Arbitration Vs Mediation - What are the Most Important Things to Know

Article Summary

  1. Arbitration vs mediation: Both are considered forms of alternative dispute resolution (ADR) and help resolve disputes instead of litigation.2.
  2. Arbitration vs mediation, both seek the same outcome – a fair resolution of the issues at hand.
  3. In other words, the parties may not have the opportunity to exchange information and evidence that they will present to the arbitrator.
  4. Mediation is an informal and flexible process, which usually translates to less stress and anxiety for all parties involved.
  5. Arbitration vs mediation, both have their place with regards to alternative dispute resolutions; however, there are many things to consider before choosing one over the other.

Arbitration vs Mediation

Arbitration vs mediation: Both are considered forms of alternative dispute resolution (ADR) and help resolve disputes instead of litigation.  Other common forms of ADR include conciliation, neutral evaluation, settlement conferences, and community dispute resolution programs.  In this article, we will focus on the two most common resolutions; arbitration and mediation.

Arbitration vs mediation, both seek the same outcome – a fair resolution of the issues at hand.  However, there are significant differences between the two methods and you must know how each process works before choosing which one is right for your circumstances.

Arbitration:

Arbitration is similar to a court process.  The arbitrator hears the evidence and makes a decision.  The parties involved provide testimony and give evidence, usually in a less formal setting than would be an actual court trial.  It is a lighter form of litigation and usually less costly.

Advantages of Arbitration:

In addition to arbitration being less expensive than a lawsuit, it is also quicker.  Arbitration can generally be completed in a few months, as opposed to several years for litigation.  Unlike trials held in a courtroom, arbitration can be held in any setting that is convenient to them.  This makes for a less stressful and more relaxed process.  

An arbitrator can also be hired with the technical knowledge necessary for your case, if necessary, i.e. a patent dispute for a new medical device.  Another advantage of arbitration is the privacy associated with it.  The proceedings are held in private and the parties involved can agree to keep the final resolution private.  

Disadvantages of Arbitration:

The arbitrator has the final say and may make their decision without issuing any written opinion.  Although the arbitrator is required to follow the law, the lack of transparency in the decision-making process can lead some to question the objectivity of the arbitrator.

There is also no right to discovery unless it is agreed upon in your arbitration provision.  In other words, the parties may not have the opportunity to exchange information and evidence that they will present to the arbitrator.  While sometimes this can be an advantage (overall decreased costs), a party may be at the disadvantage by not being privy to all of the necessary facts that could have been revealed had a more formal discovery been conducted.

Lastly, there is no appeal of a binding arbitration ruling (unless it is proven that the arbitrator was biased, or the ruling violated public policy).  Once the arbitrator makes his or her decision, you’re stuck with the ruling and may well be barred from ever airing the underlying claim in court.

Mediation: 

This process is a negotiation between parties with the help of a neutral third party.  The mediator assists the parties in reaching a satisfactory settlement.  A resolution is not made unless all sides agree.  In this type of ADR, the outcome is left in the control of the parties.

Advantages of Mediation:

Mediation is the least expensive and most peaceable method of solving a dispute.  The arrival of a dispute is completely in the hands of the parties rather than an arbitrator or judge.  Mediation is an informal and flexible process, which usually translates to less stress and anxiety for all parties involved.  Mediated settlements can address all parties’ interests which often preserves working relationships in ways that are not possible with win/lose situations.  If a work relationship needs to be terminated, mediation can usually make the situation more amicable.

Disadvantages of Mediation:

A significant disadvantage that mediation has is that it doesn’t always get to the truth of the matter.  In a formal trial, witnesses may be compelled to testify, Judges will follow rules of civil procedure,  and relevant evidence will be presented.  Since mediation has no formal rules, there may be a disparity among the witnesses and pertinent information may not be presented. 

Arbitration and mediation have their place with regards to alternative dispute resolutions; however, there are many things to consider before choosing one over the other.  In arbitration, there are provisions that you should be aware of before agreeing to the process.  In mediation, just because the process creates a win-win situation still doesn’t mean everyone will be happy with the agreement.  Before you decide to settle your dispute with arbitration or mediation, contact me for sound legal advice.  With over 30 years of practicing law in Florida, I will always protect your interest and represent you with honesty and integrity.

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