The Role of ADR in Transforming Dispute Resolution Mechanisms for Informal Economies

Abstract

This paper explores the role of Alternative Dispute Resolution (ADR) in transforming dispute resolution mechanisms within informal economies. Informal sectors, characterized by small traders, street vendors, and micro-enterprises, often face conflicts that are difficult to resolve through traditional legal systems due to the costs, time, and accessibility barriers. ADR, comprising mediation, arbitration, and negotiation, offers a cost-effective and flexible alternative to formal litigation. This study evaluates ADR's effectiveness, challenges, and prospects in resolving conflicts within informal economies, especially in developing countries. A systematic literature review (SLR) was conducted to achieve this, analyzing 10 peer-reviewed articles published between 2016 and 2024. These studies employed various methodologies, including literature reviews, case studies, surveys, and mixed methods. The findings reveal that ADR is highly effective in resolving disputes in informal sectors, offering culturally sensitive and affordable solutions. Technology, such as e-ADR platforms, enhances accessibility, especially in remote or underserved regions. However, challenges such as resistance to non-litigious approaches, lack of awareness, and cultural barriers hinder widespread adoption. The analysis suggests that ADR, when tailored to the socio-cultural context of informal economies, can foster long-term sustainability and stability. Future research should address the barriers to ADR adoption and its scalability in different regions.