Arbitration and mediation are considered Alternative Dispute Resolutions (“ADR”) and have become popular methods for settling disputes among parties today, according to this article. Entities and individuals are more frequently choosing to forego the process of the traditional court system for the resolution of disputes by entering into agreements containing arbitration and mediation provisions. Still, the latter terms prove to be legal jargon (and, therefore, “vague” jargon to the standard Joe).
As often as the phrase ‘arbitration and mediation’ gets tossed around these days, many do not exactly know what they mean. Arbitration and mediation are similar in that they are alternatives to traditional litigation, and sometimes they are used in conjunction with litigation (opposing parties may first try to negotiate, and if that fails, move forward to trial). Both arbitration and mediation employ a neutral third party to oversee the process, and they both can be binding.
Still, many people wonder whether they should choose arbitration or mediation when it comes to settling a legal dispute and they are unaware of exactly what distinctions exist between the two methods. That is why Raynes | Erickson will be breaking down the distinctions between the arbitration and mediation in addition to discussing some advantages offered by both methods.
The Main Differences Between Arbitration and Mediation
The main difference between mediation and arbitration is the process used to solve one’s conflict. As stated in the outset of this article, both options will help a person solve a legal issue outside of the traditional court process. However, both options use two different methods to carry a person, so to speak, from the beginning of the legal process to the end.
Mediation is a non-binding process that is generally conducted with a single mediator who does not judge the case but instead facilitates discussion and eventual resolution of the dispute.—FindLaw
Mediators do not issue orders, find fault, or make determinations. The BCICAC further explains: Mediators help parties to reach a settlement by assisting with communications, obtaining relevant information, and developing options. Although mediation procedures may vary, the parties usually first meet together with the mediator informally to explain their views of the dispute. Often the mediator will then meet with each party separately. The mediator discusses the dispute with them and explores with each party possible ways to resolve it.
It is common for the mediator to go back and forth between sides a number of times. The main focus remains on the parties as they work towards a mutually beneficial solution. Most disputes are successfully resolved and often the parties will then enter into a written settlement agreement.
Arbitration is typically a binding process that replaces the full trial process with multiple (often three) chosen people to serve as judges in your case.—FindLaw
Arbitration is a more formal process than mediation, as it is generally conducted with a panel of multiple arbitrators who take on a role like that of a judge. In fact, an arbitrator could be a retired judge, a senior lawyer, or a professional such as an accountant or engineer. This panel is able to make decisions about evidence and give written opinions (which can be binding or non-binding), having the power to render a legally binding decision which both parties must honor and the award is enforceable in our courts and the courts of 142 countries.
Although arbitration is sometimes conducted with one arbitrator, the most common procedure is for each side to select an arbitrator. Then, those two arbitrators select a third arbitrator, at which point the dispute is presented to the three chosen arbitrators. Decisions are made by majority vote. During the arbitration process, both parties are given an opportunity to present their cases to the arbitrator. Much like a regular court proceeding, lawyers can also question witnesses from both sides. There are usually little, if any, out-of-court negotiations between parties.
Advantages of Arbitration and Mediation
Both processes have their advantages and disadvantages. The main advantages they both have over a trial are the savings of cost and time, and a greater degree of predictability in the outcome. Certain articles such as this one on Glaisyers helps us better understand the details of each process’s benefits. Let us consider some of the primary benefits of both process (aside from the obvious cost and time), the benefits of arbitration first:
- Informality. Arbitration proceedings are far less formal than a trial. Parties can agree to have arbitrations in any convenient setting of their choosing. Also, the rules of procedure and evidence are greatly relaxed and simplified, making the overall process much less formal than a typical trial.
- Privacy. Arbitration proceedings are generally held in private, and parties can agree to keep the final resolution confidential. This is especially appealing if the subject matter of the dispute involves private or embarrassing information.
- Control. Parties have the ability to maintain greater control over the dispute resolution process through arbitration. The arbitrator is selected by the parties. Unlike in a trial, where the judge or jury may know very little about the subject matter of the dispute, the parties to arbitration have the ability to select an arbitrator with expertise in a certain area, which may lend to a more equitable and informed decision. Additionally, the parties can generally select and stipulate as to the legal and procedural rules that will govern the process.
The primary benefits of mediation:
- Confidentiality. In many instances, parties might not want the world to know they are going through a dispute. This could be due to wanting to protect a reputation, having a high-profile or public career, or sparing any unnecessary embarrassment. Similar to arbitration, whatever is said in a mediation meeting is kept between the two parties and the mediator. This means in the event negotiations break down, the courts can not be swayed either way by discussions which gives both sides the chance to state their case anew.
- Evidence. The evidence presented is not limited by normal court rules, and parties may be able to include information that would not normally be considered in a court. This can be a massive advantage if parties have any concerns that they will struggle to prove their loss under the scrutiny of full litigation.
- Amicable. One of the key advantages of mediation is that it gives both parties involved a way to solve things in a way that is agreeable for all. The results of mediation can not be enforced if it works because both parties have come to an agreement.
Should You Choose Arbitration or Mediation
In summary, the main difference between arbitration and mediation is that in arbitration the arbitrator hears evidence and makes a decision. Arbitration is like a less formal court process as parties still provide testimony and give evidence similar to a trial. In mediation, the process is a negotiation with the assistance of a neutral third party. The parties do not reach a resolution unless all sides agree.
Many people report a higher degree of satisfaction with mediation than with arbitration because they can control the result and be part of the resolution. However, All Law reminds us that there are still potential disadvantages to using both mediation and arbitration. Consider all options and speak with a legal professional before making a decision. A legal professional will provide professional guidance on matters so you are not left alone.