether existing Local Rule 16.3 of the Eastern District incorporating "Michigan" mediation (case evaluation) may satisfy the dictates of the new Act.

The Act became effective October 30, 1998.

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