When disputes arise, whether in business, personal relationships or other areas, resolving them efficiently and effectively is crucial. Arbitration and mediation are two popular methods of alternative dispute resolution (ADR) that offer ways to resolve conflicts outside the traditional litigation in court with a presiding judge. While arbitration and mediation share some similarities, they fundamentally differ in approach and execution.
What is arbitration?
There are different types of arbitration used for different types of disputes, ranging from binding to non-binding to medical to institutional to ad hoc. Generally speaking, arbitration is a formal process where disputing parties agree to submit their conflict to one or more arbitrators, who can make a decision after hearing the facts and legal arguments of a dispute. Arbitration is often used in commercial disputes, labor disputes and consumer issues.
Key Features of arbitration:
- Binding decision: If the two sides agree to use this format, the arbitrator’s decision, known as an award, can be final and legally binding, much like a court judgment.
- Choice of an arbitrator: Parties can select an arbitrator with specific expertise relevant to their dispute.
- Private and confidential: Whereas court documents are a matter of public record, arbitration hearings are typically private, and the details of the dispute and the award can be kept confidential.
- Formal procedure: While less formal than court proceedings, arbitration follows a structured process with evidence presentation and legal arguments.
What is mediation?
There are several mediation formats, but generally, it is a more informal and collaborative process where a neutral third-party mediator helps disputing parties communicate, build consensus and negotiate to reach a mutually acceptable solution. Often used in family disputes like divorce, workplace conflicts and community issues, mediation is an attractive alternative to months and possibly years of costly litigation. Judges will also encourage or require mediation because, statistically speaking, mediations result in settlement about 70% of the time.
Key features of mediation:
- Less judgmental: A mediator does not judge. Instead, they facilitate discussions and help parties find common ground.
- Voluntary participation: Except when required by the court, the parties must agree to participate in mediation
- Control: The parties retain control over their outcome.
- Collaborative approach: Mediation emphasizes cooperation and open communication, often leading to more amicable resolutions.
- Confidentiality: Like arbitration, mediation is a process that ensures that discussions remain private.
Legal guidance still necessary
Arbitration and mediation offer valuable alternatives to traditional litigation, each offering its advantages. Still, mediators and arbitrators are often lawyers because the skills and knowledge required for these roles overlap significantly with those developed in the legal profession. Lawyers are well-suited for these roles because they are trained negotiators who can be impartial, and their legal background enables them to draft fair and binding arbitration awards or assist the parties to draft a settlement agreement.