The methods of alternative dispute resolution (ADR), including mediation and arbitration, have become an increasingly popular alternative to lawsuits, given the constraints, time, and resources associated with court cases. These methods allow the disputing parties to reach a mutually agreeable settlement without the uncertainty and stress of formal litigation.
Mediation and arbitration come with numerous other benefits, including complete confidentiality of the process, facilitated discussions, the cost-saving factor, and the ability to achieve a settlement in a matter of hours and days instead of months or years. For these and other reasons, mediation and arbitration clauses are integrated into various contracts, including employment contracts, construction agreements, manufacturing agreements, and other contracts where parties give priority to mediation or arbitration processes or waive the right to trial by jury altogether.
Although many individuals use the terms mediation and arbitration interchangeably, there is a distinct difference between these two. It is essential to understand this difference to choose the most effective way to settle a dispute and make the best use of each of these methods.
Unlike arbitration or litigation, mediation is a non-binding process of settling disputes facilitated by a mediator. A mediator represents neither of the parties and participates in the process with the sole purpose of facilitation.
Contrary to arbitrators, mediators do not make any decisions in a dispute. They cannot force either of the parties to come to an agreement. Instead, mediators help parties understand the consequences of their choices and consider the legal position and arguments of the other participants.
Mediation allows for a more informal process while providing for complete confidentiality. Most often, the parties who agree to mediation and make a sincere effort to settle their claim are able to reach a settlement in a short time at a fraction of the cost of litigation. Finally, if the parties don’t come to an agreement through mediation, they may proceed to litigation.
The arbitration is the process resembling a lawsuit in which the parties present their case to the panel of arbitrators who have the final say in the dispute. In binding arbitration, the participants are bound by the arbitration panel’s decision and cannot proceed to trial. In non-binding arbitration, the parties get the decision from the arbitration panel, but they can move the case forward and try their chances in court if they choose to.
Most often, the arbitrators are lawyers with extensive experience in the area of a dispute. The arbitration process comes with the value of having the panel of professionals review and settle the case instead of resolving it in front of a judge or a jury. The arbitration also offers complete confidentiality and is much cheaper than a full-blown lawsuit.
Mediation and arbitration clauses are included in many contracts and provide an effective means to dispute resolution while keeping the dispute itself confidential. These methods for alternative dispute resolution provide cost and time saving and offer the participants a more informal setting, facilitating the discussion and settlement.
Those interested in alternatives to a formal lawsuit would benefit from the services of professional mediators and arbitrators, possessing extensive experience in the area of the dispute and well-versed in alternative dispute resolution through mediation or arbitration.