Most people have heard of two types of Alternative Dispute Resolution: mediation and arbitration. Both are used to resolve disputes before or during litigation. Some mediations and arbitrations are required, either by the court, as part of the settlement process, or by the terms of a contract. Alternative dispute resolution processes are also chosen by parties to a dispute as an alternative to litigation, because they believe it will save money, result in a quicker resolution, preserve business or personal relationships, or be less stressful than a lawsuit.
WHAT IS MEDIATION?
A simple definition of mediation is a form of dispute resolution where a neutral third party (a mediator), helps the parties to the dispute reach a resolution. A mediator may take a very active role in the mediation, making suggestions and offering his or her own ideas as the mediation progresses, or a mediator might take a less active role, asking questions in order to help the parties come to their own decision. The parties might be together for the entire mediation, or the mediator might speak to each party individually. Sometimes, attorneys participate in the mediation, and sometimes mediation occurs without the involvement of attorneys.
Generally, a mediation will begin with an introduction by the mediator, followed by opening statements by each party. After the opening statements, the mediator asks questions in order to gather all the information, identifies the issues that need to be resolved, and assists the parties in negotiating an acceptable settlement. A mediation may last for several hours, several days, or several weeks. If an agreement is reached, the mediator will usually draft a document outlining the settlement.
Courts often require parties to go to mediation before a case goes to trial. Mediation is frequently used in highly emotional conflicts, such as divorce and custody disputes, where ongoing relationships make an amicable settlement crucial. Mediation may be used to resolve disputes between family, friends, or neighbors, even where legal action isn’t contemplated. Mediation may be used to resolve a dispute within a community. Some mediators specialize in corporate negotiations and disputes, resolving conflicts where millions of dollars are at stake.
WHAT IS ARBITRATION?
Arbitration is usually a more adversarial process than mediation. In a typical arbitration, a sole arbitrator or a panel of three arbitrators listen to each party present his or her side of the case. Attorneys are often involved, witnesses may testify, and evidence might be submitted. At the end of the process, the arbitrators deliberate and render a decision.
Arbitrators, while not bound by traditional court rules, are often governed by arbitration rules. Arbitration may be used to resolve a dispute because an arbitration clause was included in a contract between the parties, because the parties agreed to participate in arbitration in order to achieve a quicker, less expensive result, or because a mandatory court arbitration program is in place.
Arbitration awards are often, but not always, binding, and while there may be a right to appeal, it is usually limited. It is important to note that where arbitration is mandated by a court, the arbitration award is of an advisory nature only.
Arbitration is especially effective when the matter of the dispute is very complex or technical, and an expert is needed to render a decision. Arbitrators often have expertise in the subject matter of the arbitration, making them better able to understand complicated technical issues. Arbitration is also very effective in situations where the dispute is entirely monetary.