Mediation and Arbitration
In today's business world, more and more contracts include arbitration and mediation as alternatives to court settlement of cases. Before you sign a contract which includes one or more of these two types of dispute resolution, you should know more about them.
Mediation
Mediation is a method of resolving misunderstandings. In a dispute, a third party, known as a "mediator," is brought in to assist the parties in reaching a settlement. In many cases, the mediator does not have authority to make a binding decision. Some advantages of mediation are:
- It is private and confidential, as opposed to trials, which are very public.
- The mediator is objective and helps the parties explore alternatives.
- The process of mediation is quicker than going to a trial.
- The process is less expensive than a long and costly trial. Both parties share in the cost of a mediator.
- The possibility of continuing the business relationship later is much greater, since the dispute has been resolved with consideration of both parties.
- The mediator may be able to propose creative solutions or accommodations.
According to the American Arbitration Association (AAA), about 85% of mediations result in a settlement. If the parties cannot agree through mediation, they can proceed to arbitration.
Arbitration
Arbitration is the process of submitting a dispute to an impartial person for final and binding determination. In an arbitration process, legal rules of evidence don’t apply and there is no formal discovery process. The arbitrator may ask for relevant documents, and the arbitrator submits an opinion after reviewing the case. As with mediation, the process can be scheduled and resolved quickly, and it is much less adversarial than litigation. The judgment of the arbitrator is final and binding. If this sounds familiar, it is: The People’s Court is an example of arbitration.
